Group members

Muhammad

Wasif
Mubashir hussain
Arslan
Muqarab
Ahsan shahid

Topic

Explain how does political and economical

effect on decision of international managers

Muhammad Wasif

Managing in global
environment
Any

manager who finds himself in a

foreign country faces a lot of new
challenges . It is very difficult to
manage an organization in global
environment.
Challenges
The legal political environment
The economical environment

Economical environment

Managers in all sizes and types of

organizations are faced with the opportunities
and challenges of managing in a economical
environment, so it is important for a manager
to understand the economical environment.

Economical environment
The

totality of economic factors such

as employment ,income , inflation
,interest rate ,productivity and
wealth that influence the buying
behavior of consumer and institution
.

Economical environment
The

global manger must be aware of

economical issue when doing
business in other countries.
Basically there are three type of
economical environment .
Market economy
Command economy
Mixed economy

Economical envrionmnet

Economical environment
i.

Market Economy:
An economic system in which resources are
primarily owned and controlled by the private
sector.

Economical environment
ii.

Command Economy:
An economic system in which all economic
decisions are planned by a central
government

Economical environment
Mixed

economy
A mixed economy is a system in
which economic decisions are largely
depend on some mixture of market
and commend economics and public
and private ownership

 Mubashir

Hussain

Elements of the Economic

Environment
Gross

National Income (GNI)

Gross National Product (GNP)
Gross Domestic Product (GDP)

Elements of the Economic

Environment
Gross

National Income (GNI): the

income generated both by total
domestic production as well as the
international production activities of
national companies

Element of economical
enviorment
Gross

National Product (GNP):

the value of all final goods and
services produced within a nation in
a given year, plus the income earned
by its citizens abroad, minus the
income earned by foreigners from
domestic production

Elements of the Economic

Environment
Gross

domestic product (GDP):

the total value of all final goods and
services produced in a country in a
given year equal to total consumer,
investment, and government
spending, plus the value of exports,
minus the value of imports.

 Muqarab

Lodhi

Other Features of an
Economy
Productivity

productivity measures the efficiency

with which goods and services are
produced.
Unemployment
unemployment is a measures of the
number of workers who want to work
but to not have jobs.

Other Features of an
Economy
Inflation

inflation is a measure of the

increase in the cost of living.
Poverty
it is a condition in which a person or
community is deprived of or lacks
essentials for, a minimum standard
of living.

Other Features of an
Economy
Income

distribution
income distribution is a description
of the fraction of population that are
at various level of income.
Debt
the sum of total government
financial obligation .

 Arslan

Javed

POLITICAL
,
ENVIRONMENT

Political environment

Managers in a global organization must stay

informed of the specific laws in countries
where they run business

Political environment
For example:
Many large businesses have postponed
doing business in China because the
government controls what organization do and
how they do it. As Chinese consumers gain
more power, however, that attitude is likely to
change

WHY POLITICAL ENVIRONMENT

IS IMPORTANT TO MANAGER?
To

be successful, managers must learn to deal

with public institutions and non public
institutions in addition to market forces
Managers must learn to cope with varying
degrees of governmental intervention in
economic decisions, depending on the
countries in which a company is doing business
The political impact on IB activities is relatively
complex because the domestic political process
is subject to various influences & managers
must deal with different political process in
different countries

Ahsan Shaid

STEPS TO ESTABLISH AN
APPROPRIATE POLITICAL STRATEGIES
IDENTIFY

THE ISSUE : What is the specific

issue facing a firm protectionism,
environmental standards, workers right,
terrorism and etc.
DEFINE THE NATURE: Define the nature of
the politics issue
ASSESS THE POTENTIAL POLITICAL
ACTION of other companies and of special
interest groups who are the parties that are
affected and able to generate political
pressure? What are their strategies to be?

POLITICAL RISKS
Definition: Any change in the political
environment that can adversely affect
the value of the firms business. Or
directly effect on the multinational
profits and goals .
Examples political decision by
government leaders about taxes ,
currency values ,trade barrier ,wages

POLITICAL RISKS
Political risk are Divided into 3 categories:
1. Ownership risk, in which the property of a firm
is threatened through confiscation or
expropriation
2. Operating Risk, in which the ongoing
operations of a firm and or the safety of its
employees are threatened through changes in
laws, environmental standards, tax codes,
terrorism, armed insurrection and etc.
3. Transfer Risks, in which the government
interferes with a firms ability to shift funds into
and out of the country