MMC-PPT-001-C
International Business
And Trade
Week 2
The Challenging Context of International Business
Presentors
Aguillon
Apid
Bagamasbad
BELMONTE
Arelas
Belmonte
• Identify key aspects of cross-border transactions.
.
• Recognize how external and internal forces affect
international business.
.
• Understand the impact of cultural, economic, and legal
factors on global operations.
BELMONTE
It involves cross-border transactions of goods and
services between two or more countries.
This lesson explores at how factors like culture, economy,
and laws, along with domestic and foreign environments,
affect international business and global trade.
BELMONTE
International Business involves transactions between
entities from different countries, including:
.
• Importing and exporting products and services
• Developing global strategies for distribution,
management, and marketing.
International Business differs from domestic business in that it requires
adapting to various cultures, complying with diverse regulations, navigating
global economic factors, addressing regional market differences, and
managing complex logistics and supply chains.
BELMONTE
The Influence of
External and Internal
Environmental
Forces
Competitive forces refer to the emergence of new
competitors in the market and the growth rate of the market.
This can lead to intensified competition in international
markets.
For example, the appearance of Less Developed countries
(LDCs) based firms in the markets of other developing nations
APID
Distributive forces refer to the channels of distribution. Management
can choose channels, but generally, they must select channels from
those that are available.
The stage of economic development determines the wholesaling and
retailing structures. For instance, in less developed countries, the
more numerous, specialized, and smaller the middlemen, whereas in
developed countries, there is a trend towards a concentration of
wholesalers and retailers.
APID
Internal Forces:
• Financial Strength: Impacts international expansion and risk management.
• Resource Allocation: Efficient distribution of resources is crucial for meeting
market demands.
• Cost Management: Controls expenses and improves profit margins.
• Pricing Strategies: Adapt pricing to local economic conditions and competition.
ARELAS
External Forces:
• Stability: Attracts business investments.
• Market Size: Influences business decisions.
• Trade Policies: Affects market entry strategies.
• Inflation and Interest Rates: Impact purchasing power and investments.
ARELAS
Internal Forces:
• Budgeting and Financial Planning: Guides investments and
expenditures.
• Capital Structure: Balances debt and equity for financial
stability.
• Financial Reporting and Controls: Ensures compliance and
transparency.
• Investment Decisions: Influences long-term growth and market
positioning.
ARELAS
External Forces:
• Exchange Rates: Affects profitability and pricing.
• Financial Regulations: Varies by country and impacts operations.
• Capital Availability: Influences expansion scale and speed.
• Foreign Investment Policies: Affects business operations and
ownership structures.
ARELAS
As political officials leave office and new ones replace them,
the policies they implement often affect businesses in
relevant industries. Because of the inconsistent nature of
politics, businesses monitor legislative bills closely to prepare
for potential changes. Policies that can have long-term effects
on companies include:
• Taxation
• Import Restrictions
• Employment Law • Intellectual Property Law
AGUILLON
Technological factors refer to innovations and advancements
in technology that can affect production processes, product
development, and market competitiveness. Staying updated
with technological trends can lead to improved efficiency and
new business opportunities.
AGUILLON
• Natural Forces:
These include weather conditions, natural disasters, and
geographical factors that can affect operations.
• Man-made Forces:
These encompass infrastructure, technological advancements,
transportation systems, and other human-created physical
factors that influence the external environment.
AGUILLON
In international business, companies operate in diverse
environments that can be broadly categorized into domestic
and foreign environments. The domestic environment refers
to the internal conditions within a company's home country.
On the other hand, the foreign environment encompasses the
external conditions in international markets where the
company seeks to expand.
BAGAMASBAD
Economic
Financia
l
BAGAMASBAD
Technologica
l
Distributiv
e
Lega
l
1.What is international business?
2.How can you say international business is different rom domestic
business?
3.Differentiate domestic environment from foreign environment.
4.It refers to the channels of distribution. Management can choose
channels, but generally, they must select channels from those that are
available.
5. Give at least five (5) External and Internal Environmental Forces that we
discussed.
BAGAMASBAD