International environment:
economic aspects
political and legal aspects
cultural aspects
Elena Horska
Aspects
of the international environment
Home country environment
Host country environment
General international environment
6-2
Kinds of information
typically available/needed
• Economic, social, political
data on individual
countries
• Summary and detailed
information on aggregate
global market transactions
• Individual reports on
foreign firms
• Specific export
opportunities
• Lists of potential overseas
buyers, distributors, and
agents for various
products in different
countries
• Information on relevant
government regulations
• Foreign credit information
6-3
Major types of political risk in
the host country environment
Ownership
risk
Operating
risk
Transfer
risk
6-4
Effects of political risk
• Import restrictions
• Local content laws
• Exchange controls
• Market control
• Price controls
• Tax controls
• Labour restrictions
• Change of
government party
• Nationalization
• Domestication
6-5
How does the threat
of terrorism affect business?
• Short and long-term decline of customer
demand
• Unpredictable shifts in the supply chain
• Government policies and laws
• Macroeconomic effects such as falling
stock market values
• Deteriorating relations among countries
6-6
The international
economic environment
Classifying
countries by income
• Less developed countries (LDCs)
• Newly industrialised countries (NICs)
• Advanced industrialised countries
6-10
Benefits of
regional integration
Trade creation
Greater consensus
Political cooperation
6-11
6-12
EU – China Business Summit 2010
They called on China to grant better market access for European
businesses, a better investment environment, stronger enforcement of
intellectual property rights and the opening of public procurement. They also
urged more respect of the rule of law and human rights. But there was no
indication of any concession by Mr. Wen on any of these matters.
EU – China - India
• What challenges and obstacles do you
see in doing business perspectivelly with:
– China, India, EU countries
– from political, economic and socio-cultural
aspects?
International
cultural environment
Culture
Culture is “the collective
programming of the mind which
distinguishes the members of one
human group from another”
(Hofstede, 1980).
It is the learned ways in which a
society understands, decides and
communicates.
7-16
Characteristics of culture
• Culture is learned
• Culture is interrelated
• Culture is shared
7-17
The visible
and invisible parts of culture
7-18
Hall’s Communication
Context
Low-context
cultures
High-context
cultures
7-19
The contextual
continuum of differing cultures
7-20
Globalization and changes in the
culture
• Adoption of new cultural elements
• Cultural imperialism is the practice of
promoting the culture or language of one
nation in another.
Westernization
• is related to the process of acculturation and/or
enculturation.
• Acculturation refers to the changes that occur
within a society or culture when two different
gorups come into direct continuous contact. After
the contact, changes in cultural patterns within
either or both cultures are evident. In popular
speech, Westernization can also refer to the
effects of Western expansion and colonialism on
native societies.
Elements of culture
• Technology and
material culture
• Language
• Education
• Religion
•
•
•
•
Values and attitudes
Aesthetics
Religion
Social institutions,
social and political
life
7-23
The role of language in
global marketing
• Language is important in information
gathering and evaluation efforts
• Language provides access to local society
• Language capability is important to
company communications
• Language enables the interpretation of
context
7-24