Introduction

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Lo c al an d In ter na tional
Describe th e
ne ss E nv iro n m en t of F ir m
B usi
 LOCAL BUSINESS
ENVIRONMENT
Studying the local business environment involves the use
of industry analysis, which can be done using Porter’s
Five Forces Model. This model identifies the five factors
or forces that affect competition in an industry.
 Porter’s Five Forces
Industry competition: Model
This force refers to the level of competition within the industry. It considers
the number of existing competitors and what each one can do.

Threat of new entrants:

This force analyzes how easy or difficult it is for competitors to join the marketplace.
Bargaining power of suppliers:
This force analyzes how much power a business’s supplier has and how much control it has
over the potential to raise its prices, which, in turn, lowers a business’s profitability.

Bargaining power of buyers:

This force analyzes to what extent the customers are able to put the company under pressure,
which also affects the customer’s sensitivity to price changes.
Threat of substitute products or services:
This force studies how easy it is for consumers to switch from
a business’s products or services to that of a competitor.
Components of the local business environment:

Policies and strategies for economic and business

development
Local laws and regulations that govern business
activities
Institutional arrangements for dialogue between council
and the business sector and other relevant actors
Types of Local businesses:
Local businesses are those that operate within a specific
geographic area
They can be anything from restaurants and coffee shops
to car repair shops and grocery stores
Local businesses can be locally owned or corporate
businesses with multiple locations operating in a specific
area
Benefits of the Local Business Environment:

Local businesses know their consumer base, as they were

created in a specific region to do a specific thing.
Local governments can create better, more dynamic, and
competitive business environments in which local
businesses thrive.
Building a strong local cluster improves company
productivity and growth while raising regional
competitiveness.
 INTERNATIONAL BUSINESS
ENVIRONMENT

The international business environment is a complex

and ever-changing landscape that continues to shape
the future of global trade. It consists of external and
internal factors that impact a company’s success or
failure in different markets.
The international business environment is influenced
by a variety of internal and external factors.

Internal factors are elements that come from within or are

under a company's control, such as human resources,
organizational structure, culture, management style, and
physical and technological resources.

Some examples of internal factors that can impact a

company's success include employee morale, management
changes, and culture changes.
External factors are elements that come from outside the
company and impact its ability to do business, such as
political, economic, sociocultural, technological,
environmental, and legal factors.

external factors such as competition, economic climate, political

and legal environment, technological advances, and major global
events can also affect a company's performance.
Components of the International Business Environment:

Economic factors: GDP growth rates, inflation, currency exchange

rates, and trade barriers.
Political factors: Political risks, geopolitical tensions, and government
regulations.
Legal factors: Laws and regulations that govern international trade,
including intellectual property rights, labor laws, and environmental
regulations.
Cultural factors: Differences in language, customs, and values that can
affect business practices and communication.
Technological factors: Advances in technology that can create new
opportunities or disrupt existing industries.
Types of the international business environment:

Licensing: A company allows another company to use its intellectual property in

exchange for a fee.
Franchising: A company allows another company to use its business model and
brand in exchange for a fee.
Joint venture: Two or more companies form a partnership to pursue a specific
project or business opportunity.
Cross-border trade: Companies buy and sell goods and services across national
borders.
Foreign direct investment (FDI): Companies invest in and operate businesses in
foreign countries.
Benefits of the international business environment:

Increased exposure to global markets and

customers.
Opportunities for growth and expansion.
Access to new technologies and resources.
Increased innovation and flexibility.
Improved efficiency and productivity.
Understanding both the local and international
business environment is essential for firms to
create strategies for competition and
improvement. Awareness of the local and
international business environment creates a
competitive advantage for the business or
organization
Introduction
AboutUs

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