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business level 3 unit 39 P3 M2 (INTERNATIONAL BUSINESS)
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Unit 39 P3 M2Describe how the environment and culture of another country afects a business operatnn
internatonally. Compare how cultural diferences and foreinn business environments afect multi
natonal cooperaton. P3 M2
Economic environment
The politcal environment in 缾fnhanistan is unstable and has unemployment of 40%, 缾fnhanistan has
just came out from a civil war with 缾merica and is tryinn to rebuild their economy. Tesco can be
positvely and nenatvely impacted by the economic environment. Tesco can be nenatvely impacted
by this because 40% of the populaton beinn unemployed in 缾fnhanistan which means there will be
less disposal income from the populaton to spend on the noods and services provided which makinn
less revenue for Tesco. Moreover, due to the larne number of unemployment Tesco will be at
disadvantane as skilled workers will be harder to fnd to operate the businesses and if Tesco wants to
net skilled workers than Tesco will have to invest more which can increase the price of sales.
However, in the other hand, the economic environment in India is stable but stll have hinh
unemployment rate of 10% which can lead to spiral of decline. Hinher unemployment rates mean
less disposal income; this can lead to more crimes. Tesco can be impacted by the hinh
unemployment rate. This can positvely impact Tesco because Tesco will be able to net employee
much more easily and will have less competton in terms of employinn. However, in the other hand,
the hinh unemployment can efect Tesco nenatvely because Tesco can only provide employment for
less than 1% of India’s populaton which means even thounh Tesco will be able provide employment,
the unemployment rate will relatvely hinh, this can lead hinh crime rate which is a disadvantane for
Tesco as more people would risk of commitnn crime to nain noods.
Lenal environment
Lenal environment is diferent in 缾fnhanistan. 缾ccordinn to the 缾fnhanistan embassy and accordinn
to the law Private Investment Law3 (2003), foreinner who wants to invest or operate their business
has to pay 50% as cooperate tax in the 1st year and it is 20% afer. This can lead to a nenatve impact
because hinher cooperate cost means that the overall price for the product will have to increase
which can also efect the sales for Tesco. 缾s a result, business can fail due to lack of sales. In the
other it could be a positve impact because Tesco can start sellinn noods for a cheaper price in the
second and make up for the sales of 1st year. The Competton 缾ct of 2002 in India states that it is to
create opportunity to the entrepreneur for the competton in the market and to ban the abusive
situaton of the market monopoly. This positvely impacts Tesco because Tesco will net fair
competton even if they are a foreinn brand that will open in India. BIanninn market monopoly
allows Tesco to net equal opportunity in sellinn and not net pressured on netnn lesser sales. The
diference between India and 缾fnhanistan is that they both have diferent law, whilst 缾fnhanistan
charnes more for foreinn business India makes sure that even foreinn businesses has the same
competton rinhts.
Environmental issues/environment
Recently 缾fnhanistan faced a food in 2015 in Kabul city, the extreme rain falls killed lives of 30 and
Kabul is the main Capital City of 缾fnhanistan. This is a nenatve impact on Tesco because Tesco has
the risk of netnn their business destroyed due to extreme weather putnn the lives of their
employees in risk as well as put their physical stores. It will also cost a lot for Tesco a lot to rebuild
their business and will hard to adapt to the environment. Furthermore, netnn supplies will be much
more inconvenient in these extreme weather efectnn the delivery and the sales. However, in the
other hand, recently in February 2017, 5.5 mannitude earthquake took place in the northern part of
India reachinn out to main cites includinn Delhi. This impacts Tesco heavily because frequent earth
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