Dynamics of International Business

GEO 330: Dynamics of International Business

Course Information

  • Course Code: GEO 330
  • Title: Dynamics of International Business
  • Semester: Spring 2026
  • Instructor: Dennis Choi
  • Class Session: Class 9 - International Business in Practice (1)

Screening Process for Potential Markets and Sales

Step 1: Identify Basic Appeal

  • Market potential: Determined by basic demand, climate, and any absolute bans on products.
  • Site potential: Involves assessing access to materials, labor, and financing essential for business operations.

Step 2: Assess the National Business Environment

  • Cultural Forces:
    • Impact on market selection: Global product vs. tailored product.
    • Key factors include beliefs, language, and traditions.
    • Impact on site selection: Work ethic, skills, and education levels.
  • Political and Legal Forces:
    • Government regulations including investment barriers, profit repatriation, and tax considerations.
    • Examine the legal system and bureaucracy which may lead to administrative delays.
    • Assess political stability and potential for unforeseen changes in the environment.
  • Economic and Financial Forces:
    • Understand fiscal and monetary policies, currency issues, and overall economic health.
  • Logistical Considerations:
    • Include transportation costs and the country's image regarding product perception.

Step 3: Measure Market or Site Potential

  • Key Indicators:
    • Analyze current sales data, income elasticity, and various market potential indicators.
    • Evaluate the quality of the workforce, available materials, and infrastructure adequacy.

Step 4: Select the Market or Site

  • Research Methods:
    • Conduct field trips for on-site analysis and personal connection with customers.
    • Perform competitive analysis to monitor competitor strategies and control over key production inputs.
    • Utilize primary research methods, including:
    • Trade shows for industry trends and products.
    • Interviews and focus groups that capture local insights and emotions.
    • Consumer panels optimized for markets with collectivist cultures.
    • Surveys to gather large data samples tailored to local markets.
    • Environmental scanning to understand broader trends and impacts.

Cultural Insights from Market Studies

Example: Advertising Effectiveness

  • A pilot study tested reactions of Anglo and Asian American students to advertisements for Welch's grape juice.
  • Ad Types:
    • Promotional Appeals: Highlighting benefits of consumption (e.g., increased energy, great taste).
    • Preventive Appeals: Highlighting health risks mitigated by juice consumption (e.g., reduced cancer risk).
  • Findings:
    • Asian Americans preferred preventive messages while Anglo Americans favored promotional ones, reflecting cultural values.
    • Asian subjects valued collective awareness of health risks over individual benefits, aligned with their cultural narratives.

Global Risks Assessment

Global Risks of Highest Concern (2016)

  • For the Next 18 Months:

    • Large-scale involuntary migration: 52.0%
    • State collapse or crisis: 27.9%
    • Interstate conflict: 26.3%
    • Unemployment or underemployment: 26.0%
    • Failure of national governance: 25.2%

  • For the Next 10 Years:

    • Water crises: 39.8%
    • Failure in climate-change mitigation: 36.7%
    • Extreme weather events: 26.5%
    • Food crises: 25.2%
    • Profound social instability: 23.3%

Legal and Regulatory Adaptations

Key Regulatory Frameworks

  • EU Directives on Electronics:
    • RoHS (Restriction of Hazardous Substances):
    • Mandates substitution of hazardous materials in electrical equipment (lead, mercury, etc.) since 2006.
    • WEEE (Waste Electrical and Electronic Equipment) Directive:
    • Mandates producers manage the recycling of electronic equipment.
    • Encourages environmentally efficient design with disposal considerations.

Economic Risk Index Analysis

Country Economic Risk Index (Marsh, 2021)

  • Various countries ranked for economic risk from low to high.
  • Examples of countries with scores:
    • China: Low Risk
    • Singapore: Very Low Risk
    • Brazil: Moderate Risk
    • High Risk Territories: Specific countries with significant economic risk factors noted.

PESTEL Analysis Framework

Overview

  • Developed by Francis Aguilar in 1967.
  • Framework for analyzing macro-level environmental factors influencing businesses.
  • The model involves categorization of Political, Economic, Social, Technological, Environmental, and Legal factors.
  • Essential for starting businesses and entering foreign markets.

PESTEL Factors Defined

  • Political: Government policy, corruption, trade policy, tax policy.
  • Economic: Exchange rates, inflation rates, unemployment rates.
  • Social: Population demographics, career attitudes, health consciousness.
  • Technological: Innovation levels, R&D activity, technological awareness.
  • Environmental: Climate changes, environmental policies, NGO pressures.
  • Legal: Consumer protection laws, discrimination laws, health and safety laws.

Example Application: Netflix

  • Political: Content censorship issues.
  • Economic: Impact of exchange rates due to foreign sales.
  • Social: Trends towards one-person households.
  • Technological: Advancements in 4K/8K streaming technology.
  • Environmental: Power consumption implications from data centers.
  • Legal: Issues related to property rights and net neutrality regulations.

Market Potential Measurement

Market Indicators

  • Factors influencing market potential include competition levels, distribution networks, demographic trends, and demand forecasts.
  • Understanding the growth rate, market size, and capacity is vital for strategic decisions.

In-Class Activities

Assignment

  • Conduct a PESTEL analysis on a chosen country or industry, focusing on the macro-environment.