PPT-09-FACTORS-THAT-AFFECT-INTERNATIONAL-BUSINESS

FACTORS
THAT
AFFECT
INTERNATIO
NAL
BUSINESS
There are several factors that
affect International Business:
1. To be competitive as described by the
type and number of competitors,
locations and activities.
2. Distributive, where national and

international agencies provide for
distributing foods and services.
3. GNP, labor costs per unit, and personal
consumption expenditures that can impact the
company’s ability to do business.
4.Socio-economic characteristics and distribution of

human population.
5. Finance factors which are in the form of variable

interest rate, inflation, taxation.
6. Legal factors, where it involves the type of foreign and domestic law and must
be followed by a variety of international companies.
7. Physical, namely natural elements such as topography, climate and natural

resources.
8. Politics, the element of nationalism such as the nation’s political,

governmental, and international organizations.
9. Socio-cultural, such as attitudes, beliefs,
education, etc.
10. Labor or employment, namely the composition,

expertise.
11. Technology expertise and technical equipment

that affects how the sources are converted to
products.
• The economy in the country and abroad will
create a relationship of mutual influence
between one country and another, one of which
is in the form of exchange of goods and services
between countries.
• International business affects the economic

growth of a country, since all countries in the
international business compete (in one form or
the other) in terms of international markets.
CULTURE
ENVIRONMENT SOCIETY
GLOBALIZATION
ECONOMY POLITICS
• In the normal course, INTERNATIONAL BUSINESS is realized
when each and every country in the world would be
interacting with other countries in their respective vicinities.
Usually, the form of cooperation or interaction is trade
between, or better known as International Trade.
• Companies that are already engaged in a specific field in a
business in the country often try to expand their markets
abroad.
• Below are SOME OF THE CONSIDERATIONS THAT ENCOURAGE
WHY A COMPANY EXERCISE OR PLUNGE INTO
INTERNATIONAL BUSINESS ARE:
• A. THE PRODUCTS IN THE
COUNTRY IS ALREADY
EXPERIENCING SATURATION LEVEL
AND MAY HAVE BEEN
EXPERIENCING THE STAGE OF
DECLINE (DECLINE PHASE) WHILE
ABROAD IT IS GROWING.
B. THE POTENTIAL OF
THE INTERNATIONAL
MARKET IN GENERAL IS
MUCH MORE
EXPANSIVE THAN THE
DOMESTIC MARKET.
C. UTILIZING THE
CAPACITY OF THE
MACHINE ARE STILL
UNDER-UTILIZED, AS
OWNED BY A COMPANY.
D. COMPETITION IS
HAPPENING IN THE
COUNTRY, SOMETIMES EVEN
SHARPER WITH THE
PRODUCTS COMING FROM
ABROAD.
• E. DEVELOPING NEW
MARKETS (ABROAD) IS
AN ACTION THAT IS
EASIER THAN
DEVELOPING NEW
PRODUCTS (IN THE
COUNTRY)
• Companies entering the
international business in general
engage or involve themselves
gradually from the simplest
stage that does not contain the
risks to the stage of the most
complex and risky business that
is very high.
• AS FOR THE STAGE, IN

CHRONOLOGICAL ORDER ARE
AS FOLLOWS:
EXPORT
INCIDENTA
L
EXPORT
ACTIVE
(PURCHASIN
G)
SALES
LICENSE
FRANCHISI
NG
MARKETI
NG
ABROAD
PRODUCTIO
N AND
MARKETING
IN FOREIGN
COUNTRIES
• International business conducts business transactions
all over the world. These transactions include the
transfer of goods and services, technology, managerial
knowledge and capital towards the countries. It
involves exports and imports.
• 1. Accurate information
• 2. Timely information
• 3. The size of the international business
NATURE OF should be large
INTERNATION • 4. Market segmentation based on
AL BUSINESS geographical segmentation
• 5. International markets have more potential
than domestic markets
OBJECTIVES OF
INTERNATIONAL
BUSINESS
1. To achieve higher rate of profits

2. Expanding the production capacity
beyond the demand of the domestic
country
3. Severe competition in domestic market
4. Limited home market
5. Political stability vs. political instability
6. Availability of technology and
competent human resources
7. High cost of transportation
8. Nearness to raw materials
9. Liberalization and Globalization
10. To increase market share
REASONS FOR RECENT
INTERNATIONAL BUSINESS GROWTH
1. Expansion of technology
2. Business is becoming more global because transportation is quicker;
communications enable control from afar; transportation and
communications costs are more conducive for international
operations
3. Liberalization of cross-border movements
4. Lower government barriers to the movement of goods, services and
resources enable companies to take better advantage of
international opportunities
1. POLITICAL FACTORS
2. HIGH FOREIGN INVESTMENTS AND HIGH
COST
PROBLEMS IN 3. EXCHANGE INSTABILITY
INTERNATION 4. ENTRY REQUIREMENTS
AL BUSINESS 5. TARIFFS, QUOTA, ETC.
6. CORRUPTION AND BUREAUCRACY
7. TECHNOLOGICAL POLICY

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FACTORS

2. Distributive, where national and

4.Socio-economic characteristics and distribution of

5. Finance factors which are in the form of variable

7. Physical, namely natural elements such as topography, climate and natural

8. Politics, the element of nationalism such as the nation’s political,

10. Labor or employment, namely the composition,

11. Technology expertise and technical equipment

• International business affects the economic

• AS FOR THE STAGE, IN

1. To achieve higher rate of profits

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