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GLOBAL BUSINESS

ENVIRONMENT

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F ACTORS AFFECTING INTERNATIONAL BUSINESS

SOCIAL/CULTURAL POLITICAL

IB

ECONOMIC LEGAL TECHNOLOGICAL

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POLITICAL F ACTORS

Different parties have different policies.

Characteristics and policies of the political

parties in power.

Nature of the Constitution and

government.

Formation of economic and businesspolicies

Regulation

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F ACTORS INFLUENCIG POLITICAL

ENVIRONMENT COMPOSITION OF POPULATION

Religion, Tribal, Rural and Urban

Share of these class in economic and political power

Emigrants

PARTY IN POWER 

Key leaders and their background

Policies and manifesto

Internal security of the parties

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REGIONAL TIES

Border disputes

External and Internal threats

GOVERMNMENT AND INSTITUTIONS

Constitutional principles

Institutional setup to govern

The power of press

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ECONOMIC F ACTORS Level of development Economic resources

Size of the economy 

Economic system

Policies Trends in GNP growth rate

Per capita income

Trend and nature of foreign trade

Domestic demand and supply 

Support of govt. to export

Barriers to international trade

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Level of development ± if it is high the infrastructure willbe good and the economy grows, surplus production willbe there and the country will be having relations with theoutside countries.

Economic resources ± if there is ample economicresources we can do business anywhere.

Size of the economy ± to attract more investments thereshould be liberalized rules and regulations for further 

development. Economic system ± capitalism, socialism etc. prevailing in

the domestic territory.

Policies ± economic policies and govt. policies affect thegrowth of the economy. Opportunities are much higher 

where better policies are provided. Domestic demand and supply ± if demand in domestic

market is high the international trade will be less and viceversa.

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LEGAL F ACTORS

Different legal systems prevailing in

different countries ± an international court

will be there to settle the disputes between

two countries. What to do to settle dispute

will be clearly stated in the international

contract.

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MAJOR DISP ARITIES IN NATIONAL LAW AFFECTING IB

In relation with

  Intellectual property rights

  Consumer protection product liability

  Competition among business

  Bribes and corruption practices

  Advertisement and sales promotion

  Contracts

  Marketing practices

  Carriage of goods

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INTERNATIONAL LAW

It applies to sovereign states and imposes

rights and duties on nations in their 

dealings with each other.

It derives from consensus on rules agreed

by contesting countries from internationally

recognized legal principles.

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MAJOR INDIAN LAW PERTAINING TO IB

EXPORT IMPORT ACT FEMA

THE EXPORT (QUALITY CONTROL AND 

INSPECTION)

TRIPS (Trade Related Intellectual Properties

 Acts)

TRIMS (Trade Related Intellectual Measures)

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SOCIO ± CULTURAL

F ACTORS

The way we do things or a configuration of learned behaviour - culture

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F ACTORS INFLUENCING

CULTURE Education

Society

Political structure

Man and the Universe ± human andnature is having their own duties which isdefined by culture

Belief and the style of living

Music, drama and dance

Language

Religion ± The value

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TECHNOLOGICAL F ACTORS

Technical know-how

Internet

Communication

 Availability of technical brains ± qualifiedpeople or trained people for using latesttechnologies.

Networks

 Access ± the technology should beaccessible.

 Adaptability ± the technology should be

adaptable in the countries where it is used.

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TYPES OF IB

Licensing and franchising ± working like anagent e.g. ICICI units functioning all over the world.

Exporting

Contract manufacturing or sub contracting

Management contracting ± highly qualified

people will be giving solutions to problemsall over the world.

Fully owned manufacturing ± setting up our own manufacturing units outside the state.

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 Assembly operations ± assembling the raw

materials from outside and manufacturing the

product. Joint venture

Third country location ± Xerox from US entered

into joint venture with MODI from India and

exported MODI-XEROX to Russia where India

had a good relation.

Merger and acquisition

Strategic alliance ± for solving a commonproblem two parties will come together and take

common solutions and further there will not be

any relation.

Counter trade ± similar to barter system