Thursday, 19 December 2019

Unit 4: International Business Environment

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Unit 4: International Business Environment


Notes   Culture is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living.

The socio-cultural fabric is an important environmental factor that should be analysed while formulating business strategies.

The cost of ignoring the customs, traditions, taboos, tastes and preferences, etc., of people could be very high.

Society and culture influence every aspect of overseas business of an MNC and successful MNC operations – whether it is marketing, finance, production, or personnel – have to be acutely aware of the predominant attitudes, feelings and opinions in the local environment.

Given the rapid pace of technological change, it is vital that firms carefully study different elements in the technological segment.

The major challenges facing the international marketers today are coping with change, understanding complexity of the changing markets, dealing with competition and performing social responsibilities.

Majority of the MNCs have to face complex political environmental problems because they must cope with the politics of more than one nation.

In order to analyse the political scenario of the nations the companies must know the type of political system that exists in that nation.

As there is a multiplicity of political environment, there are various legal environments: domestic, foreign and international.

The most important characteristic of the international market environment is the economic dimension.

It includes the analysis of the world economic systems, development status of the countries, the purchasing power across nations and income of the population.


Absolutist Government: In this, the ruling government dictates the policies without considering citizens’ opinions.

Confiscation: Confiscation is the process of a government’s taking ownership of a property without compensation.

Counterfeiting: To make a copy of, usually with the intent to defraud.

Culture: Culture is, the thought and behaviour patterns that member of a society learns through language and other forms of symbolic interaction their customs, habits, beliefs and values, the common viewpoints, which bind them together as a social entity.

Gross National Product: It is the total value of all final goods and services produced within a nation in a particular year.

Parliamentary Government: In this, the citizens are consulted from time to time to know their opinions.

Purchasing Power Parity: It states that the exchange rate between one currency and another is in equilibrium when their domestic purchasing powers at that rate of exchange are equivalent.

Religion: Religion is one of the important social institutions influencing business.

A few religions have spread over large areas in the world.

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