International Business Environment

Strategy: A method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem.

The art and science of planning and marshalling resources for their most efficient and effective use.

Importance of Strategy in International Business: The businesses should not only know about their customers but also: a) Competition b) Government Policies c) Regulation d) Macro Economics e) Social forces f) Political forces

Internal Environment: Mission and mission of the firm, attitude and capabilities of the management, organizational structure, decision making capabilities and capacities etc

There are three different sets of External Environment: a) Domestic: The environment that exists in the Home Country b) Foreign: The environment related to foreign market. The nature of the components of the business environment may differ according to the difference in the markets. c) Global: It refers to the global factors like WTO/agreements between nations, FTA, regional blocks, cartels etc.

Political Environment: The political environment is one of the less predictable elements in an organisation's business environment. The fact that democratic governments have to seek reelection every few years has contributed towards a cyclical political environment.

It is important for organisations to monitor their political environment, because change in this environment can impact on business strategy and operations in a number of ways: The stability of the political system affects the attractiveness of a particular national market. Governments pass legislation that directly affects the relationship between the firm and its customers, its suppliers and other firms. Governments see business organisations as an important vehicle for social reform. The government is additionally responsible for protecting the public interest at large. The economic environment is influenced by the actions of government. Government is itself a major consumer of goods and services. Government policies can influence the dominant social and cultural values of a country.

Economic Environment: Factors considered here are: Scope of Business, Business Prospects and Business Strategy. The nature and development of the economy, economic resources, size of the economy, economic policies and conditions, per capita income etc.

Developed Economy: common criteria for evaluating a country's degree of development are per capita income or gross domestic product (GDP), level of industrialization, general standard of living and the amount of widespread infrastructure. Emerging Market Economy: A nation's economy that is progressing toward becoming advanced, as shown by some liquidity in local debt and equity markets and the existence of some form of market exchange and regulatory body. Developing Economy: A developing country, also called a less-developed country (LDC), is a nation with a low living standard, underdeveloped industrial base, and low Human Development Index (HDI) relative to other countries.

Growing power of developing countries Economic Policies Regional Powers

Socio-Cultural Environment: Religious aspects Language Customs Traditions and beliefs Buying and Consumption Habits

Culture:Culture refers to the cumulative deposit of knowledge, experience, beliefs, values, attitudes, meanings, hierarchies, religion, notions of time, roles, spatial relations, concepts of the universe, and material objects and possessions acquired by a group of people in the course of generations through individual and group striving. Organization Culture: The values and behaviours that contribute to the unique social and psychological environment of an organization.

It includes an organization's expectations, experiences, philosophy, and values that hold it together, and is expressed in its self-image, inner workings, interactions with the outside world, and future expectations. It is based on shared attitudes, beliefs, customs, and written and unwritten rules that have been developed over time and are considered valid.

Demographic Environment: Demographics are the quantifiable statistics of a given population. Demographics is also used to identify the study of quantifiable subsets within a given population which characterize that population at a specific point in time. Important Demographics bases of market segmentation include:

Age Structure Gender Income Distribution Family Size Family Life Cycle Occupation

Education Social Class Religion Race Nationality

REGULATORY ENVIRONMENT Business Policies and Regulations: Mainly divided into three: International laws, treaties, conventions etc. Laws of foreign countries Law of home country

Natural Environment It is the source and support of everything used by businesses: every raw material, every energy source, every life sustaining factor including waste disposal site. The natural environment determines what can be done in a society and how institutions can function

Technological Environment: UNCTD's draft TOT code defines technology as systematic knowledge for the manufacture of a product, for the application of a process or for the rendering of a service and does not extend transactions involving mere sale or lease of goods or services. Technology not only includes knowledge or methods that are necessary to carry on or to improve the existing production and distribution of goods and services but also entrepreneurial expertise and product know how