Global Business Environment Notes

MICROENVIRONMENT:

The factors in the microenvironment that affect international business decisions are:

The Company: Different departments affect business decisions.
Suppliers: Provide the materials needed for products.
Business Intermediaries: Include resellers and distributors.
Competitors: Keeping an eye on competitors is important for success.
Publics: Groups interested in the company's actions (like local communities).
Customers: The main target market drives business strategies.

Macro Environment Factors
PEST Analysis
Demographics: Population changes affect business strategy.
Economics: Influences buying power and is important for market analysis.
Natural Environment: Trends include shortages of resources and pollution.
Technology: Fast changes can create or remove opportunities.
Politics/Social Environment: Affects laws and regulations.
Culture: Influences customer preferences and buying behavior.

Demographics and Economic Influence
Demographic Changes:
Shifts in age, family structures, and diversity.
Economic Environment:
Consumers are more careful with money, looking for value.
Growing income inequality creates a two-tiered market.

Trends in Natural and Technological Environments
Natural Environment:
Shortages of raw materials and rising pollution levels.
Companies should adopt sustainable practices.
Technological Environment:
Not adapting to technology can lead to missed chances.

Political and Cultural Environment Changes
Political Environment:
More laws and enforcement of ethical standards can affect operations.
Cultural Environment:
Changes include new communication technologies and shifts in societal values.

Company Responses to Environment
Passive Acceptance: Companies may accept changes without trying to make an impact.
Proactive Approach: Actively trying to change the environment through lobbying and PR.

Importance of Cultural Awareness
Studying culture is important to avoid marketing mistakes and meet consumer needs.
Language Barriers: It’s not just about translating words but also adapting meaning (like idioms).
Cultural Adaptation Key: Understanding and respecting differences while keeping core identity.

Microenvironment Actors
Components:
Company, suppliers, competitors, and customer markets.
Each part needs to be considered in planning for success.

Natural Environment Trends
Raw Material Shortages: Marketers should rely less on non-renewable resources.
Pollution Concerns: Companies are expected to be socially responsible.
Green Movement: Respond to consumer demands with eco-friendly products.

Business Environment Response
Reactive vs Proactive:
Businesses either adapt passively or take active steps to influence their surroundings.
Influence on Policy: Getting involved in lobbying can shape market outcomes.

Trends Fueling Globalization
Key Trends:
Shrinking domestic markets, regional cooperation, growing middle classes, and more technology use.

Understanding Tariffs
Definition:
Tariffs are taxes on foreign goods to protect local industries.
Leads to higher prices for consumers.
Revenue Generation:
Example: A 25% tariff on a $100 product makes it cost $125.
Possible Negative Impacts:
Inflation, job losses, and potential trade wars.
Long-term reliance on tariffs for government revenue.