international business environment

INTERNATIONAL BUSINESS ENVIRONMENT

The environment of international business is the sum total all the external forces working upon the firm as it goes about its affairs in foreign markets. The environment can be classified in terms of domestic, foreign, and international spheres of impact. The foreign environment can be taken as those factors which affect when a MNC operate in other country. Generally those factors are different from domestic conditions. The important environmental factors can be classified in to four that as follows..

1. political or legal environment
2. economic environment
3. cultural environment
4. technological environment

1.POLITICAL ENVIRONMENT

political environment refers to the influence of the govt and judiciary in a nation on international business. a political system that is stable, honest, efficient, and dynamic and which ensures political participation to the people, and assures personal security to the citizens, is a primary factor of economic development.

political risk

corporates face many problems when they operating outside home country, these risk are known as political risk, that will adversely affect the business, these are as follows..

A. macro risks

1. expropriation of corporate assets without prompt adequate compensation
2. barriers to repatriation of profit
3. confiscation of properties
4. loss of technology and other intellectual property
5. campaign against foreign products
6. mandatory labour legislations
7. civil wars
8. inflation
9. currency devaluation

B.micro factors

1. terrorist attacks, kidnappings...
2. increased taxation
3. official dishonesty

2.ECONOMIC ENVIRONMENT

economic environment means the factors that affect international business such as inflation, economic growth, economic policies.... while investing another country a company should understand about economic condition of foreign nation.

3.CULTURAL  ENVIRONMENT

the culture of country and other country will be very different, while starting a new business in other country we must try to understand important cultural factors of country. this will help to increase companies market share. following are the important factors in culture..

1. language
2. religion
3. believe in superpower
4. sub culture
5. diversity in culture

4. TECHNOLOGICAL  ENVIRONMENT

the technology that used in domestic country can't be used in foreign country this will make problems for international business. in this situation we must use host country technologies.

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