International-Business-Dr-R-Chandran-E-book

9. Infrastructural and
10. Labour.
34
International Business- Dr. R. Chandran
An organization can overcome the effects of all the risks by taking into
account the different environmental factors.
Since the home environment is known, one can understand and overcome
the pitfalls in the event that any action goes wrong. The international
business related environments vary from continent, country to country and
even from region to region. A detailed and comprehensive analysis of such
fast changing environment is essential for formulating business strategies.
Even well known companies with financial power, advance technology and
an efficient management team have failed in other countries. Examples are
the Enron project which did not take off in India; American style of
managing a sales force which never worked for Procter and Gamble in
Japan; the multilayer marketing technique of Amway, which did not work in
South Korea and Kentucky Fried chicken and McDonald’s hamburgers,
which failed in Brazil and Tashkent respectively. Thus, it is important for a
company to have an international team to design strategies to suit varying
environments of different countries.
In this chapter we discuss the environmental factors relevant to international
business. The economic environment, political environment, cultural
environment, technological environment, legal environment and competitive
environment play a vital role in determining an international business
operation. Certain environments are quite conducive to a company at the
time of entry and later on they may pose major challenges. Argentina
attracted huge investments before 2000. After 2002, they became
detrimental to innumerable organizations. Hence environmental factors
could be stimulant or detrimental. If it is stimulant, the business will
flourish. But if it is detrimental, then the company has to be cautious.
ECONOMIC ENVIRONMENT:
The economic environment can be classified into three categories:
a) Economy in the home country
b) Economy in the host country
c) Economy at a global level.
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