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uk

Global Factors Influencing

Business Strategy

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http://www.bized.co.uk

Global Factors Influencing

Business Strategy

Copyright 2007 Biz/ed

http://www.bized.co.uk

Strategy

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http://www.bized.co.uk

Strategy
Key strategic decisions relate to:
Access to international markets
Spotting new markets
Building exports

The extent to which the business will be

competitive in international markets
The effect on decision making of the
existence of trade blocs
Consideration on the necessity and
importance of acquisitions
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Trade Blocs
Trade Blocs influence the ease of access to
new markets and affect the relative costs of
trading in different regions of the world:
EU
NAFTA

Locating within a trading bloc could help to

reduce long term trading costs (e.g. Japanese
companies building plants in the UK to help
overcome exposure to the Common External
Tariff)
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International Growth
Growth not just through expansion of the size of the
firm but also through external growth:
Acquisitions mergers, takeovers
Multi-National Corporations global presence
Brings with it a range of issues for the business to
consider - PEST

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Factors

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Factors
Key factors influencing global
business strategy can be
summarised under the PEST
heading:
Political
Economic
Social
Technological
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Political
Political Change regime change through coup,
violence, etc. Change in government through democratic
election can influence future business strategy.
e.g. the opportunities that are now available in Russia and
Eastern Europe following the collapse of communism

Political Uncertainty in countries like Zimbabwe,

Sudan, Venezuela. Political uncertainty can lead to a fall
in investment by businesses and influence decisions on
expansion and business ventures
War/Terrorism create uncertainty
Political Doctrine can affect the ease with which
business is conducted

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Economic
All these factors need to be considered in any
global business venture:
Tax Systems
Investment Considerations and Allowances
Sophistication of Financial Markets ease with which
capital can 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

The impact on the local environment not only

affects human communities but can also inflict
widespread ecological damage. This imposes social
costs on the environment but also can cost the
business large sums in legal costs and
compensation.

Religious Considerations
appropriateness of some
business ventures e.g.
selling condoms in staunchly
Catholic countries
Impact on local communities of
business development
availability of jobs, training,
environmental impact for these
communities
Impact on the environment
can impact on the businesses
image
Ethical considerations
Cultural issues

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Technological
Availability and developments in technology
can have a powerful influence on global
business strategy:
e.g.
Access to bandwidth
PC ownership
Technology and sales processing payments and
sales
Compatibility of technologies in Business
Management accounting systems, language
differences, etc.
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