Elements of the national business environment of Thailand that might affect the business move
Added on 2023-01-04
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Running head: INTERNATIONAL BUSINESS
International Business
Name of the Student:
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International Business
Name of the Student:
Name of the University:
Author note:
1
INTERNATIONAL BUSINESSElements of the national business environment of Thailand that might affect the business
move
The lower cost sunglass company ‘Crystal Vision’ was established with aim of providing
affordable but good quality sunglass to the people of America. However, the labour as well as
production cost in the USA is much higher, $51.2 per hour as compared to other countries, such
as, India, China, Thailand, Vietnam, Indonesia etc,. (Papadopoulos, 2019) Thus, the production
of cheap sunglasses within the USA is becoming highly challenging due to very high labor
charge. Hence, the manufacturing activity of the sunglasses will be moved to Thailand for
getting the advantage of cheap labor and thereby lower production cost.
According to Rastogi & Trivedi (2016), the political, economic, social and technological
factors play a crucial role in affecting the business performance in a different country. Since, the
business will be moving from the USA to Thailand, thus, the political, socio-cultural, economic
and technological aspects of Thailand will be affecting the sunglass manufacturing business.
Thailand is ruled by constitutional monarchy, however, the judicial section is independent of
executive and legislative branches. At present, the political scenario is more or less stable in
Thailand and the legal structure is favorable for business.
The economic condition of Thailand is highly promising as it is a newly industrialized
economy. It is the 8th largest economy within Asia and in 2018, the GDP was USD 504.9 billion
according to World Bank (Rother, 2018). The population growth is high in Thailand,
contributing in the low labor cost. Moreover, the service and manufacturing industry grew with
the help of large amount FDI and technology transfer from foreign countries (Jomo, 2019).
Hence, the production cost is low in Thailand. The socio-cultural factors include population
growth and integration of cultures and values generated from ever increasing migration of labor
INTERNATIONAL BUSINESSElements of the national business environment of Thailand that might affect the business
move
The lower cost sunglass company ‘Crystal Vision’ was established with aim of providing
affordable but good quality sunglass to the people of America. However, the labour as well as
production cost in the USA is much higher, $51.2 per hour as compared to other countries, such
as, India, China, Thailand, Vietnam, Indonesia etc,. (Papadopoulos, 2019) Thus, the production
of cheap sunglasses within the USA is becoming highly challenging due to very high labor
charge. Hence, the manufacturing activity of the sunglasses will be moved to Thailand for
getting the advantage of cheap labor and thereby lower production cost.
According to Rastogi & Trivedi (2016), the political, economic, social and technological
factors play a crucial role in affecting the business performance in a different country. Since, the
business will be moving from the USA to Thailand, thus, the political, socio-cultural, economic
and technological aspects of Thailand will be affecting the sunglass manufacturing business.
Thailand is ruled by constitutional monarchy, however, the judicial section is independent of
executive and legislative branches. At present, the political scenario is more or less stable in
Thailand and the legal structure is favorable for business.
The economic condition of Thailand is highly promising as it is a newly industrialized
economy. It is the 8th largest economy within Asia and in 2018, the GDP was USD 504.9 billion
according to World Bank (Rother, 2018). The population growth is high in Thailand,
contributing in the low labor cost. Moreover, the service and manufacturing industry grew with
the help of large amount FDI and technology transfer from foreign countries (Jomo, 2019).
Hence, the production cost is low in Thailand. The socio-cultural factors include population
growth and integration of cultures and values generated from ever increasing migration of labor
2
INTERNATIONAL BUSINESSforce from the surrounding less developed countries, such as, Vietnam, Cambodia, Laos, and
Myanmar etc. The supply of labor is higher than is demanded in the industries and hence, the
labor charge comparatively lower (Kaushik, 2018). Furthermore, over the years, the technology
sector in Thailand grew substantially, which has helped in the growth of low cost manufacturing
sector. Thus, it can be said that the performance of the sunglass manufacturing business will be
affected by the above aspects.
Obstacles to overcome in the international business environment
While transferring business unit to another country, there will be some obstacles. Firstly,
the rules and regulations of business will be different than that in the home country. Secondly,
the level of technological development will not be similar as that in the USA due to the
difference in economic development in the two countries. Thirdly, cultural difference is a big
challenge in any international business venture. The behavior and attitude of the employees
towards work are different in two different countries and that is dependent on their cultural
background (Perlmutter, 2017).
Difference in business management while undertaking international business activities
While undertaking international business activities, few factors must be considered. In
this case of producing cheap sunglasses, the things that need to be considered are the currency
exchange rates, easy access to cheap raw materials, resources and affordable capital, convenient
communication and transport options, financial assistance programs, labor protection and
immigration laws, and business protection policies of Thailand and business decisions must be
taken accordingly while protecting the intellectual property, so that profitability is not only
maintained but is also increased from offshoring (Burns, 2016).
INTERNATIONAL BUSINESSforce from the surrounding less developed countries, such as, Vietnam, Cambodia, Laos, and
Myanmar etc. The supply of labor is higher than is demanded in the industries and hence, the
labor charge comparatively lower (Kaushik, 2018). Furthermore, over the years, the technology
sector in Thailand grew substantially, which has helped in the growth of low cost manufacturing
sector. Thus, it can be said that the performance of the sunglass manufacturing business will be
affected by the above aspects.
Obstacles to overcome in the international business environment
While transferring business unit to another country, there will be some obstacles. Firstly,
the rules and regulations of business will be different than that in the home country. Secondly,
the level of technological development will not be similar as that in the USA due to the
difference in economic development in the two countries. Thirdly, cultural difference is a big
challenge in any international business venture. The behavior and attitude of the employees
towards work are different in two different countries and that is dependent on their cultural
background (Perlmutter, 2017).
Difference in business management while undertaking international business activities
While undertaking international business activities, few factors must be considered. In
this case of producing cheap sunglasses, the things that need to be considered are the currency
exchange rates, easy access to cheap raw materials, resources and affordable capital, convenient
communication and transport options, financial assistance programs, labor protection and
immigration laws, and business protection policies of Thailand and business decisions must be
taken accordingly while protecting the intellectual property, so that profitability is not only
maintained but is also increased from offshoring (Burns, 2016).
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