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8/2/2019 Ibp Enviromental Factors
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Implications of environmental
differences Relating to
International Business
By:
Zeeshan Hussain
Dharma1
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What is International
Business?
2
International business consists of
transactions that are devised and carried out
across national borders to satisfy the
objectives of individuals, companies, and
organizations.
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Need for International
Business
3
International business: causes the flow of ideas, services, and
capital across the world
offers consumers new choices permits the acquisition of a wider variety
of products
facilitates the mobility of labor, capital,and technology
provides challenging employmentopportunities
reallocates resources, makes preferentialchoices, and shifts activities to a global
level
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Types of International
Business
4
Export-import trade
Foreign direct
investment
Licensing
Franchising
Management contracts
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International Business
Questions
5
How will an idea, good, or service fitinto the international market?
Should trade or investment be used to
enter a foreign market? Should supplies be obtained
domestically or abroad?
What product adjustments are
necessary to be responsive to localconditions?
What are the threats from globalcompetitors, and how can these threats
be counteracted?
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Globalization
6
Because of globalization, for the first time inhistory, the availability of international productsand services can be accessed by individuals in
many countries, from diverse economicbackgrounds.
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Global Links Today
7
International business has created a networkof global links that bind countries,
institutions, and individuals with trade,financial markets, technology, and livingstandards.
For example, a reduction in coffee production in
Brazil would affect individuals and economiesworldwide.
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Recent Changes in International
Business
8
Total world trade declined dramaticallyafter 2000, but is again on the rise.
The rate of globalization is accelerating.
Regionalization is taking place, resulting in
trading blocs.
The participation of countries in worldtrade is shifting.
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The Composition of Trade
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Between the 1960s and the 1990s the
importance of manufactured goodsincreased while the role of primary
commodities (i.e. rubber or mining) haddecreased.
More recently, there has been a shift ofmanufacturing to countries with emerging
economies. There has been an increase in the area of
services trade in recent years.
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Factors Influencing International
Business Key factors influencing global business strategy
can be summarised under the PEST heading:
Political & Legal
Economic
Social & Cultural
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Political & legal
11
Political Change
regime change through coup,violence, etc. Change in government throughdemocratic election can influence future businessstrategy.
e.g. the opportunities that are now available in Russia andEastern Europe following the collapse of communism
Political Uncertainty in countries like Zimbabwe,Sudan, Venezuela. Political uncertainty can lead to afall in investment by businesses and influencedecisions on expansion and business ventures
War/Terrorism create uncertainty
Political Doctrine can affect the ease with whichbusiness is conducted
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Economic
12
All these factors need to be considered in any globalbusiness venture:
Tax Systems
Investment Considerations and Allowances
Sophistication of Financial Markets
ease with which capitalcan be moved and raised
Commodity Prices oil, energy, metals
Monetary and Fiscal Policies interest rates, tax regimes,government aid
Internal Regulation and Bureaucracy
can be stifling! Exchange Rates
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Social & Cultural
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The impact on the localenvironment not onlyaffects humancommunities but can alsoinflict widespread
ecological damage. Thisimposes social costs onthe environment but alsocan cost the businesslarge sums in legal costs
and compensation.
Religious Considerations
appropriateness of somebusiness ventures
Impact on local communitiesof business developmentavailability of jobs, training,environmental impact forthese communities
Impact on the environmentcan impact on thebusinesses image
Ethical considerations Cultural issues