7. Impact of Domestic Environment : Impact of Domestic environment on International business decisions are depicted under following 5 categories : (1) Economic Environment : • Type of home country Economy – Firms from developed and high-income countries. • Home country FDI policies – Countries foreign investment policies. • Home country investors/shareholders perception on foreign investment. • Home country firms profit profile during last few years. • Home country bank loan interest rate on firms foreign investment. • Stability of home country currency exchange rates. (2) Political Environment : • Home country government support on foreign investment by firms for international investment decisions. • Home country political stability to maintain …show more content…
• The nature of home country laws deal with the conduct of the firm in the domestic market and trade with third countries. • The difficulty in regulations of local laws related to doing business may give enhanced confidence in foreign business expansion. 8. Impact of Foreign Environment : Impact of foreign environment on International business decisions are depicted under following 5 categories : (1) Economic Environment : • The economic level of the foreign country based on per capita income/GDP. • The current level of inflation in the prospective country and what is its forecast. • Current exchange rates between home and host countries and possible future variations. • The long-term prospects for the host country’s economy, gross domestic product (GDP) per capita, and other economic factors. (2) Political Environment : • The host country government policies for easy FDI money transfer, and simplifying the permissions for construction of manufacturing facilities for foreign investors. • The supportive nature of the political atmosphere in host country to the foreign firm's investment, their business, the employment creation to the locals etc. have an impact on firms …show more content…
9. Impact of Global Environment : Impact of global environment on International business decisions are depicted under following 5 categories : (1) Economic Environment : • The impact of the economic conditions of the people of the entire world has a considerable effect on the business performance of the global firms. • The per-capita income of the people of the entire globe decides the business sustainability of the global firms in any country. • The natural and acquired endowments of the countries also in a continent also decides business opportunities and the profit structure of the international firms. (2) Political Environment : • The global political environment also affects the international business investment decisions of the firms due to the fact of the inter-dependent economy. • The process of globalization through decreased cross-border trade restrictions made the economy of the entire globe as inter-dependent. • The political unrest in any part of the world or any kind of natural or manmade distortion will affect the share market and GDP of the entire
This paper will discuss the five environmental factors that influence global and domestic marketing decisions that organizations must make. These five environmental factors are technology, demographics, government, culture and economics. Companies are affected differently by these factors depending on the industry they are in and the size of the organization. I will be using the Washington Plaza Hotel to illustrate how these environmental factors affect the hotel industry's marketing decisions. The Washington Plaza Hotel is a hospitality business located in Washington, DC. They offer services such as lodging, restaurant, bar, catering and meeting space rental. The Washington Plaza Hotel's major customer base is government, tourist, non-profit organizations, local businesses and some corporate clientele. Let's now take a look at how these environmental factors affect the marketing of the hotel.
Environmental – External environmental factors are forces or trends that can affect a business whether it is an opportunity, threat, or constraint. They can be divided into three interrelated subcategories of remote, industry, and operating environments. The remote environment includes factors beyond a company’s operating situation such as the economic, social, political, technological, and ecological factors. The industry environment includes factors that have more of a direct influence on a company’s business such as entry barriers, competitor rivalry, the availability of substitutes, and the bargaining power of buyers and suppliers.
When it comes to doing business internationally the decision making is more complex. There are many interactions between each country that need to be addressed. In order for a business to be successful in the international market they need to examine and analyze all the facets of their company. They need
Businesses play a significant role with the economies of all countries, whether developed or developing. It contributes to the welfare of the society through the satisfaction of needs, provides a source of livelihood to millions of people worldwide. Businesses do not operate in vacuums but operate within business environments. The events in the environment of a company have a direct effect on the success or failure of that company. According to Jain, Trehan and Trehan (2009), business environments can be categorized in two: (1) internal business environment; (2) external business environment. Institutions and organizations are usually in a position of controlling their internal business environment. By doing so, they gain the ability of affecting their institutional performance. On the contrary, it is difficult for a business to control the external environment; however, businesses can identify in advance the opportunities and threats presented by the external environment and take decisive actions to ensure its continued success (Jain, Trehan & Trehan, 2009; Goyal & Goyal, 2009).
Before conducting business in another country management collects information on different macroeconomic indicators, environmental issues, legal processes, political trends, and patterns of events that may have a bearing on the company. The underlying assumption is that the present pace of events determines the path of future developments. It is, therefore, advised that a company conducts an environmental scan to assess the overall attraction of the target environment in terms of potential benefits, costs, and risks. The focus of this paper is to compare the United States data and Zambia in critical areas of the global environment. Definitive areas discussed range from rates of unemployment and political risk. Understanding the status and condition characterizing these environmental attributes would enable businesspeople to predict future trends and prepare responses when conducting business in the Southern region of Africa.
Economic factors affecting negative or positive way the companies. The inflation and currencies rates have big influence.
No nation in the world is self-sufficient. Each involved at different levels of international business by selling what they produce, or acquiring what they lack. In the global world, the mutual dependencies between countries are called global interdependency. International business, importing - exporting goods, and international investments highly contribute to global interdependency. In recent years, the mutual dependencies between countries have shifted with the increase in global business. The explosion in international investment levels is attributed to many variables. Among these, the most important ones are developments in technology, developments in transportation, global competition, financial liberalization, freer borders, and business confidence.
An International Business Entrepreneur is affected by laws and regulations from many sources not only the laws of its home country or state. Of course, an International Business Entrepreneur must obey with the laws of the city, county, state, and nation that is considered its home or principal place of doing business. An International Business Entrepreneur must also comply with the laws and regulations of the host country or jurisdiction. If the host country is a member of a regional organizational structure, such as the European Community, these laws must also be observed.
1John D. Daniels and Lee H. Radebaugh, International Business: Environment and Operations (USA: Addison Wesley Longman, Inc., 1998), 181.
There are many factors that can affect the management in globalization of business, which are the multinational corporations, the difference in cultures, ethical issue, fair trade and the managerial styles.
The process of globalization allows the global market to include products and services from all the companies around the world, including all the investments that is across national borders. Indeed, many American companies have taken their merchandise, manufacturing and services to invest in other countries. However, this has produced a negative effect in the global economy. The American companies
Environmental factors affect an organisation in 2 ways. They set limits and pose threats and they also provide opportunities and challenges. A change in the government export policy may suddenly threaten an export oriented organisation. A reduction in the rate of interest may provide cheap finance to an organisation.
International Factors:- Factors such as political, cultural and social factors may vary from country to country. These differences in factors and development in countries outside the organizations home country effects the organization tremendously. For example if there is even a slight change in the currency value of the country from where the organization purchases its resources like raw material, etc. causes a great impact in the company’s overall profit and loss.
Stonehouse, G., Campbell, D., Hamill, J. & Purdie, T. (2004). Global and Transnational Business (2nd ed.). Chichester: John Wiley & Sons.