FACTORS AFFECTING INTERNATIONAL BUSINESS

INTRODUCTION

Business decisions are influenced by two sets of factors

Internal factors (The Internal Environment) External Factors( The External Environment)

Business Environment presents two challenges to the enterprise

The challenge to combat the environmental threats Exploit the business opportunities

AN ORGANIZATIONS ENVIRONMENT

Industry Sector Competitors,

Industry size and Characteristics, Related Industries Socio-Cultural sector

Raw Materials Sector Suppliers, Manufacturers, Real Estate

Task Environment
Human Resources Sector Labor Market, Employment Agencies, Universities, Training Schools, Employees in Other Companies, UnionizationResources Sector Financial

Age, Values, Beliefs, Education, Religion, Work Ethic, Urban vs. Rural, Birth Rate
DOMAIN

Government Sector

Stock Markets, Banks, City, State, Federal Laws ORGANIZATION and Regulations, Taxes, Savings and Loans, Market Services, Court System, Sector Private Investors Economic Political Processes Conditions Technolog Sector y Sector Customers, Clients, Potential Users of Techniques of Recession, Unemployment Rate, Production, Science,Products and Services Inflation rate, Rate of Macro Research Centers, Investment, Economics, 3 Environment Automation, New Growth Materials

TYPES OF ENVIRONMENT
1)

2)

INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT

INTERNAL FACTORS

BUSINESS DECISION

EXTERNAL FACTORS

INTERNAL ENVIRONMENT
Important internal factors are 1) Value Chain

The value system of founders and those at the helm of affairs has important bearing on the choice of business, the organization, business policies and practices.

INTERNAL ENVIRONMENT
2) Management Structure and Nature The organizational structure, the composition of the Board of Directors, extent of professionalization of management etc. are important factors influencing business decisions. 3) Internal Power Relationship Factors like the amount of support the top management enjoys from lower levels and workers, share holders and Board of Directors have important influence on the decisions and their implementation. The relationship between the members of Board of Directors is also a critical factor.

INTERNAL ENVIRONMENT
4) Human Resources The characteristics of the human resources like skill, quality, morale, commitment, attitudes etc. could contribute to the strength and weakness of the organization. The involvement, initiative etc. of the people at different levels may vary from organization to organization. 5) Company Image and Brand Equity The image of the company matters while raising finance, forming joint ventures or other alliances, soliciting market intermediaries, entering purchase or sale contracts , launching new products etc.

INTERNAL ENVIRONMENT
OTHER FACTORS
1.
2. 3. 4.

Physical Assets and Facilities R&D and Technological Capabilities Marketing Resources Financial Factors

EXTERNAL ENVIRONMENT
Two Types a) Micro Environment

Consists of actors in the companys immediate environment, that affects the performance of the company. Consists of larger societal forces that affect all the actors in companys micro environment.

b)

Macro Environment

MICROENVIRONMENT

Also known as task environment and operating

environment
Include

The suppliers Marketing intermediaries Competitors Customers Publics

SUPPLIERS
Those

who supply the inputs to the company.

CUSTOMERS
Major

task of business is to create and sustain customers

COMPETITORS A firms competitors include not only the other firms which market the same or similar product but also all those who compete for the income of the consumers
Desire competition Brand competition Generic competition

MARKETING INTERMEDIARIES
Firms

that aid the company in promoting, selling and distributing its goods to final buyers. Vital links between the company and the final consumers.

PUBLICS
Any

group that has an actual or potential interest in or impact on an organizations ability to achieve its interests
E.g.

Media publics, citizens action publics, local publics

MACRO ENVIRONMENT
Consists of

larger societal forces that affect all the actors in companys micro environment-namely
the political economic, Socio-cultural forces technological, International & Natural.

POLITICAL & GOVERNMENT ENVIRONMENT

Has close relationship with the economic system and economic policy. In many countries regulations to protect consumer interests have become stronger. Some governments specify certain standards for the products to be marketed in the country; some even prohibit the marketing of certain products. Eg: In India, Advertisement of alcoholic product is prohibited. and the packages must carry injurious to health warnings

ECONOMIC ENVIRONMENT
It includes the structure of the economy, stage of development, level of income ,the distribution of income & assets. Important factors are:

Economic conditions Economic policies Economic systems

SOCIO-CULTURAL ENVIRONMENT

Major factors are:

the buying and consumption habits of people, their language beliefs and values, customs and traditions, tastes and preferences, Education

.E.g.:

Vicks Vaporub, the popular pain balm is used as mosquito repellent in some tropical countries

Language

problem.
e.g.

difference pose a serious

Colour

Preet-> Prestige for overseas market In Japanese, General Motors body by Fisher means Corpse by fisher

Blue:

feminine and warm in Holland ; but masculine and cold in Sweden Green: favourite in Muslim world; but represents illness in Malaysia
.

 White

indicates death and mourning in China and Korea while as it is a favorite color in Christian world and is the wedding dress of the bride. Red is the popular colour in communist countries but many African countries have a national distate for red colour. Maroon colour is very much like in Carribean countries.

FAMOUS GLOBAL MARKETING MISTAKES

An American T-shirt maker in Miami printed shirts for the Spanish market, which promoted the Pope's visit. Instead of "I saw the Pope " (el Papa); the shirts read,"I Saw the Potato " (la papa). Pepsi's "Come Alive With the Pepsi Generation" translated into "Pepsi BringsYour Ancestors Back From the Grave" in Chinese. The Coca-Cola name in China was first read as "Kekoukela", meaning "Bite the wax tadpole" or "female horse stuffed with.wax", depending on the dialect. Coke then researched 40,000 characters to find a phonetic equivalent "kokou kole ", translating into "happiness in the mouth.

TECHNOLOGICAL ENVIRONMENT
Technology includes the tools both machines & ways of thinking of technology. Technological developments may increase or decrease the demand for some existing products

INTERNATIONAL ENVIRONMENT
Particularly important for the industries directly depending on imports or exports and importcompeting industries Inflation, liberalization Major international developments have their spread effects on domestic business.

NATURAL ENVIRONMENT

Geological and ecological factors, such as natural resources endowments, weather and climatic conditions,, location aspects in the global context, etc., are relevant to business.

THANK YOU.