Exam (elaborations)
UNIT 5 - part 2 international business
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unit 5 part 2 level 3 business btech
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P5: Explain the external factors that influence a selected businessconsidering
trading internationally.
External influences
Factors that influence international business:
Political factors can dramatically affect Tesco which would be the
alterations of
government policy where they should comply with the new laws; and
therefore,
employers must create a strategic plan on how to respond to these
upcoming
legislations that have negative impacts on their activities.
In addition to that, the political influence of the government of a certain
country or the
president of different associations such as APEC or EU: and which can
fundamentally influence the methods and procedures on international
trading and the
selection of business sectors they're able to trade on an international
basis. And,
understanding countries various political systems is extremely imperative.
For
instance, since China is a communist state, Tesco would find it
tremendously difficult
to export their products to China as it's more restricted and challenging
compared to
other countries.
Most countries worldwide are democracies such as US, Japan, Korea etc.
Homogeneously, these countries are also influenced by different political
viewing
platform regarding international trade. This could influence Tesco as some
governments might seek to safeguard jobs in their economies, and thus,
might be
less positive on allowing and encouraging international businesses coming
into their
countries
Economic factors have several numbers of effects on Coca-Cola and Tesco
which
involves different countries' economic conditions. Economic conditions
have a
massive impact on the ability of their consumers to purchase products in
that country
they're operating in, as well as to both businesses themselves. The
economic
,conditions that have a crucial influence in Coca-Cola and Tesco are level
or taxation,
inflation, interest rates, economic cycle and level of employment and
unemployment;
and which all these could hugely affect their products, services, labour,
Costs
demand etc.
All the economic conditions stated above have higher tendencies to
influence
Tesco's demand for products and services. For instance, due to inflation,
all Tesco's
products such as Electronics and Technology-based will increase its price
and
therefore, could influence demand as consumers wouldn't sec it as
affordable.
Moreover, each stage of economic cycle has an external influence on
Tesco. For
instance, if both businesses started trading during growth, then it's
foreseeable that
their future sales are likely to be positive and enable them to earn higher
amount of
profit. Nevertheless, if they enter an economy that is facing a recession or
declining
phase, then both of their investment, sales and profit are expected to be
falling and
possibly will have a negative effect relating to finance.
Businesses are affected by an external environment as much as they are
affected by the
competitors. These factors can have a major impact on the
success or failure of any business. Global
actors influencing business are legal, political, Social, technological, and
economic. (PESiLE)
Other factors that also affect businesses include the business support
systems that are used to help
businesses tale, and particularly, methods of payment and the use of the
internet.
External influences
These refers to the changes in government and government policies.
Political factors greatly
influence the operation of business. The political influence of the
government of a country or the
president of a group of countries, such as the EU or APEC, has significant
influence on the way in
, which the country does business and the toe of businesses that can trade
there on and
international basis
For example: companies operating in the European Union must adopt
directives and regulations
created by the EU. The political arena has a huge influence upon the
regulation or businesses.
And the spending power or consumers and other businesses. Business
must consider the stability of the political environment, government's
policy on the economy. etc.
China and Cuba are both communist states, so this means that trading
with them is more challenging
than with other counties and potentially has more restrictions. Most
countries around the world are democracies rather than communist.
However, even these countries are influenced by different political
viewpoints with regard to international trade Some governments may
seek to protect jobs
in their economies and, therefore, may be less positive about international
businesses coming into
their counties.
Economic Factors
International businesses are also affected by the economic conditions of
the country in which they
operate. Economic conditions can have a huge Impact on the ability or
customers to buy products in
that country and on the business as a whole
These factors involve changes in the global economy. A rise in living
standards would ultimately
Imply an increase in demand for products thereby, providing greater
opportunities for businesses to
Make profits. An economy witnesses’ fluctuations in economic activities.
This would imply that in
case of a rise in economic activity the demand of the product will increase
and hence the price will
increase. In case or reduction in demand the prices will go down. Business
strategies should be
developed keeping in mind these fluctuations.
Other economic changes that affect business include changes in the
interest
rate, wage rates, and the rate or Inflation. In case or low Interest rates and
increase in demand businesses will encouraged to expand and take risks.
Therefore. business strategies should have room for such fluctuations. I
may affect international businesses, as Interest rates affect the amount it
costs a company to borrow money and also the amount of money those
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