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It is widely accepted that modern Ireland, being an open economy, is greatly influenced by, and dependent upon, the international trading environment - Leaving Cert Business - Question A - 2002
Question A
It is widely accepted that modern Ireland, being an open economy, is greatly influenced by, and dependent upon, the international trading environment. Irish business... show full transcript
Worked Solution & Example Answer:It is widely accepted that modern Ireland, being an open economy, is greatly influenced by, and dependent upon, the international trading environment - Leaving Cert Business - Question A - 2002
Step 1
Evaluate the significance of international trade for the Irish Economy.
Answer
International trade plays a vital role in the growth and sustainability of the Irish economy, significantly influencing various sectors.
Increased World Output
The economic output of the world increases as countries specialize in producing what they are most efficient at. For Ireland, specialization in software, pharmaceuticals, and food production fosters an environment where businesses can thrive and innovate through trade.
Choice and Variety
Consumers in Ireland benefit from a wider choice and variety of goods due to international trade. This variety arises from imports, enhancing consumers' standards of living and providing access to products that might not be locally available.
Economies of Scale
Irish businesses can achieve economies of scale through international trade by expanding their markets beyond national boundaries. This allows them to produce goods more efficiently and at lower costs, thereby increasing competitiveness.
Increased Efficiency
Engaging in international trade encourages efficiency among Irish firms. Competition from foreign industries prompts local businesses to innovate and optimize production processes, thereby lowering prices for consumers.
Economic Growth
Trade is a significant driver of economic growth in Ireland. By exporting goods and services, businesses can increase their revenues and invest in further growth opportunities.
International Co-operation
Trade promotes closer ties between countries, fostering cooperative relationships that can mitigate conflicts and promote peace via economic interdependence.
Competition
Irish industries face competition from global markets, which can drive improvements in quality and price. Being exposed to international competition compels local companies to enhance their offerings.
Development of Human Resources
The need for skilled labor to compete internationally leads to a focus on education and training in Ireland, helping to address workforce challenges and enhancing the overall productivity of the local economy.
Step 2
Include in your answer the opportunities and challenges for Irish Business as a result of engaging in international trade.
Answer
Opportunities for Irish Businesses
- Access to New Markets: Expanding into international markets provides Irish businesses with access to a larger customer base, which can lead to increased sales and profitability.
- Increased Revenue: By exporting goods, Irish businesses can boost their revenues significantly, which can be reinvested into the company for future growth.
- Innovation and Knowledge Transfer: Engaging with international markets encourages innovation as companies adopt best practices and new technologies from around the world.
- Brand Recognition: Successful international trade can enhance the reputation of Irish brands globally, leading to further export opportunities.
Challenges for Irish Businesses
- Regulatory Barriers: Different regulations in foreign markets can pose challenges for Irish companies looking to export, requiring them to navigate complex compliance landscapes.
- Competition from Global Players: Local Irish firms may find it difficult to compete against larger multinational corporations that have more resources and established market presence.
- Economic Dependence: Relying heavily on international markets can expose Irish businesses to global economic fluctuations, making them vulnerable to downturns in demand.
- Cultural Differences: Engaging with international customers requires understanding diverse cultures and business practices, which can complicate marketing and operational strategies.