Implications of environmental differences Relating to International Business

By:
Zeeshan Hussain
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Dharma

What is International Business?

International business consists of transactions that are devised and carried out across national borders to satisfy the objectives of individuals, companies, and

organizations.

Need for International Business

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 employment opportunities reallocates resources, makes preferential choices, and shifts activities to a global level 3

Types of International Business

Export-import trade Foreign direct investment

Licensing

Franchising Management contracts

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International Business Questions

How will an idea, good, or service fit

into 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 local conditions? What are the threats from global competitors, and how can these threats be counteracted?

Globalization
Because of globalization, for the first time in

history, the availability of international products and services can be accessed by individuals in many countries, from diverse economic backgrounds.

Global Links Today

International business has created a network

of global links that bind countries, institutions, and individuals with trade, financial markets, technology, and living standards.
For example, a reduction in coffee production in

Brazil would affect individuals and economies worldwide.

Recent Changes in International Business

Total world trade declined dramatically

after 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 world

trade is shifting.
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The Composition of Trade

Between the 1960s and the 1990s the

importance of manufactured goods increased while the role of primary commodities (i.e. rubber or mining) had decreased. More recently, there has been a shift of manufacturing 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

Political & legal

Political Change regime change through coup,

violence, etc. Change in government through democratic election can influence future business strategy.
e.g. the opportunities that are now available in Russia and Eastern Europe following the collapse of communism

Political Uncertainty in countries like Zimbabwe,

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Sudan, Venezuela. Political uncertainty can lead to a fall in investment by businesses and influence decisions on expansion and business ventures War/Terrorism create uncertainty Political Doctrine can affect the ease with which business is conducted

Economic
All these factors need to be considered in any global

business venture:
Tax Systems Investment Considerations and Allowances Sophistication of Financial Markets ease with which capital

can 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

The impact on the local Religious Considerations

environment not only affects human communities but can also inflict widespread ecological damage. This imposes social costs on the environment but also can cost the business large sums in legal costs and compensation.

appropriateness of some business ventures Impact on local communities of business development availability of jobs, training, environmental impact for these communities Impact on the environment can impact on the businesses image Ethical considerations Cultural issues

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