Assessing the International Business

Environment – Political, Economic, Legal,

Cultural and Technological

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 The International Operations
Foreign- Environment
(Uncontrollable)
Economic
Cultural Forces
Forces Environment
Domestic- Environment
Uncontrollable
(Uncontrollable)
Country Market A
Competitive
Environment
Forces
Uncontrollable
Controllable (s)
Political/Legal Competitive Country Market B
Forces Structure
Price Product
Political/Legal Environment
Forces Promotion
Place
Uncontrollable
Country Market C
Level of
Economic Technology
Climate
Geography
and
Cultural
Infrastructure
Forces
Structure of
Distribution

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Political Environment
important aspects of the political
environment of international management
are:
*government stability,
*incentives for multinational trade,
*controls on international trade,
*the influence of economic communities on
international trade.
*Form of Government
*Foreign policy
*State companies
*Role of military
*Level of terrorism 3
 Economic Environment
• Economic system  Consumption pattern
• Stage of development  Infrastructure
• Economic stability  Inflation
• GNP
• Int’l financial standing
• Monetary/fiscal
policies
• Foreign investment

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Prentice Hall 2003 Chapter 1 5
 Legal Environment
• Legal system  Protection of intellectual
property
• Prevailing int’l laws – Patents, copyrights,
• Protectionist laws trademarks
– Paris convention for the
• Tax laws Protection of Industrial
Property
• Role of contracts
– TRIPS (WTO) Trade
• Protection for Related Aspects of
Intellectual Property
proprietary property
 Product safety and product
liability
– Product safety laws
– Criminal / civil liability

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 Cultural Environment
– Language  Values and national
• Low-context cultures cultures (Hofstede):
and high-context
cultures
– Power distance
– Interpersonal space – Uncertainty avoidance
– Time orientation – Individualism-
– Religion
collectivism
– Masculinity-
– Contracts and
femininity
agreements
– Time orientation

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How countries compare on Hofstede’s dimension
of national culture?

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 The Technological Environment

 Technoglobalism is the phenomenon in which rapid

developments in information and communication
technologies (ICTs) are propelling globalization and vice-
versa.
 An MNC’s major concern is the appropriability of
technology – that is, the ability of the innovating firm to
profit from its own technology by protecting it from
competitors.

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 Global E-Business

 E-business is “the integration of systems,

processes, organizations, value chains and entire
markets using Internet-based and related
technologies and concepts.”
 E-commerce refers directly to the marketing and
sales process
 The Internet and e-business provide a number of
uses and advantages in global business.

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 Geographical Factors
 Climatic Conditions
 Availability of RM/Resource
endowments
 Availability of Cheap labour
 Port Facilities
 Location aspects in the global context.
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