International environment:economic aspects

political and legal aspectscultural aspects

Elena Horska

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Aspects of the international environment

Home country environment

Host country environment

General international environment

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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

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Major types of political risk in

the host country environment

Ownership risk

Operating risk

Transfer risk

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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

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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

The international

economic environment

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Classifying countries by income

• Less developed countries (LDCs)

• Newly industrialised countries (NICs)

• Advanced industrialised countries

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Benefits of regional integration

Trade creation

Greater consensus

Political cooperation

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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

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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.

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Characteristics of culture

• Culture is learned

• Culture is interrelated

• Culture is shared

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The visible and invisible parts of culture

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Hall’s Communication Context

Low-context cultures

High-context cultures

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The contextual continuum of differing cultures

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.

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Elements of culture

• Technology and material culture

• Language• Education• Religion

• Values and attitudes• Aesthetics• Religion• Social institutions,

social and political life

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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