Module 2 - The Firm and Its Environment & International Business Environment.pptx

MODULE 2-THE FIRM AND ITS ENVIRONMENT ENVIRONMENTAL FORCES AND ENVIRONMENTAL SCANNING ENVIRONMENTAL SCANNING ⮚ It is the process of monitoring business organizations both internal and external. SURVEY ⮚ Can be conducted and interpreted to evaluate relevance to...

MODULE 2-THE FIRM AND ITS ENVIRONMENT ENVIRONMENTAL FORCES AND ENVIRONMENTAL SCANNING ENVIRONMENTAL SCANNING ⮚ It is the process of monitoring business organizations both internal and external. SURVEY ⮚ Can be conducted and interpreted to evaluate relevance to operations and decisions. 2 ELEMENTS OF ENVIRONMENTAL SCANNING 1. Internal Environment 2. External Environment STRENGTH WEAKNESS OPPORTUNITY THREAT Internal Environment External Environment Controllable (such as employee, Uncontrollable capabilities, (such as PEST resources, & NR analysis) stakeholder etc.,) ⮚ CHARACTERIS ⮚ LIMITATIONS OR ⮚ CHANCES ⮚ EXTERNAL TICS THAT DEFICIENCIES OF TO FACTORS GIVE THE THE BUSINESS IMPROVE AFFECTING BUSINESS A BUSINESS BUSINESS. COMPETITIVE PERFORMA EDGE. NCE. INTERNATIONAL BUSINESS ENVIRONMENT ⮚ It is the macro overview of the markets and institutions in the global economy. It signifies buying and selling of goods around the world. International business expansion is complex and costly, but to minimize these costs and risks, businesses must have global strategy to pursue. STRATEGIC AREAS are the following; 1. Global Concentrations- may decide to enter an international market where competition is minimal but demand is high for the product or service offerings. 2. Global Synergies- have highly develop competencies, experts, innovators, pioneers may decide to collaborate. 3. Global Strategic Motivations- may look for international venues for production. Multinational Company (MNC) ⮚ Is a business that exercises strategic control over production or marketing facilities in two or more countries. Internationalization Process Stage 1 Licensing- Companies are authorized to produce and market a given product within a specified territory. Stage 2 Exporting- Goods produced in one country are sold for use or resale. Stage 3 Local Warehousing and selling- Goods produced in one country are ship to parent company’s storage and marketing facilities. Stage 4 Local Assembly and Packaging- Components, rather than finished products, are shipped to a company-owned assembly facilities. Stage 5 Joint Ventures- A company in one country pools resources with one or more companies in a foreign country to product, store, transport, and market products. This is also called strategic alliances or strategic partnerships. Stage 6 Direct Foreign Investments- Produces and market products through wholly owned subsidiaries in foreign countries. INTERNATIONAL MANAGEMENT ENVIRONMENT 1. Internationalization Economic Domain ⮚ Process or system by which countries around the world have widely diverging per capital income levels ,economic growth rates, and levels of development. 2. Legal/Political Domain ⮚ Managers must be familiar with the laws restraining on areas such as: 1. Tariffs- taxes imposed on imported products. 2. Quotas- legal limitation on the quantity. 3. Administrative Measures- healthy and safety law, customs inspection, and pricing 4. Exchange Control- limitations on exchanging the home country currency. 5. Local Content Laws- requirements that certain percentage of finished goods to be made of parts produced in importing country. 6. Subsidies- Special tax incentives that encourage the production of goods for export rather than domestic consumption. 7. Commodity Agreement and Producers’ Cartels- stabilize the prizes of food or raw materials than to allow free market price competition. 3. Socio-Cultural Domain ⮚ Social and cultural differences who populate the nations of the earth have a direct effect on the selection of a management style such as: - communication - religion and values - policies affecting holidays, work break, retirement, etc., - nature and extent of education CHALLENGES IN INTERNATIONAL BUSINESS ⮚ Political and legal environment differences ⮚ Cultural environment differences ⮚ Economic environment differences ⮚ Language differences ⮚ Marketing system differences ⮚ Trade restrictions and practices ⮚ Physical location - Thank you for listening ☺