Climate change has gradually grown to become one of the most dreadful threats that face human kind on earth more than ever before in the history of the world. With the effects far reaching and the consequences deeply cutting on the lives of almost every other living creature, environmental/climate changes have presented challenges that have officially proven difficult if not complicated. Considering the fact that the global systems are interlinked through many businesses in an international sense, it then becomes obvious that international business is definitely going to experience tough effects resulting from the conditions that come with the environmental/climate changes currently taking place. Since businesses across the world work on the general business principle of supply and demand, it implies that both sides can be affected. There are effects that will impact on the supply side and there are also those effects that will affect the demand side. World trade/international business is gaining momentum in discussions especially around of the area of green house gas emissions and trade implications (World Trade Organization, 2006).
Taking agriculture for example to begin with, the effects are already being felt in a very thorough sense where food production is quickly becoming impaired in different ways. The impact of this is that the countries that have been known to be the largest producers of food through natural means that depend on rain for instance will not match the production quantities that they have been giving out. This implies that they will not manage to satisfy the demand that they have always supplied. Such countries can cease to enjoy the foreign income they have been attaining due to exports of their produce. All the functions of their economies that depended on such sources of income will get affected negatively and will start to show major signs of deterioration with time and this will become even dire in implication with increase in time. On the other hand, the countries that have been receiving their food through such business levels will have their people starve or be forced to look for other sources of food which unfortunately will again prove difficult. Starvation weakens the populations such that their productivity is duly affected meaning that their economic input is curtailed. The overall result is that the different key sectors of the economy that depend on energetic labour begin to suffer the effects of reduced production and development is seriously curtailed. This is just an illustration of the impact that environmental/climate change can have on international business and the reality remains to be that the effects are even much more than this.
There will be inevitable changes in conditions of the environment/climate which will for sure have some level of impact on production which in turn bears losses that are so direct for any region especially those that are quite exposed due to vulnerability issues. The sad part about this is that when one region is affected, several other regions will also get affected due to the interlinking nature of international business (Swiss National centre of Competence in Research, n.d). Food production decline in sub-Saharan Africa means increase of food prices in northern countries that depend heavily on the food produced in Sub-Saharan Africa. The absence of adaptive abilities in the Sub-Saharan Africa countries will increase their vulnerability since they are simply developing countries that do not have enough financial resources to fight the impacts. A new report released by Lloyd's, a leading insurance, indicate clearly that climate change inevitably lead to increased water shortage, interfere with production of food and disturb supply of energy. Generally therefore, the impacts can analytically be emanating from key areas, some of the main ones including water, food, energy security and migration which in turn can have a heavy impact on international business (Lloyds, 2010).
The fundamental effect that will in fact form the basis of all other impacts on the international business is that of being able to change the way people live and work-something that forms a very great percentage of our lives since we get our livelihood needs by working, which then provides us with the means of acquiring the basic needs in life. There will be heightened competition for all the resources, which are scarce in existence like water and food for instance; which in turn impacts on international business such that the economies will face global insecurity on these resources hence ultimately increasing the overall cost of conducting business especially on the international scale. The implication here is that global businesses that depend on these scarce resources and many of them do, will have to make a fight for the resources if at all they have to remain in business and continue to produce. The fight in reality is increased pricing of resources that are not there in the fasts place and the likelihood environment is that when costs are very high for resources that cannot be found, meaning most of the businesses will not be able to attain the resources. The instability in international business will eventually drive to a point of global instability and in fact this trend is being faced in the Europe and the United states. However, there could also be other business opportunities that will be up for grabs by international businesses especially in the line of mitigations to these effects through innovations and technology in general.
Water is an important resource for many international businesses. Most industries depend on water to have their facilities run right form the beginning of the raw material processing to the finished product when ready to go to the market. All the products we use today have been produced due to the availability of water. Imagine a situation where there will be no water at a given point or one where the available water is too scarce. The impact will be that these products will not come out of the industries and most probably the industries that make them available in the market will have to close down. Conflicts are already emerging that are related to water sources an the notable one is between India and Pakistan who are seriously competing for the critical Indus river basin which is a great source of water for their businesses and citizens as well. This just shows the extent to which these environmental changes are likely to have on international business. The logic behind this competition is that the two countries have very major industries that depend on water from this river and for these industries to remain relevant, the water must be constantly available. Therefore when the water becomes scarce, each country begins to feel that it has the right to the water source and views the other dependant as not entitled to the resource. When this becomes heightened the overall result is that these countries can easily develop enmity which can become a threat to national security and definitely business between them or interlinked business partners in other countries will also get to feel the consequences.
Energy security is starting to display a worrying trend especially when we consider the Arctic which is one of the areas that bear huge amounts of gas and oil resources that feed most parts of the globe in the line of big international business entities that are involved in sourcing these resources and supplying them to different businesses worldwide. Fall in supplies of energy leads to sharp increases in prices worldwide (International Centre for Trade and Sustainable Development, 2010). The ice cap is melting thus making the exploitable gas and oil resources scale down to much diminished levels. These reduced levels have begun to draw criticism over nations on who should be entitled to these resources. The fact is that as the resources diminish, the major dependants will always begin to look for ways of protecting the part of the remaining quantities by claiming sole identity of the once natural resources. As this happens, the first victims are international businesses because these are the entities that are responsible for the heavy work of mining these resources, purifying them and having them transported to the destinations where they are consumed. Along the line of these businesses from source to destination, who depend on the activities that take place including transportation and the purification processes at the source. When these activities are interfered with in one way or another, then everyone in this line gets affected and the overall effect hits international business very hard. Food and migration are the other key factors that influence the effects that environmental/climate change will have on international business.
There are issues of food security at the moment facing the world and international business receives the brunt of these effects. Businesses, whose core areas are food, will have dire effects because their business lines will experience major disruptions related to reduced resources hence increased costs. Countries with large populations to feed will in effect experience severe hunger which will then reduce their economic production activities by great margins. Migration is another big issue that will bear on international business. People from poorer nations facing starvation will seek salvation in countries perceived to be doing well economically like the USA for instance.
In conclusion, the ways in which the environmental/climate changes can impact international business are quite far reaching, spanning almost every sector and industry in international business. Since international business is interlinked from country to country, region to region, and continent to continent; the impacts are in effect equally interlinked. Generally an impact in one international business will trickle down to all the other businesses related to it and this can form a dangerous cycle where every business is entirely affected. Eventually, the whole international business system can become totally hindered thus bringing the global economic system to a stand still. On the other hand, there can also be opportunities in all these challenges especially when international businesses begin to think of ways of counteracting these effects.