International Business Environment - 01

INTERNATIONAL
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Task 1 ..............................................................................................................................................3
various business techniques used to assess international business environment........................3
Influence of globalization on national economies......................................................................5
Organizational structures used by companies.............................................................................6
Risks impacting international operations....................................................................................7
Task 2...............................................................................................................................................7
Micro and macro environment affecting international business.................................................7
Positive & Negative Impacts of International Business .............................................................9
Task 3.............................................................................................................................................10
Importance of corporate social responsibility and sustainability in international business......10
Conflicts between corporate strategy and social responsibility................................................10
Difference between management approaches...........................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment is the mixture of varied factors which have a direct impact on the
organization and its operation. In short, business environment highlights the influence of various
external and internal aspects present in environment in which the business operates. TESCO is a
well known retailer and groceries company headquartered in England, UK and established in
1919.
This report provides a brief about various business techniques used to assess international
business environment, Influence of globalization on national economies, Organizational
structures used by companies, risks impacting international operations, micro and macro
environment affecting international business, opportunities and threats of globalization, impact
of international environment on business organization, significance of corporate social
responsibility, conflict between corporate and sustainable responsibilities and comparison of
different management approach towards sustainability.
MAIN BODY
Task 1
various business techniques used to assess international business environment
PESTLE analysis
Political factors
Political factors involves government policy, political stability of the country, labour
laws, foreign trade etc. These factors plays a dynamic role for the international business
environment which are involved in trading across the world. Because these businesses deals in
wide range of countries, the stability of that country's government is highly essential for the
company as an instability would lead them to become nationalized. Apart from this, their
property might be confiscated. For example Being an automobile company, The powerful impact
of Brexit had affected lands rover in a great way which might led them to close their plants.
Economic factors
These factors encompasses Exchange rate, inflation rate, unemployment rate, interest
rates etc. Considering the different interest rates, exchange rate becomes an important factor for
the organizations who are planning to expand their business on international platform. For
example a country having high interest rates would definitely affect the spending of consumers
on luxury goods which would turn out to be a nightmare for companies. Land rover when

decided to to extend its chain through Pashley cycles in US in 2005, that time US was suffering
from fiscal deficit as well as low employment rate due to which the company suffered huge
looses over its cycles.
Social factors
Population rate, consumer attitude, lifestyle, health consciousness attributes comes under
the social factors. Beliefs and values of people guides the organization the means of doing the
business and hence these factors plays a remarkable role for the organizations to understand the
mindset and demands of the customers housed in different countries. For example TESCO,
keeping in mind the issue of obesity, introduced nearly 350 fat free dairy products containing 0%
fat and 8% sugar to aids their customers in leading healthier life(Luthra, 2016).
Technological factors
With the rapid emergence of globalization, technology has become disrupting factor for
most of the industries. Over few years, importance of technology has revolved around the
operations of most of the companies therefore factors such as degree of innovation, automation,
research and development must be considered by the organizations while expanding or opening
new business. After facing the downfall in technological advancement, TESCO made a huge
investment in R & D and launched RFID technology in order to enhance the experience of in
store for their customers(Phadermrod, 2019).
Legal factors
Legal factors includes discrimination laws, employment laws, consumer protection laws.
The legal framework of a country stimulates the success or failure of the organization. A firm
before entering into n new market must carefully assess the legal environment of particular
country as this will impact its survival in the same. For example In 2011, 20 workers of
Sainsbury went on a strike claiming employer's discrimination among them based on race,
colour, sex. Sainsbury was also found guilty for misleading its investors and paying 12 million to
resolve legal action.
Environmental factors
Influence of climatic and weather changes on the organization is imperative. Each and
every country has different environmental standards as well as laws which affect the revenue and
profitability ratio of the company at large. For example UK provides tax benefit to the companies

which operate in sustainable manner. Marks and Spencer taken initiative to produce Eco-friendly
raw material as well as fabrics.
Illustration 1: PESTLE Analysis
[Source:What is pestle analysis? A tool for business analysis,2019]
Porter's Five Force Analysis-
Illustration 2: Porter's Five Force Analysis
(Source: Porter's Five Force,2019)
It is the powerful tool for analyzing competitive environment of the business within the
international marketplace. From such it can be optimized that company could face threats from

new entrants and substitute whereas they could also have bargaining power of supplier and buyer
and the several competitive rivals which are present in marketplace.
Influence of globalization on national economies
Since its inception, globalization had a profound impact on the national and international
economies of countries. The concept of globalization has left its presence on wide geographies
which has not only benefited the people but also organization which has excelled in many
segment due to its emergence. Economic conditions of a country is highly dependent on how the
country has taken the advantage of globalization. It compels the companies to pursue
reorganization in terms of financial market, production at national and international level which
affects the economic relations through multilateralism.
Foreign direct investment which is one of the indicator of economic growth, grows at a
large rate due to globalization which helps the global companies in their growth and provide
technology opportunities. In UK, The flow of inward FDI in 2017 was reported £92.4 billion as
compared to 2016 where it was £192 billion which drastically decreased the global companies
investment capacity and led to high level of merger and acquisitions.
Besides this, Globalization helps the organizations to succeed in cut-throat competition
through innovative technology which eventually increase the FDI of the country and accelerate
the national economy. High tech systems makes the procedures more efficient and lead to great
economic output. TESCO with its new innovation made a significant contribution to the UK
economy and surged its sale by more than 15% through extending its brand chain which
increased the economy by 5% . Besides this, by reducing the borrowing cost, TESCO banks
decreased the mortgage loans by 0.83% which affected the UK economy in a great way. Also
decreasing the personal loans and interest rates, made the fiscal conditions of UK more stronger.
Organizational structures used by companies
An organizational structure is a well defined system which highlights how various
activities are to be performed and in which direction to achieve the objectives and strategies of
an organization.
The first type of structure is based on the allocation of various functions and refers to
functional structure. In this type, the various tasks and operations of the company are divided
among different departments based in their function. For example all the work related to
recruitment, policies, payroll, compensation functions are performed by the HR department of

company. Sainsbury to boost its sales, has a well structured sales department whose major
function is to conduct the market analysis and provide customers the products according to their
need and demand. Sales team of Sainsbury is highly bifurcated which includes International sales
manager who is responsible for accounting the sales across the globe, UK and Ireland sales
manager whose task is to handle the market of respective countries.
The second structure is based on the product and is called product based structure. In this
type, the company assess the market and divides its human capital on the grounds of different
products in order to fulfill the requirement of customers who are in need of that particular
product. For example perfumes and cosmetics oriented customers comes under a single segment.
TESCO has a separate chain of petrol stations which provides petrol and diesel-bio ethanol
mixture rather than pure petrol to many industries and shops.
Teams build to handle the wide geographies are organized into one segment and divided
on grounds of geographic location. Companies tapping the different locations across the world
splits their functions and human capital on the premise of geographies. This is geographical
structure. A company divides the employees as area sales manager, regional sales manager,
Country sales manager etc.
Risks impacting international operations
Operating on the international platform has remained a nightmare for most of the
organizations. When a company plans to expand its business on international platform or
establish it in different country, it is certain for them to remain aware of some risks they might
encounter during the course of business. Success and failure of an organization totally depends
on its sustainability in respective countries. A large number of risks that a company might face
while conducting business globally are
Foreign exchange risk- It mainly happens when the exchange rate of currency of host
country differs from that of domestic country. When a company decides to operate
internationally, the currency rate of that country largely affects its functioning as these rates
fluctuates day by day which eventually affect the profitability ratio of company. Because of the
volatility of these rates, it becomes hard for companies to safeguard them from these
risks(Martínez-Ferrero, 2016).
Political risks- International business comes across a wide range of political risks. These
includes wars, corruption etc which hampers the performance of the organization in the most

influential way. Geopolitical risks mainly occurs when the country's government abruptly
changes the practices and policies which deteriorates the company's overall profit generating
ability. This all may lead to the confiscation of international businesses because of
nationalization.
For example Sainsbury is vulnerable to many risks like in 2010, the currency movement
accelerated its net value and increased overseas asset to $318. Besides this, it accepts maximum
credit risk of $19.6(Brady,2015).
Task 2
Micro and macro environment affecting international business
Toyota is the biggest car manufacturing company. Micro environment is the controlling
environment of the organization as its functioning and performance has the direct and
expeditious impact on the automotive organization. They are the internal factors which includes:
Suppliers: They play a vital role as they can control the success of the business, by being the
only good suppliers among all for their automotive parts. For example: If the Interex Automotive
can is the only and the best supplier for Toyota parts, they can have a great impact and control
the production and pricing policy of the company(Jiang, 2018).
Consumers: Consumer can influence the environment of the company through their bargaining
power they can have impact on the demand and supply of Toyota. Also, the type of customers
whether international or local will play a important role in adopting the marketing strategy.
The Competition: Competition lets the company know about how different the company is from
its competitors and their advantages in comparison with land rover so that they can make a
business plan accordingly. For Example: If in the automotive industry there are no new entrants,
then in that case Toyota can create a good share and dominate the market(Environment of
business:Micro and macro,2018).
Macro Environment relates to the economy as a whole and includes globalization, fiscal
and monetary policy, employment, etc. It emphasizes on the external factors which tends to
influence the performance, decision making and planning process.
Economic Factors: Monetary and fiscal policies of the government can devise the inflation level
which affects the economy. This in turn can have a great impact on sales of the company and
also employment and buying populations amount of disposable income.

Political & legal Environment: Any company has to take in concern the legislation before
making sound marketing growth strategies. Therefore, the production cost and actual price may
vary and get affected due to change in government policies in regard to new taxation policies.
Environmental Factors: As the world is affected by the global warming and pollution this will
again have an impact on Toyota's production, as they will require putting more effort on the
technologies for production of advanced cars which will not create air pollution and will keep the
environment pollution free.
Globalization & International Trade's Benefits
Market Integration in the global economy is the ongoing process which helps the Toyota
to lead in increasing inter-connectedness of economies on national level. Globalization has
helped in growth of trade over time and also increasing the exports that is, more of the sales in
the foreign markets. It also has increased the real wages by cutting the cost down of production.
Moreover, the inflation rates are also reduced which beneficial for both producers and consumers
globally(Larriba-Andaluz, 2015).
Globalization Challenges
Toyota has to face various challenges when it was setting up in America, it had to
compromise to fit the culture value of its host country that is, America has to adopt short-term
motivational strategies for individual planning and emphasis more on women. Therefore, to get
fit in the market and to inspire and motivate the new employees, Toyota has to adjust and face
the challenges of Globalization and International trade.
Globalization opportunities
Due to globalization and International Trade, a secular shift of consumer towards the
technology- intensive products in advanced industrialized countries has resulted in customers
demand for more technological advanced and hi-tech products. And to stand in the market in
which sustainability is required, it should manufacture cars which are eco-friendly which proves
to be more effective and efficient. Therefore, by application of mechanical and human technical
resources, Toyota can develop specific tools and technologies to meet these challenges.
Positive & Negative Impacts of International Business
Global trade is the most appealing prospect to all the businesses whether it is big or small
as it helps in exchanging of goods and services across international borders which helps in
increasing of share in GDP (Gross Development Product).

Business Expansion & Innovation: By providing new technology and better services to people
for which customers crave, a strong customer base can be built. For Example: By providing
heated and ventilated seats, backup cameras and sensors for parking, automatic braking in
emergency, ambient lightening in the car, etc., Toyota can attract its existing as well as new
customers, which will directly result in business expansion.
Early Payments: Up- front of payments is involved in many of the trade and agreements at
international level. It results in less amount of involvement of risk, justifying the selection of
right market and traders in the international market.
Difficult Communication: When there is no opportunity for the dealers to interact with each
other face to face, in that case, language can be a big barrier for both the parties.
Miscommunication can lead to costly mistakes, misinterpretation, and disagreement between the
parties.
Legal Differences: Every country has it laws and regulations in respect of production,
selling,and doing international trade. It relates to various costs, taxation policies which have to
be followed by the company in order to lead in global economy. Therefore, proper study of the
laws and policies of different countries has to be done promptly in which Toyota has to export or
invest for growing its business globally and increase the share in GDP.
Less Competition: If the company is exporting or delivering something creative and unique in
the global market which will let the business stand out from any other business which is local.
For Example: If Toyota comes up with new technology which is advanced and not yet adopted
by the India's automotive company, that is; Automatic Emergency Braking, Parking Censors,
etc., then in that case, there will be no competitor For Toyota in India(Press.Croucher, 2018).
Entrance to Export Financing: An easy access can be done to export finance when the
company is doing international trade as it will be able to leverage more export financing which in
result will help the company to explore the various options relating to financing at the time of
export from the Export-import banks of various countries in which Toyota is doing
business(Ervural, 2018).

Task 3
analyses the implications for businesses of the cultural and regulatory diversity in international
markets
As the discussion the companies have there continue level of expansion across the
different borders along the variant marketplace which is increasable as small and large business.
on the other hand, Multinational and cross-cultural teams are likewise becoming ever more
common, meaning businesses can benefit from an increasingly diverse knowledge base and new,
insightful approaches to business problems. However, along with the benefits of insight and
expertise, global organizations also face potential stumbling blocks when it comes to culture and
international business. on the other hand, it has been analysed that’s What may be acceptable
business practice in one country, may be very different from the approach that is used by
businesses overseas. Therefore, recognising how culture can affect international business is
something that should be understood in order to avoid misunderstandings between colleagues
and clients, and also to make sure that businesses are presenting themselves to their new market.
In addition to that Beliefs and values of people guides the organization the means of doing
the business and hence these factors play a remarkable role for the organizations to understand
the mindset and demands of the customers housed in different countries. There are many more
factors cultural diversity as the firm have the receives supervision from multiple different
regulatory bodies at the same time because it operates in the national market. The operation of
this enterprise poses new challenges for expanding business globally and increasing in the
market share of the company. Moreover, this have resulted as the Miscommunication which can
lead to costly mistakes, misinterpretation, and disagreement between the parties. Therefore,
proper study of the laws and policies of different countries has to be done promptly in which to
export or invest for growing its business globally and increase the share in GDP. In addition to
that’s the different firm have originations of different strategies which can be as tapping the
different locations across the world splits their functions and human capital on the premise of
geographies
Importance of corporate social responsibility and sustainability in international business
The implication for business of the regulatory diversity and culture within the global
marketplace. The cultural and government regulatory bodies had several implication on the

companies who are entering or performing the business in international marketplace. There are
many culture difference among various country this can have a negative and positive both
impacts on the company. Along with that each an every country has a several regulation which
could affect overall functioning of company and must be regularized through it.
Corporate Social responsibility (CSR) it is an self regulating business model that helps company
to be socially accountable itself.
CSR helps in improving the Rolls Royce company brand by being a social responsible company
it can improve company image & build company brand and it is possible only by projecting
positive image of the Rolls Royce company and make its name not being financially profitable
but it also a social conscious. And also like being active in the community company employees
are potential engage in potential customer. And it indirectly increase the company marketing.
CSR helping companies to stand outside of the competition, when companies are involved in the
community building relation with the customer and the neighborhood it help in brand image.
Conflicts between corporate strategy and social responsibility
For expanding business globally and increasing in the market share of the company,
Toyota uses many of the corporate strategies and policies framed by the management team which
sometimes result in non- fulfillment and creating a situation through which conflict arises
between adopted strategy by the company and of social, ethical and sustainable responsibilities
towards the environment(Gürel and Tat, 2017).
Energy Efficiency and Renewable: Optimization of energy is the focus of every automotive
industry. Therefore, the strategy for setting up a production plant for creating sources and
renewing the energy will itself use a lot of energy, money which will not be sustainable for
Toyota to survive in the market.
Air Pollution: In order to strive for the becoming the most advanced company in automotive
industry, Toyota adopts a strategy of making car more efficient they uses high power engines so
that car can speed up more than it actually does. For gaining customer satisfaction, it is creating
air pollution which has a huge impact on global warming. To overcome this, Toyota should fuel
launch cars which will be sustainable in nature with compact and efficient engines, so that,
emissions and air pollution is reduced(Bull, 2016).
Water Scarcity: For performing production process automotive industry needs most of the water
resources which includes washing, coating, rinsing and cooling. Here, Toyota's corporate

strategy is washing the cars before coating and also after painting by spray, to give them
complete finish look. Therefore, washing twice and thrice will need more use of water which not
a sustainable and ethical activity.
Waste Management: Managing waste from production which includes waste like scrap, and
various production waste is done by the company by creating a waste yard and pits for them
which is included in their strategy, which results in proper waste management but for this,
construction has to be done, due to which roads have been effected, that is breakage of roads
which is not suitable for use. Therefore, resulting a major conflict between its strategy and social
responsibility.
Difference between management approaches
Sustainability accounting Sustainability management control
It indicates a process whereby the main
emphasis is on the revelation of non-monetary
information regarding the organization's
performance to their stakeholder like creditors
etc.
It utilizes quantitative parameters to analyze
the business environment and its impact.
Its main tools involves activity based costing,
management accounting tools, bench-marking,
balance scorecard.
Tesco usually applies the combination of
balance score card and bench-marking for
assessing its environment and producing
sustainable products.
It refers to the tools and processes used by the
organization to push the manager's behaviour
towards the attainment of organizational
objectives and goals.
It makes use of qualitative parameters to drive
the accelerate the behaviour of managers and
employees.
Its tools encompasses contingency report, Risk
assessment, benefit-cost analysis, economic
service valuation.
Sainsbury, through benefit-cost analysis
estimates the risks that would be involved in
succession planning and make its financial
report.

CONCLUSION
This report highlights the study of Business Environment at International level including
various aspects of business techniques and risks evaluation for analyzing business environment,
positive and negative impact of globalization. The study also shows the scrutiny of micro and
macro environment of Toyota along with the international trade's advantages, challenges and
various opportunities to grow globally and lead the market. And also, the effects of global trade
on the business and meeting the Corporate Social Responsibility and approaches for the same
applied by the company. In addition, this report also states the different aspects to be fulfilled for
sustainability and the disagreement arises due to adopting of various strategy which are not
fruitful and sustainable in nature for global development of the company.

REFERENCES
Books and Journals
Brady, M.E., 2015. A Comparison-Contrast between Adam Smith and Paul Davidson on the
Definition and Application of the Uncertainty Versus Risk Concept in
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Bull, 2016. Strengths, Weaknesses, Opportunities and Threats: A SWOT analysis of the
ecosystem services framework. Ecosystem services. 17. pp.99-111.
Ervural, 2018. An ANP and fuzzy TOPSIS-based SWOT analysis for Turkey’s energy
planning. Renewable and Sustainable Energy Reviews. 82. pp.1538-1550.
Gürel, E. and Tat, M., 2017. SWOT analysis: A theoretical review. Journal of International
Social Research. 10(51).
Jiang, R., 2018. A SWOT analysis for promoting off-site construction under the backdrop of
China’s new urbanisation. Journal of cleaner production. 173.pp.225-234.
Larriba-Andaluz, 2015. Gas molecule scattering & ion mobility measurements for organic
macro-ions in He versus N 2 environments. Physical Chemistry Chemical Physics. 17(22).
pp.15019-15029.
Luthra, S., 2016. The impacts of critical success factors for implementing green supply chain
management towards sustainability: an empirical investigation of Indian automobile
industry. Journal of Cleaner Production. 121. pp.142-158.
Martínez-Ferrero, 2016. Corporate social responsibility as an entrenchment strategy, with a
focus on the implications of family ownership. Journal of Cleaner Production.135.pp.760-
770.
Phadermrod, B., 2019. Importance-performance analysis based SWOT analysis. International
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Press.Croucher, S., 2018. Globalization and belonging: The politics of identity in a changing
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Rowman & Littlefield, 2016. Wireless communications with unmanned aerial vehicles:
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