Session 6: Global Micro And Macro

Environment.
MGT 3403_International Business Management
Batch 20.2/20.3
Ms. Dilki Hansika
Department of Management

NSBM Green University - Department of Management 1

Impact of Global Environment
on International Business
Global Micro and Macro Environment
 INTERNATIONAL BUSINESS
Business that is primarily
based in a single country but
acquires some meaningful
share of its resources or
revenues (or both) from other
countries.
International businesses are operating across nations other than
their home country.
Global Micro And Macro
Environment
Global Micro Environment
Customers
Around the world in different countries.

• Localization of Products and Services

• Multilingual Customer Support
• Currency and Payment Flexibility
• Cultural Sensitivity and Marketing
• Compliance with International Regulations
Employees
• The employees who are working in
international businesses are coming from
different countries.
• They may belong to different diversified
groups.

• Cultural Sensitivity Training

• Multilingual support
• Flexible work arrangements
• Cross Cultural Collaboration projects
Competitors
• May be domestic competitors and international
competitors

• Pricing pressure
• Innovation race
• Markert Entry strategies
• Consumer experience
• Regulatory Compliance
• Brand and Marketing strategies
Suppliers
• Inputs may be received from suppliers in different
countries.
• Do not want to depend on domestic suppliers and
can obtain the advantage of cost and quality.

• Supply Chain Efficiency

• Cost effectiveness
• Quality and innovation
• Environment and ethical practices
•
Global Macro Environment
Social & Demographical Environment

Globalization of Human Capital

Increasing trend in the
offshoring of
manufacturing jobs and
outsourcing of white-
color jobs
Why Offshoring Manufacturing
jobs are increasingly important
for International Businesses.
• Cost Reduction
• Access to Skilled Labor
• Increased Productivity
• Extended operating hours
• Tax Benefits
• Environmental Consideration
• Competitive Advantage
Natural Environment

Business Sustainability
Increasing trend of
International
Businesses are
engaging with
sustainability practices
Sustainability Practices of International
Business
• Supply Chain Sustainability
• Energy Efficiency
• Waste Reduction
• Fair Labor Practices
• Local Community Engagement
• Sustainable Product Innovation
• Collaboration with NGOs and
government
Sustainability Practices of International Business -
Examples Companies have different strategies to act sustainability
• Apple
• Apple has made it their goal to reduce carbon emissions and to partner with companies that
share similar values. They use mostly aluminium instead of other materials because it produces
lower emissions. Also, twenty-three of their partners are committed to 100% renewable energy
• IKEA
• All of us already love IKEA, but you will even more after you hear that their products are made
to cut back on people’s use of energy and water. They manufacture products using sustainable
materials and 91% of their waste is recycled or incinerated into energy.
• Unilever
• Unilever controls big brands, such as; Dove, Lipton, Axe, etc. and has been making tremendous
environmental efforts. They plan to cut their carbon emissions in half by 2030 by encouraging
sustainable growth.
• Looking to make your business or workplace more sustainable? Here are some ideas you can
implement in your office:
• Donate a portion of earnings to environmental efforts or environmental non-profits.
• Reduce carbon emissions.
• Recycle! Or even better, create a zero-waste plan.
• Manufacture products from sustainable materials or recycled products.
• Use energy-efficient products.
 Political Environment

Terrorism • Security Concern

• Employee safety
• Supply Chain
Disruptions
• Reputation Damage
• Increase the insurance
Cost
• Consumer behavior
• Trade and Investment
risk
Typical Political Risks
• Nationalization - the transfer of a major branch of industry or
commerce from private to state ownership or control.
• Terrorism
• Macro-political risk event - Macro risk is a type of political risk that
can impact all businesses operating within a country. Macro risk
can be political in nature or caused by macroeconomic factors
outside of government control. Common examples of macro risk
include changes in monetary policy, shifts in the regulatory or tax
regime, and political or civil unrest.
• Micro-political risk event - Micro risk is a type of political risk that
refers to actions in a host country that can adversely affect selected
foreign operations of a company that does business internationally.
Managing Terrorism
Risk
• Develop a benevolent image (IBM and
Exxon).
• Maintain a low profile and minimize
publicity.
• Using teams to monitor terrorist
activities
• Hiring counterterrorism consultants
 Economic
Environment Categories of
Economic Risk
• Loss of profitability due to abrupt
changes in monetary and fiscal policies
• Loss of profitability due to changes in
foreign investment policies
• Risk of currency exchange rate
• Example: devaluation of peso in
1990s
Legal Environment

Types of Legal Systems Approaches to Contract Law

• Common law • Common law: details must be
• Civil law written in the contract to be
enforced
• Islamic law
• Civil law: assumes promises will
be enforced without specifying
the details
• In Asia the contract may be in
the relationship, not on the
paper
Legal Environment
• Consists of the local laws
and legal systems of those
countries in which an
international company
operates and of
international law, which
governs relationships
between sovereign
countries
• About initiating the
business, Environment,
labor relations,
taxation etc.
Technological
Environment
• The appropriability of technology
• The International Convention for the Protection of
Industrial Property (the Paris Union)
• Inappropriate use of technology by others
• Appropriateness of technology for the local
environment
Global E-Business
• E-business
• Global e-Business is intended for individuals hoping to work adequately in the Global Business Environment
and to oversee or lead either the change of existing business forms or the formation of new e-business
action.
• E-commerce
• Global ecommerce is the selling products or services across geopolitical borders from a company’s country of
origin, normally defined as its founding or incorporating location. Products or services are sold into non-
native markets via online sales and marketing.
• B2B – Business to Business
• It is a form of transaction between businesses, such as one involving a manufacturer and wholesaler, or a
wholesaler and a retailer. Business-to-business refers to business that is conducted between companies,
rather than between a company and individual consumer.
• B2C – Business to Customer
• It refers to the process of selling products and services directly between a business and consumers who are
the end-users of its products or services. Most companies that sell directly to consumers can be referred to
as B2C companies.
The Impact of the Information Technology

Making Geographic barriers less Lowering cultural barriers Encouraging convergence of

relevant consumers’ tastes and
preferences