PRESENTED BY : VAISHALI SHARMA LECTURER MBA-IB

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The fundamental basis for strategy formulation is the environmental analysis. Environment provides the opportunities to the business to produce & sell a particular product. For Ex: the present scenario the business environment provides the wide opportunity for Internet,touch screen mobile etc

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Environment means surroundings.IBE means the factors/activities those surround / encircle the international business. In other words , business environment means the factors that affect or influence that MNC¶s.

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The focus of IB is on international transactions , whereas IBM deals with managing such transactions within the boundary set by corporate strategy When a company decides to enter a foreign market that decision incorporates planning to establish the ways by which business functions ± Marketing, Accounting, HRM & so on are to be managed in that distinct location. Managing the various functions & coordinating them with the parent company¶s overall strategy is the task of IBM

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IBE INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT .

` Internal environment factors influence /affect the business from within. Management/leadership style. They include: Production management. ` Human resource Management Trade Unions Organization structure Financial management Marketing management ` ` ` ` ` ` .

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EXTERNAL ENVIRONMENT MICRO ENVIRONMENT MACRO ENVIRONMENT .

.` ` ` ` ` ` ` Competitors Customers Market intermediaries Suppliers of raw materials Bankers & other suppliers of Finance Shareholders Stakeholders of the business firm.

` Social & Cultural factors Technological factors Economic factors Political factors ` Governmental factors International factors Natural factors ` ` ` ` ` .

` Factors that affect IB includes: Social & Cultural factors (S) Technological factors (T) Economical Factors (E) Political & Governmental factors (P) International factors & Natural factors (N) ` ` ` ` ` .

` Culture is a thought and behavior patterns that member of a society learns through language and other forms of symbolic interaction. This knowledge forms values. creates attitudes & influence behavior. Acquired knowledge that people use to interpret experience & generate social behavior. ` .

Elements of Culture language Values & Attitudes Aesthetics Social Structure Education Customs & Manners Religion Verbal -written -oral Non-Verbal -Punctuality Physical Distance Kinesics Time Orientation -Relating with others -Attitudes & Posture -Gifts -Usage of Products -Attitudes towards entrepreneurship -Holidays -Gifting -Role of women -Products & Services -Marketing Practices .

` ` . Life time employment policy in most of the companies in Japan. Masala Dosa & Hyderabadi Briyani have become popular in Europe & the USA whereas Pizzas have become popular in India. it is not socially acceptable in India & it¶s socially & legally unacceptable in Saudi Arabia. It alcoholic drinks is acceptable in the West however.` Consumption of Alcoholic drinks is acceptable in the society.

of operational deviations like Disney¶s policy of serving . Later.` Disney with its success in park business & entertaining children in USA entered Japan in 1983 & became successful there too. despite these problems. Disney decided to enter Paris & France market too in 1986 owing to vocational advantage of Paris &availability of subsidies & incentives by French Govt. French farmers drove their tractors & blocked the entrance. Disney had problems of negotiations with France Govt & also unwillingness of French people to accept Disney. Disney opened the park in 1992.Soon after the opening . there were a no.

It result in the loss of $2 billion by the end of 1994 ` ` ` ` ` . of operational deviations like : Disney¶s policy of serving NO Alcohol Serving less quantity of breakfast Lunch timings Non-sutability of teamwork for the employees of Disneyland Paris.` Later. there were a no.

` It consists of religious aspects Language ` Tastes & Preference Social institutes Living habits Eating habits Dressing habits etc ` ` ` ` Customs ` ` Traditions ` ` Beliefs .

IB gained significance due to the amazing advancements of technology. ` ` . Technology is the application of knowledge. Technological changes enabled IB to take the shape transnational business through the concept of Global business.` One-up-on-a-time¶s illusion is getting into reality because of technology.

technological alliances.` Technology makes more technology. It is self reinforcing. It brings the globe closer. licensing & franchising. ` ` ` . JVs . It flows from the advanced countries to the developing countries through the MNC¶s .

COUNTRIES Australia China Japan New-Zealand Singapore India % of Spending on Tech. to total investment 15 12 14 13 6 11 .

SPENDING % R&D BUDGET ON PRODUCT INNOVATION 50% 30% 70% SPENDING % R&D BUDGET ON PROCESS INNOVATION 50% 70% 30% COUNTRY GERMANY JAPAN USA .` Advanced countries spends considerable amount on R&D for further advancement of technology.

it remained as a major importing country due to its low level technology before 1991. could export finished goods to India by importing the raw material from India itself. the Japanese became reach & advanced due to technology. ` ` .Japan with its high level of tech. The difference between the nations is mostly reflected by the level of technology. Thus though Japan is endowed with poor natural resources .` Technology is one of the significant factors which determines the level of economic development of a country. India had vast natural resources .

telecommunications and microelectronics Innovations in chemicals. steel.` Nations develop economically when they translate science into useful technology & in turn create wealth from innovations. Innovations is the useful adaption of science or knowledge including inventions of new products or processes. pharmaceuticals. medical instruments & machine tools Innovations in textiles & leathers JAPAN GERMANY ITLAY . automotive engineering . Process innovation In automobiles .

Totality of economic factors. ` .` The economic environment of various countries mostly & directly influences international business. such as ` ` ` ` ` ` ` Employment Income Inflation Interest rates Productivity Wealth That influence the buying behavior of consumers and firms.

` ` ` ` . the profits made by exporters and investors and employment levels (also through the impact on the tourism industry). Exchange rates: This impacts the price of imports. business investment. Monetary and fiscal policy: This helps in attaining full employment. Interest rates: Interest rates determine the cost of borrowing and the flow of money towards businesses. The economic environment is also influenced by various political. These include a change in government and the development of new technology and business tools. government programs and tax policies. price stability and economic growth. employment rates. This has a direct impact on consumer spending.` Inflation and deflation: Inflationary and deflationary pressures alter the purchasing power of money. social and technological factors.

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It differs with each country. . domestically & internationally. The IB manager should be aware of the political environment of the Host & Home country.` It influences the way a firm conducts its business.

Political system International political relations Relations between the government and the business Political stability .

in the country. Two ideologically opposing forms of government are ` Democracy Totalitarianism .` By political system we mean the type of Govt.

take part in decision making.fair judiciary system It is a system of government by an individual or a political party with no participation in the decision making by the citizens. directly or indirectly through elected representatives . Right to freedom of expression .e freedom of expression & regular elections are denied to them ` ` . All the constitutional rights to the citizens under democracy i. opinion & organization .Democracy ` Totalitarianism ` It is a system of Government in which people .

Communism Theocratic Tribal Secular .

TRIBAL AFRICA A political party that represents the interest of a particular tribe rules the country. It aims at equal distribution of wealth.Communism CHINA . owns all property & makes decisions regarding production & distribution of goods & services. party or group. CUBA & VIETNAM Govt. THEOCRATIC IRAN & SAUDI ARABIA It is rule of a religious leader . LAOS. NORTH KOREA . That tribe need not be the majority tribe in the country. SECULAR IRAQ The military controls the government and makes decisions .

` The political relations between two countries also determines the nature & extent of trade between the countries . .

permitting foreign firm to have business with the country or establishing operations in the country may be a means of achieving its objectives like increasing investments. .` For the Host country government .

` The major risk in political environment is political instability. ` . The policies framed by a Govt may be set aside by a subsequent government.

and which are used to segment the target population for effective marketing. marital status.` Demographic factors of the market in which a firm operates. death rate. such as age. ` Statistical socio-economic characteristic or variables of a population. education level. average size of a family. A census is a collection of the demographic factors associated with every member of a population. religion. income level. Gender. average age at marriage. birth rate. . occupation.

AGE STRUCTURE GENDER INCOME DISTRIBUTION FAMILY SIZE OCCUPATION EDUCATION SOCIAL CLASS RELIGION NATIONALITY .

.` Categorization of the population of communities or countries by age groups.

` Gender comprises a range of differences between men and women. .

. income distribution is how a nation¶s total economy is distributed amongst its population.` In economics.

Nuclear Joint .

` Status hierarchy in which individuals and groups are classified on the basis of esteem and prestige acquired mainly through economic success and accumulation of wealth. Four common social classes (in their descending order) are: ` Upper class Middle class Working class Lower class. ` ` ` .

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` Geographic Natural resources ` .

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