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Heidi Hellström
Master of Science in Economics, Senior Lecturer
Vaasa University of Applied Sciences
COMPANY
INTERNATIONALIZATION (5CR)
DEFINITIONS
• P for Political
• E for Economic
• S for Social
• T for Technological
• L for Legal
• E for Environmental
POLITICAL
This is concerned with how political developments, regionally, nationally and internationally might affect a business’s strategy.
• Employee protection: health/safety, discrimination, minimum wage
• Consumer protection: truth in advertising, high-pressure sales tactics, sales agreements
• Competition protection: unfair trade practices, monopoly, mergers & takeovers
POLITICAL
• Is the country democracy or dictatorship?
• Free markets or government controls?
• Company customers: public or private sector?
• How stable is the excisting government?
ECONOMIC
• Economic growth
• Taxation international trade
• Exchange rate (ex. Sweden)
• Inflation
• Buying power (ex. Finland)
• Willingness to spend and spending patterns
• General economic forces
• Business cycle ->
What competitive advantage might a business gain
by social changes taking place outside of the
business?
SOCIAL
SOCIAL
• Aging population, reduced birth rates, longer life expectancy
• Changing role of women in the workplace
• Improved Education – better skilled workers
• Early retirement, more leisure time
• Rising divorce rates, more “single” households
• Job security
• Immigration creating a wider range of consumer tastes
PERSONAL FACTORS MEASURED IN FINLAND
• Population: 5,5 million (2014)
• Men / women
• Households (families, singles etc.)
• Birthrate
• Nbr of marriages
• Nbr of > 65 yrs and nbr of < 30 yrs
• Average expected lifetime (m/w)
TECHNOLOGICAL
• Changes in physical
sciences
• Internet
• Energy use and costs
• Government and Industry
focus on tech
• Government spending on
research
• Investments
• Technology transfer
(Poland, China…)
• Intellectual property rights
(not in Finland – Russia
case)
• Patents
• Trademark registration
LEGAL
• Employment law
• Health and Safety
• Taxation: both corporate and consumer
• Other regulations
• International trade barriers
• Strength of the rule of law
LEGAL FORCES EXAMPLE
See the link:
Usually brand names face much more issues, that
never assumed in advance
FROM THE COMPANY POINT OF VIEW
• Must obey laws both home country and the country, itoperates
• Laws can affect to the location choises
• eWorld – law and the internet
• Common law (UK, USA, Canada, Australia etc): based on jugde´s decisions
• Religious laws (ex. Koran)
• Domestically oriented laws (the company is forced overseehome country laws and rule the laws, where it operates
FROM THE COMPANY POINT OF VIEW
• Laws directed against foreign companies
• Or then just cultural topics that are good
to know
• Consumer protection laws