International Business

Environment
 Types of Environment

Micro Environment
Suppliers
Customers
Competitors- Industry analysis
Market Intermediaries
Human resource
 External environment

Macro Environment- Pestle Analysis

Political Environment
There are many different types of political
systems, for example, multi-party democracies,
two-party system, dictatorships (military & non-
military).
 Economic Environment

 Countries are often divided into three main categories: the more
developed or industrialized, the less developed or third world, & the
newly industrializing or emerging developing economies.

Stage of economic growth & the pace of growth.

Level of national & per capita income.
Incidents of taxes, both direct & indirect tax, Industrial policy.
Infrastructure facilities available & the difficulties thereof.
Availability of raw materials & components & the cost thereof.
Sources of financial resources & their costs.
Availability of manpower-managerial, technical & workers available &
their salary & wage structures
Exchange rate fluctuations
 Technological Environment:

Level of technological development in the country as

a whole & specific business sector.
The pace of technological changes & technological
obsolescence.
Restrictions & facilities for technology transfer &
time taken for absorption of technology.
Modes of technology transfer/ source of technology.
 Cultural Environment:

 The most well-known is that developed by Hofstede

in1980.
Individualism v/s collectivism is the degree to which a
nation values & encourages individual action & decision
making. China collectivist - US is individualistic
Uncertainty avoidance high or low - is the degree to which
a nation is willing to accept & deal with uncertainty. High
Greece, Singapore Low.
Power distance is the degree to which a national accepts &
sanctions differences in power. High Malaysia
Masculinity – Japan high, Sweden Low
 Factors of social and cultural environment

Social and cultural factors affecting business include

belief systems and practices, customs, traditions and
behaviours of all people in given country, fashion
trends and market activities influencing actions and
decisions.
 Legal & Natural Environment

Common Law- America, Canada countries.

Civil Law/ Codified Law- US, Europe
Sharia Law/ Theocratic - Muslim Countries

Natural Environment:
Prone to natural disasters
Norms related to natural resources
Wastemanagement norms
People attitude towards nature
Ease of Doing Business
Parameters On Ease of Doing Business
 Few Highlights

Procedures fully completed online and recorded

within minimum time of ½ day .
No professional fees unless services required by law
or commonly used in practice.
Time required for construction and water sewage
permissions maximum 30 days.
Electricity formalities 20 days MAX
Corporate tax around 29% of profits.
Processing international shipments 37 hours.
 QUIZ

 .1.Which is the right sequence of stages of Internationalization

 a. Domestic, Transnational, Global, International, Multinational

 b. Domestic, International, Multinational, Global, Transnational

 c. Domestic, Multinational, International, Transnational, Global

 d. Domestic, International, Transnational, Multinational, Global

 2. Which of the following cannot be a reason of political risk?

 a) change in the government

 b) civil war

 c) natural calamity

 d) change in external relations

Islamic banking is based on a set of laws collectively known as —
 a) Shariah

 b) Jihad

 c) Riba

 d) Ijma

 PEST analysis is:

 a) a broad framework to help managers understand the environment in which their business operates.

 b) a checklist to ask how political, economic, strategic or technological developments can influence an
industry and a company.
 c) a checklist for forecasting political, economic, strategic or technological factors.

 d) a framework for strategic analysis of internal and external environment.