Factors Influencing IB_07.10.2011

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International business challenges


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Factors influencing the International Business :

Factors influencing the International Business

Group Members::

Group Members: Mohammad Mahbubur Rahaman; ID: 13-002 Bellal Hosen; ID: 10-021 Syed Shafayet-Uzzaman; ID: 11-009 Mamunur Rashid; ID: 13-019 Md. Enamul Haque; ID: 13-050 6- 2


Overview The political, legal, social, economic, and geographic environments affect the way a company operates and the amount of adjustment it must make to its operations in a particular country, such as how it produces and markets its products, staffs its operations, and maintains its accounts. In fact, the external environment may affect each function of the company. The amount of adjustment is influenced by how much the environments of home and host countries resemble each other. 6- 3

Various Influential Factors:

Various Influential Factors Physical and Societal Factors: >Political policies and legal practices >Behavioral factors >Economic forces >Geographical influences >Demography >Cultural factors Competitive Environment: 6- 4

Physical and Societal Factors:

Physical and Societal Factors Political Policies : Politics helps shape business world wide because political leaders control whether and how international business takes place. Political disputes, particularly those that result in military conflicts, can disrupt trade and investment. Even small conflicts can have far-reaching effects. For instance, bombing of a hotel in Indonesia led international tourists to divert their trips elsewhere and international investors to consider Indonesia to be a riskier place to put funds. Legal Policies: Domestic and international laws determine largely what the managers of a company operating internationally can do. Domestic laws includes regulations in both the home and host countries on such matters as taxation, employment and foreign-exchange transactions. International law may also determine how and whether companies can operate in certain locales. 6- 5

Physical and Societal Factors ------Continued:

Physical and Societal Factors ------Continued Behavioral Factors: The interpersonal norms of a country may necessitate a company’s alteration of operations. For instance, the host countries people’s social and mental development, ethics and behavior may force a company to determine its way of operation it practices in its own country. Economic Factors: Economic explains country differences in costs, currency values and market size. Economics explains, among other concepts, why countries exchange goods and services with each other, why capital and people travel among countries in the course of business, and why one country’s currency has a certain value compared to another’s. 6- 6

Physical and Societal Factors --Continued:

Physical and Societal Factors --Continued Geographical Influences: Natural conditions affect what can be produced where. Managers who know geography can better determine the location, quantity, quality, and availability of the world’s resources, as well as the best way to exploit them. The uneven distribution of resources results in different products and services being produced or offered in different parts of the world. Geographical barriers such as high mountains, vast deserts, and inhospitable jungles affect communications and distribution channels for companies in many countries. The probability of natural disasters and adverse climatic conditions such as hurricanes, floods, earthquakes, tsunamis, or freezing weather make it riskier to invest in some areas than in others. These factors also affect the availability of suppliers and the prices of products. 6- 7

Physical and Societal Factors --Continued:

Physical and Societal Factors --Continued Demography: Demography means the total number of population of any particular territory. They have a greater influence of any business operation. For example in a mass populated area demand of consumer products will be comparatively higher than any lesser populated area. So, we can say that demography has a direct impact on business environment. Because demand direct towards maximization of business. Cultural Factors: Cultural environment of a particular territory plays an important role in business. This includes the language, social norms, festivals, religion, ethics, lifestyles etc. 6- 8

Competitive Environment:

Competitive Environment The Competitive Environment: In addition to its physical and societal environments, each company operates within its competitive environment. The competitive environment varies by industry, company and country-and so, accordingly, do international strategies. The most common competitive factors in international business are as follows: Major advantage in price, marketing, innovation, or other factors Number and comparative capabilities of competitors Competitive differences by country 6- 9

The End:

The End Thank You For Your Kind Attention. 6- 10

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