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FORCES IN INTERNATIONAL BUSINESS - Case Study Example

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FORCES IN INTERNATIONAL BUSINESS

Religion and language are also important cultural factors that influence international business. Natural resources forces explain the significance of natural geography, topography, natural endowments, climate and sustainability of energy resources use on international business. The political system in the country reflects the will of the country in determining its course of economic growth. Political stability in the country is essential for long term prospects of business. Many countries now are more open to privatization of business. A country's economic health will determine demand for goods and services and availability of infrastructure and other resources for doing business. Maturity of legal system in a country will determine the risk of doing business in the country and is essential for fair transactions. The country's financial position in terms of balance of payments, exchange rate, inflation etc will help multinational companies to draw up strategies on investment, management of finances etc. Availability of labour and labor market trends will be important in determining setting up operations in a country.
The Case of Coca Cola operations in India indicates how these seven forces influenced the company in its operations and how it reacted. The company had to face ethical dilemma of operating its plant in remote locations and face accusations of making profits at the cost of depriving locals of natural resource.
Socio-Cultural forces
Culture affects all business functions. Hofstede's cultural dimension model will be a useful starting parting to understand how culture influences business ((Hofstede, 2001).The power distance factor could indicate how bureaucracy operates in the country. If it is high it will mean a highly centralized decision making structure and very little delegation of powers to local authorities. This knowledge will help a company in doing negotiations. Very often this also defines the relationship between consumer and seller. This will also have an important bearing on organizational design. For example an organisation which tries to bring in its organizational value of empowered decentralized decision making to its employees from a cultural background of high power distance, will face difficulties in implementation (Meade 2005, p 95). Uncertainty avoidance may influence attitudes to entrepreneurship in society and inclination to take risks in financial institutions. Individualism vs. collectivism dimension will indicate the level of influence of unions and labors attitude to collective bargaining. This will also determine the predominance of task or relationship in interpersonal management.
Religion has a strong influence on commerce. Religion is responsible for many beliefs and attitude affecting behaviour, which is brought into business and organizations by people (Ball et al 2008). Attitude to work, accumulation of material wealth ...Show more

Summary

In the era of globalization, more and more companies enter international markets in varying degrees. It is important that the environmental forces that impact international business are understood clearly for successful operations in different countries. These seven forces are socio-cultural forces, natural resource and environmental sustainability forces, economic and socioeconomic forces, political forces, legal forces, financial forces and the labor forces…
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