The attractiveness of a country as a market or investment site depends on balancing the likely long-term benefits of doing business there, against the likely costs and risks

Determinants of benefits

One of the determinants of benefits in international business is competition. When competition from local businesses is high, the firm is likely to make fewer sales. When the competition from local companies is low, the international business is expected to have high sales; thus, more profit.

The second determinant of benefit in international business is the state of the economy. When the economy has a sufficient money supply, people will have enough money to spend; thus, they are likely to make more purchases. On the other hand, when the economy has insufficient money supply, people will not enough money; hence, they are likely to make fewer purchases.

Determinants of costs

One of the determinants of cost within a firm is taxes. When the tax rates are high, the firm is likely to incur more costs. On the other hand, when the tax rates are low, the company will likely incur fewer expenses.

The second determinant of cost within a firm is minimum wage. When the minimum wage is high, the firm is likely to incur more costs when carrying out its operations within the nation. On the other side, when the minimum wage is low, a business will incur low operation costs.

Determinants of risks

One of the determinants of risk is economic stability. When the economy is stable, the possibility of making losses is low. On the other side, when the economy is unstable, the possibility of making losses is high.

The second determinant of risk is the climate. When a region's environment does not favor the production of goods, the firm can make losses. When the climate is favorable, the possibility of making a loss due to natural calamities is low.