Upload
aubrey-neal
View
242
Download
0
Tags:
Embed Size (px)
Citation preview
Chapter 3
International Business
Environment
2
International Business Environment
Environment- everything around us.everything around us.
Business environment: Sum total of all Sum total of all the forces surrounding & influencing the the forces surrounding & influencing the life and development of the firm.life and development of the firm.
Internal Environment Strengths Weakness of the Org.
Business Decision
External Environment Business OpportunityThreats to Business
3
Business Dynamics to a large extent depends on the environmental dynamics.
Environmental understanding becomes more important in the area of international business in which the environmental forces of the home country interact with the foreign environment.
International Business Environment
4
Environmental Characteristics Factors and Forces are external to the firm. Essentially uncontrollable. Environmental factors are dynamic-they
continuously change over time.NEED ?
Anticipate, respond and adapt to the complexity and rapid pace of various environmental forces changes globally.
Being international environmental factors are given, the firms should adapt its business strategy to suit the environmental factors.
5
Components of International Business Environment
Internal Environment
Micro Environment
Domestic Environment
Foreign Environment
6
7
Domestic Environment
( Uncontrollables)Competitive Structure
(Controllable)International Business Decision
- Production- Finance- Human Resource- Marketing
Domestic Environment
( Uncontrollable)
Competitive Structure
Polit
ical and L
egal Fo
rces
Eco
nom
ic Clim
ate
Foreign Environment ( Uncontrollable)
Geographic Environment
Economic and Financial
Environment
Socia
l-Cultu
ral
Enviro
nm
ent
Political Environment
Legal Environment
Ecol
ogical
Env
ironm
ent
Global Environment ( Uncontrollables)
International Economic Environment
International Financial Institutions
and System
International Trade Organization and
Agreements
Reg
iona
l Eco
nom
ic G
roup
s an
d
Agr
eem
ent
8
Internal Environment Represent firm’s business strategy and decision with regard to--
Production Finance Marketing Human Resources Research Activities
Firm can change them, but within the constraints of various environmental factors.
9
Microenvironment
Actors in the firm’s immediate environment which directly influence the firm’s decisions and operations. They are:
Potential of New Entrants Competition Power of Customers Power of Suppliers Potential of Substitute Products/Services
Are Semi-Controllable.
10
Macro Environment or Domestic environment
Competitive Structure Economic climate
Political & Legal forces
Uncontrollable
IMPACT ?
11
Macro Environment
Political & Legal forcesEconomic ConditionsSocial-Cultural EnvironmentTechnological EnvironmentEcological EnvironmentGeographic
12
Non-Economic Environment
Political Socio-Cultural Legal
Ecological Geographic
13
Political
Form of Government Political Party System
Political Ideology Role of Government
Political Stability
14
Socio-Cultural
Language EducationAesthetics Religions &
SuperstitionAttitude & values Social groups &
Organizations
15
Economic Technological
Political-legal
Socio-cultural
-GDP trends-Interest rate-Money supply-Inflation rate-Unemployment-Wages/prices-Energy availability/cost-Disposable income
-Total government spending for R&D-Total industry spending for R&D-Focus technological efforts-New products-New development in technology-Productivity through automation
-Monopoly regulation-Environmental protection laws-Tax law-Special incentives-Attitudes toward foreign company -Laws on hiring and promotion-Stability of government
-Lifestyle change-Career expectation-Regional shifts in population-Consumer behavior-Rate of family formation-Growth rate of population-Age distribution of population-Life expectancy-Birth rate
Macro Environment- Indicators
16
Economic Forces
Availability of credit Interest rate Inflation rate GDP trends Consumption patterns Unemployment level Wage and price control Demand shift for goods/services Imports/Export factors Income difference by region/customer Monetary policies Fiscal policy
17
Technological Forces
-Profound impact on organizations Computer Tele communications Internet eCommerce
18
-Internet changes the nature of opportunities and threats Alters life cycle of products Increases speed of distribution Creates new products and services Eases limitations of geographic markets Alters economies of scale Changes entry barriers
Technological Forces
19
Political-Legal Forces
-Key opportunities and Key Threats Antitrust legislation Tax rates Patent Laws Quota Lobbying efforts by International
20
Political-Legal Forces
-Key Political-Legal Variables Government regulation and deregulation) Tax law changes Special tariffs Changes in patent laws Environment protection laws Equal employment laws Level of government subsidies
21
Social-Cultural-Demographic Forces
-Key Variables Life expectancy rates Per capita income Average disposable income Attitude toward business Buying habits Ethical concerns Attitude toward saving
22
Social-Cultural-Demographic Forces
Monitor Key Variables Racial equality Average level of education Government regulation Attitude toward customer services Attitude toward product quality Social responsibility Waste management
23
Global or Foreign Environment
World Economic Condition International Financial Systems Working of WTO, IMF, WB.. International Agreements Regional Economic Groupings World-wide Economic Recession Initiatives of Regional levels
European Union (EU)North American Free Trade Association (NAFTA)Association of South East Asian Nations ( ASEAN)
24
Differences Exist 1. Between domestic & foreign
environments.2. Among the environments prevailing in
different foreign markets.
Business Strategies that are successful in one nation might fail miserably in another nation.
25
Relevance of International Business Environment
Central Issues in entering into international business -
Which market (s) to select? How to enter into those markets?- Decisions are strategic in nature and
influenced by the environmental forces.- Target markets should have enough
market potential.
26
Review How different political systems affect
the international business? What are the implications of political,
economical and legal differences among difference countries?
Differentiate between socialism and individualism.
Group discussion: Reading case CAMBODIA and answer the question.