NCRDs Sterling institute of management

Five factor of environment in international business

presented To Prof R.K Srivastava

Presented by Rajesh yadav C-58

BUSINESS ENVIRONMENT
An uncontrollable environment will negatively affect any organizations efforts whatever they might be. You need to have a heavily structured method and environment to process information into relevant bits for each department to produce results. Team environments are the backbone of any organization. Nothing can work without a collaborative effort on all departments.

POLITICAL ENVIRONMENT
Political environment has a very important impact on every

business operation no matter what its size, its area of operation. The most crucial & unavoidable realities of international business are that both host and home governments are integral partners. International law recognizes the right of nations to grant or withhold permission to do business within its political boundaries and control its citizens when it comes to conducting business. A change in the government does not always mean change in the level of political risks.

SOCIOCULTURAL ENVIRONMENT
Humans essentially create their own cultural and

social environment. The increasingly competitive international business environment calls upon exporters to tailor or adapt their business approach to the culture and traditions of specific foreign markets. The task of adjusting to a new cultural environment is probably one of the biggest challenges of export marketing. For example, the Marlboro Company

TECHNOLOGY ENVIRONMENT
The business in a country is greatly influenced by the

technological development. The technology adopted by the industries determines the type and quality of goods and services to be used. Advances in technology may also cause relocation of production. Technological environment of the use facilities etc. also have very important implication for business.

FOR EXAMPLE
In many developing countries, including India, the TV arrived very late. Although the color TV had become quite common in the advanced and even in some developing countries when the telecast started in India, in the early period there was only black and white telecast. The cable TV came to India only by about the beginning of the 1990s. The late introduction and the slow expansion of the telecast affected not only the TV business but also the advertising industry and product promotion.

ECONOMIC ENVIRONMENT
Economic environment refers to the aggregate of the nature of economic system of the country, the economic policies of the government, the organization of the capital, the nature of factor endowment, business cycles, the socio-economic infrastructure etc. The successful businessman visualizes the external factors affecting the business, and makes suitable to get the maximum with minimize cost.

ECONOMIC ENVIRONMENT
Income distribution & discretionary income
Productivity: unit labour costs and labour

compensation costs. Major international debtors Inflation, interest rates, availability of credit

LEGAL ENVIRONMENT
Legal environment includes flexibility and adaptability of law and other legal rules governing the business. It may include the exact rulings and decision of the courts. These affect the business and its managers to an extent.

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EXAMPLE OF LEGAL ENVIRONMENT

In 1992, the Supreme Court ordered the closure of a number of tanneries in Kanpur as they were polluting Holy Ganga.

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