The international business is one of the most challenging part of the business in the modern day. This is factored by complex networks that are involved. Whereby, the chains of demand and supply are highly complex. Business on an international platform is faced by major challenges and often succumbs to them if not carefully maneuvered. The biggest of all challenges is the challenge of political interference and supervision. The second is that of culture and diversity among the people. The economic system also plays an important role in the performance of the business. It determines the levels of taxation, the costs of inputs as well as the sales made by the premises. It is important to note that economic and socioeconomic forces are significant drivers of international business. For the purpose of this essay, we shall examine the impacts of the two broad forces in the light of one developed and one developing state.

Discussion

On a broader category, it is important to highlight that economic forces that affect business in the international society include; the GDP of a country, the GNI per capita, income distribution, private consumption, unit labor costs and other macroeconomic factors like large national debts (Abbasi et. al, 1983). The socioeconomic forces include; total population, age distribution, population density and distribution as well as other factors like the proportion of women population in the work force. We shall take the United States and India, as a developed state and an underdeveloped state respectively and use them in the analysis of this paper.

Economic factors

The gross domestic product of a country is an important consideration in establishing an international business destination. The higher the GDP of a country, the better the living conditions of its people (Abbasi et. al, 1983). Moreover, the higher the consumption and demand consequently. For countries such as the United States, the GDP is high and, therefore, there is a lot of expenditure that goes in the demand side of the economy. Alternatively, when we look into India, we realize that the country enjoys rather smaller GDP and hence the aggregate demand is lower making the United States a perfect destination for trade. Big multinationals are more likely to prioritize investing in the United States, while small enterprises are more likely to target India as they are prone to defective products. Profits are also high for low priced goods. This is because the majorities are poor and, therefore, have low purchasing power.

The gross national income and the income distribution are two intertwined factors. In this light, we understand that the gross national income is the income that is generated by members of the state in a given year. On the other hand, income distribution is a concept that determines how the income is distributed among the members of the country. It dwells on establishing the levels of inequality and posits that the primary economic role of the country is to yield high GNI and equitably distribute it among its members. It is thus imperative that, the higher the GNI, the higher the resources available to the people and, the higher their purchasing power. Additionally, the better the income distribution among the citizens of a certain nation, the more the purchasing power, as wealth is not concentrated to a few individuals. The people tend to form consumer groups and thus trigger induced consumption spending (Abbasi et. al, 1983). For this reason, business investors would prefer the United States over India due to its equitable distribution of income and high GNI. For such avenues, retail outlets would do well.

High private consumption triggers increased spending on products (Aworemi, Abdul-Azeez, and Opoola, 2010). Countries such as the United States have very high consumption spending, and thus it is as the perfect destination for investors. Business may, therefore, have a tendency to locate in the United States as opposed to locating in India. Unit labor costs are also very significant factors that determine the possibility of an investor taking chances in a country. If the business is labor intensive and the cost of labor is very high, it is important to note that the business may not start up well in the country. This is one factor that favors countries like India instead of the United States in the instance that labor intensive means are preferred. However, this is hardly the case as there are alternative ways of mitigating the costs of labor such as the use of capital intensive methods (Aworemi, Abdul-Azeez, and Opoola, 2010). The use of machines has proved even cheaper than human labor, therefore, the decision on where to invest may not necessarily be steered by the cost of labor. High national debts may scare away business enterprises as governments that suffer high debt burdens have a tendency to tax multinationals more or impose sanctions on them and therefore limiting their profits. Companies that would be interested in such markets include expensive luxury car companies.

Socioeconomic forces

The total population of a country determines the purchasing power of the country depending on the business that one is interested in (Kapstein, and Kim, 2011). For most of the developing countries that have higher populations, the population is often seen as the potential market especially where a company is dealing with inferior or basic products. The population of India is a potential destination for a retail outlet. Higher populations may also be indicative of higher poverty index, and thus expensive products may not do well in such economies (Kapstein, and Kim, 2011). International business in such a country is mainly inclined towards the provision of goods and services at cheaper prices. In the United States, the international businesses are there to provide high quality products and offer a broader consumer choice.

Age distribution is also an important factor to be considered in the international business platform (Eggleston et. al, 2010). It is important to consider that a population that is composed of the young is likely to spend more of their incomes on electronic gadgets, dressing as well as luxuries. On the other hand, an ageing population is more likely to spend more of their income on medical bills, age care and investments for their future generations (Eggleston et. al, 2010). It is thus imperative that electronic companies such as Samsung, Apple or Sony are more likely to locate in countries that have higher proportions of their population as the young. In this case, the United States is more likely to attract such companies, as opposed to any of the Asian countries that are rapidly ageing.

Population density and distribution is a consideration that, in international business may be used to understand the market location and plan on areas to invest. It is crucial that most of the businesses prefer being located in central places where the sales are high. There is a need for these businesses to develop in strategically secure regions especially when we are dealing with politically unstable countries. The population density and distribution influences the level of consumption of all goods in the light that, the more the people, the more they spend on goods and services. Businesses such as petrol stations, huge supermarket chains and huge production unit are more likely to be located centrally within the markets and thus attract more profits. On the other hand, small enterprises are more likely to be located closer to the people independent of the density to serve their small household needs.