UNIT: 4 INTERNATIONAL BUSINESS ENVIRONMENT

Macro-Environment
Macro-environment is generally understood as the far environment (outside an organizations industry and markets)

Economic Factors
Economic factors affect the purchasing power of potential customers and the firm's cost of capital.
The following are examples of factors in the macro-economy:
1. Economic growth 2. Interest rates 3. Exchange rates 4. Inflation rate
3

 The economic environment consists of factors that affect consumer purchasing power and spending patterns Economic factors include inflation, income level and its distribution, unemployment, business cycles Changes in major economic variables have a significant impact on the marketplace.
4

Technological Factors
Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include: R&D activity Automation Technology incentives
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Social environment
It describes the characteristics of the society in which the organization exists. Literacy rate, customs, values, beliefs, lifestyle, demographic features and mobility of population are part o the social environment.

Socio-cultural Factors
Social factors include the demographic and cultural aspects of the external macroenvironment. These affect customer needs and the size of potential markets. Some social factors include: Health consciousness Population growth rate Age distribution Career attitudes 7 Emphasis on safety

Socio-Cultural Influences
Social environment is a demographic aspect. Demography concerns population size, family structure, age distribution. Important variables indicating consumer base on which marketing firms target. Changes in the demographic aspects can result in significant 8

Political environment
It comprises political stability and the policies of the government. Ideological inclination of political parties, personal interest on politicians, influence of party forums etc. create political environment. For example: Bangalore established itself as the most important IT centre of India mainly because of political support.

Legal environment
This consists of legislation that is passed by the parliament and state legislatures. Examples of such legislation specifically aimed at business operations include: The Trade mark Act 1969, Essential Commodities Act 1955, Standards of Weights and Measures Act 1969 and Consumer Protection Act 1986.

1. 2. 3. 4.

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