ibp enviromental factors

8/2/2019 Ibp Enviromental Factors

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Implications of environmental

differences Relating to

International Business

By:

Zeeshan Hussain

Dharma1


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What is International

Business?

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International business consists of

transactions that are devised and carried out

across national borders to satisfy the

objectives of individuals, companies, and

organizations.


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Need for International

Business

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International business: causes the flow of ideas, services, and

capital across the world

offers consumers new choices permits the acquisition of a wider variety

of products

facilitates the mobility of labor, capital,and technology

provides challenging employmentopportunities

reallocates resources, makes preferentialchoices, and shifts activities to a global

level


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Types of International

Business

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Export-import trade

Foreign direct

investment

Licensing

Franchising

Management contracts


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International Business

Questions

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How will an idea, good, or service fitinto the international market?

Should trade or investment be used to

enter a foreign market? Should supplies be obtained

domestically or abroad?

What product adjustments are

necessary to be responsive to localconditions?

What are the threats from globalcompetitors, and how can these threats

be counteracted?


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Globalization

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Because of globalization, for the first time inhistory, the availability of international productsand services can be accessed by individuals in

many countries, from diverse economicbackgrounds.


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Global Links Today

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International business has created a networkof global links that bind countries,

institutions, and individuals with trade,financial markets, technology, and livingstandards.

For example, a reduction in coffee production in

Brazil would affect individuals and economiesworldwide.


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Recent Changes in International

Business

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Total world trade declined dramaticallyafter 2000, but is again on the rise.

The rate of globalization is accelerating.

Regionalization is taking place, resulting in

trading blocs.

The participation of countries in worldtrade is shifting.


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The Composition of Trade

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Between the 1960s and the 1990s the

importance of manufactured goodsincreased while the role of primary

commodities (i.e. rubber or mining) haddecreased.

More recently, there has been a shift ofmanufacturing to countries with emerging

economies. There has been an increase in the area of

services trade in recent years.


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Factors Influencing International

Business Key factors influencing global business strategy

can be summarised under the PEST heading:

Political & Legal

Economic

Social & Cultural


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Political & legal

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Political Change

regime change through coup,violence, etc. Change in government throughdemocratic election can influence future businessstrategy.

e.g. the opportunities that are now available in Russia andEastern Europe following the collapse of communism

Political Uncertainty in countries like Zimbabwe,Sudan, Venezuela. Political uncertainty can lead to afall in investment by businesses and influencedecisions on expansion and business ventures

War/Terrorism create uncertainty

Political Doctrine can affect the ease with whichbusiness is conducted


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Economic

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All these factors need to be considered in any globalbusiness venture:

Tax Systems

Investment Considerations and Allowances

Sophistication of Financial Markets

ease with which capitalcan be moved and raised

Commodity Prices oil, energy, metals

Monetary and Fiscal Policies interest rates, tax regimes,government aid

Internal Regulation and Bureaucracy

can be stifling! Exchange Rates


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Social & Cultural

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The impact on the localenvironment not onlyaffects humancommunities but can alsoinflict widespread

ecological damage. Thisimposes social costs onthe environment but alsocan cost the businesslarge sums in legal costs

and compensation.

Religious Considerations

appropriateness of somebusiness ventures

Impact on local communitiesof business developmentavailability of jobs, training,environmental impact forthese communities

Impact on the environmentcan impact on thebusinesses image

Ethical considerations Cultural issues

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