Analyse international business influences
Assess trade links, agreements, technology, multinational effects and government relationships in context.
Section 6.1 · External influences on business activity
Cambridge International AS & A Level Business 9609, 2026–2028 syllabus and 2029 syllabus, section 6.1.6. Apply legal, economic and political examples to the relevant country and date. Written practice is self-checked. Specialist review has not been completed for this lesson; these exercises do not award an official mark or establish exam readiness.
Before you begin
- Use the lesson's stated business context and distinguish evidence from assumptions before recommending a response.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
What is one possible benefit of international trade links to a business?
What you will learn
- Explain why international trading links matter
- Assess trade agreement and technology effects
- Balance multinational benefits and costs for a host country
International links create opportunity and exposure
Trade links can give firms access to new customers, inputs, skills, capital and knowledge. They can also expose them to foreign competition, transport disruption, different standards and changing exchange rates or political relationships.
A trade agreement may reduce some barriers or set common rules, creating access while changing competition or compliance requirements. Its actual terms, participating markets and rules of origin matter; do not assume every agreement removes every barrier.
Technology and multinationals affect more than sales
Digital platforms, communications, tracking and payment systems can make it easier to coordinate orders and serve overseas customers. Firms still need to address logistics, language, consumer protection, data rules and reliable fulfilment.
A multinational may bring jobs, investment, training, tax revenue and technology to a host country. Risks can include pressure on local firms, profit repatriation, bargaining power, environmental costs or dependence. Governments and multinationals negotiate over taxes, employment, investment, competition and standards; outcomes depend on enforcement and local capabilities.
Pause and explain
Why should a firm check the terms of a trade agreement before expanding?
Worked example
A multinational proposes a food-processing plant in a lower-income country. Give one possible host-country benefit, one risk and a condition that affects the outcome.
Show the worked solution
- The plant may create jobs, skills and supplier demand.
- It may displace local firms or create environmental pressure.
- Local standards, supplier links, skills and enforcement affect the net result.
Answer The plant may create jobs and training and purchase from local suppliers. It could also displace domestic processors or create pollution and bargaining concerns. The net effect depends on enforceable labour and environmental standards, the strength of local supplier links, skills transfer and how profits and taxes are treated.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
An exporter uses an online marketplace to enter a new country. Explain two benefits and two issues it should plan for.
Give me a hint
Consider customer reach as well as fulfilment and market rules.
Compare my reasoning
- The platform may provide reach and lower entry costs.
- Orders still require payment, delivery and customer support.
- Check product rules, consumer protection, data handling and returns.
The platform can expose the exporter to customers without building its own local store and provide order data. The firm still needs reliable delivery, payments, language and support, and must check product, consumer-protection and data requirements in the destination market. Returns and marketplace fees also affect margins.
Look for these in your work
- Reach benefit is explained
- Operational needs are covered
- Compliance and margin are considered
A trade agreement lowers a tariff on one input but introduces new documentation rules. Explain how a manufacturer should judge whether importing the input is now attractive.
Give me a hint
Compare the tariff saving with compliance and supply costs.
Compare my reasoning
- Calculate total landed cost, not only tariff.
- Include origin documentation, logistics and delay risk.
- Compare domestic alternatives, quality and supply reliability.
The manufacturer should compare landed cost after the tariff reduction with documentation, customs, logistics and delay costs. It should verify that the input qualifies under the agreement's rules and compare quality, reliability and domestic alternatives. A lower tariff alone does not prove the import is cheaper overall.
Look for these in your work
- Agreement eligibility is verified
- Total cost and delay are included
- Alternatives and reliability are compared
A host government wants a multinational to train local workers and use local suppliers. Explain one reason each party may accept or resist these conditions.
Give me a hint
Consider capability-building for the host and cost, quality or investment certainty for the firm.
Compare my reasoning
- Training can create local skills and employment.
- Local sourcing may strengthen supplier links but require qualification.
- The firm may seek predictable rules and may resist cost or capacity constraints.
The government may seek skills, jobs and local value creation. The multinational may accept training to build a workforce and improve relationships, but local suppliers may need development and qualification. Predictable rules and incentives can encourage investment, while abrupt or costly conditions may deter it; negotiation and enforcement shape the result.
Look for these in your work
- Host-country aim is stated
- Firm incentives and constraints are analysed
- Negotiation and capability are included
Common mistakes
- Treating a trade agreement as zero barriers in every sector
- Assuming all multinational investment benefits a host country equally
- Ignoring local suppliers, workers, consumers and government power
What can you explain now?
What is one possible benefit of international trade links to a business?
Compare with the explanation
Access to customers or inputs in other markets
Trading links can extend both sales opportunities and sourcing options.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
How can trade, technology and multinational activity benefit firms and countries while creating new dependencies or obligations?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.