M

B International
A Business
2
0 Management
7

Rhocel T. Tolenada
 What is an International Business
Environment ?
An international business environment refers to
the surrounding in which international companies
run their businesses. Therefore, it is mandatory
for the people at the managerial level to work on
the factors that comprise of International
Business Environment.
 Advantages of International Business Environment

The advantages are discussed below:

 Helps in expanding the business,

 Exposure to more customers

 Helps in the proper management of the product life cycle and

 Helps in mutual growth.

 Internal
Environment
Internal Environment is that part of the
business environment which is concerned
with the different factors present within the
organization. It comprises of conditions,
forces, members and events which has the
capability to influence the company’s
decisions and operations. It determines the
procedures and methods in which activities
are carried out in the organization, as well as
it includes all of the immediate and
information resources, such as technical,
financial and physical resources of the
organization.
 Factors in Internal
Environment
• Value System
• Vision, Mission and Objectives
• Management structure and Internal Power
Relationship
• Human Resource
• Tangible and Intangible Assets
 External Environment
External Business environment comprises of all the extrinsic factors, influences,
events, entities and conditions, often existing outside the company’s boundaries
but they have a significant influence on the operation, performance, profitability
and survival of the business enterprise.
For the purpose of continuous and uninterrupted functioning of the business, the
enterprise has to act, react or adjust according to the two factors:
MICRO ENVIRONMENT The elements of the external
- can be defined as the forces in environment are divided into
two categories:
the firm’s immediate environment
which directly influence the firm’s
decisions and operations.

MACRO ENVIRONMENT
- It consists of broader forces
which affect the firm as well as
the other forces in the firm’s
micro environment.
Micro Environment
Otherwise called as task environment, these factors directly influence the
company’s operations, as it covers the immediate environment that surrounds the
company. The factors are somewhat controllable in nature. It includes:

- Competitors - Shareholders

- Suppliers - Employees

- Customers - Media

- Intermediaries
Macro Environment
Otherwise called as general environment, macro environment affects the entire
industry and not the firm specifically. That is why these factors are completely
uncontrollable in nature. The firm needs to adapt itself according to the changes in
the macro-environment, so as to survive and grow. It includes:

- Economic - Cultural

- Political and Legal - Demographic

- Technological
Economic Environment
It encompasses all the factors that make a
country attractive to foreign companies. Like the
political environment, different countries can
have different economic environments. We can
classify countries as developed, developing or
less developed countries in terms of economic
growth.
 Political and Legal Environment

The political and legal environment consists of the

laws, rules, regulations and policies which the
company needs to adhere. The changes in these laws
and government may affect the company’s decisions,
open doors of new opportunities for the business or
pose a threat to the business.
 Socio - Cultural Environment

Socio-cultural environment consist of those factors which are

concerned with human relationships such as customs,
traditions, beliefs, values, morals, tastes and preferences of the
society at large. The company must consider these factors on
various matters such as the hiring of employees, advertising the
product and service, decision making etc.
 Demographic Environment

As the name suggests, the demographic environment

covers the size, type, structure, education level,
and distribution of population in a geographical
area. The knowledge of this environment will help
the firm in deciding the optimal marketing mix for
the target population.
 References
https://enterslice.com/learning/international-business-environment-ibe/

https://www.legalraasta.com/blog/international-business-environment/

https://keydifferences.com/difference-between-internal-and-external-environme
nt.html

https://cleartax.in/s/international-business-environment#:~:text=An%20Internati
onal%20Business%20Environment%20(IBE,and%20growth%20of%20a%20countr
y
.

https://efinancemanagement.com/international-financial-management/internati
onal-business-environment?fbclid=IwAR1v91YwN67ZOk5xotGwmfcdwSNaI9xr2Q
zcjY8_z0lXsLwJwUvXYgoNKg4