International Business Environment : Volkswagen
13 Pages3794 Words81 Views
Added on 2021-02-20
International Business Environment : Volkswagen
Added on 2021-02-20
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International BusinessEnvironment
INTRODUCTION International business environment is multidimensional which involve culturedifferences, political risk, legal & taxation issues, exchange risk and so on. Along with this, itcomprises political, economic, regulatory, tax, legal, technological, cultural social environment(Shenkar, Luo and Chi 2014) (Shuman, 2013). This report is based on Volkswagen which is partof automotive industry founded in 1937 and its founder is German Labour Front. Its headquarteris located at Wolsburg, Germany and they are serving at worldwide level. Respective assignmentwill going to discuss techniques of analysing international business environment includingimpact of globalisation and international trade on national economies. Furthermore, it will alsoexplore organisational structure Volkswagen use for operating in global and international market.Micro and macro environment will going to be analyse in which company operates along withbenefits, opportunities and challenges of globalisation and international trade. In the end it willanalyse implication of culture and regulatory diversity in international market. Importance ofcorporate social responsibility as well as sustainability in supporting success of business. Alongwith this, potential conflicts will going to highlight between corporate strategy, ethical social andsustainable responsibilities. As well as management approaches will be compare and contrast forsustainability of company. TASK 1Business techniques used to analyse international business environmentIt is important for examining international business environment for business firm who isworking at global level. There are several tools through which it can be analyse in proper mannerexplanation of these are as follows :- Porter's five forces model – It is an analysing tool which use 5 forces for determiningprofitability of industry as well as shape organisation's competitive strategy (Simic andDimitrijevic, 2012). These five forces are created by Michael Porter in 1997 for understanding 5competitive forces which may affect industry at international level. Explanation of these are asfollows :- Threat of new entrants- This is force which assist in identifying that how simple or notit is to enter within specific sector. Its effect will be high when low amount of capital willbe needed and if their will be no government regulation.
Bargaining power of suppliers- This force permits suppliers to sell high price or rawmaterial of low quality to buyers. It will directly impact on buying firm profit becausethey have to pay high amount for material. Suppliers within industry have highbargaining power when they are few but buyers are high, cost of switching raw materialis high and so on. Bargaining power of buyers- In industry buyers have power of demanding high qualityproduct or low price from producers within industry at the time when their bargainingpower is strong (Savrul, Incekara and Sener, 2014). Buyers have strong bargainingpower when only few are left, price of buyers are sensitive, many substitutes and so on. Threat of substitutes- This force threat when buyers get substitutes of product easilywith attractive price and better quality at that time they can easily switch. Industry rivalry- It help in determining how competitive and profitable industry is.Level of competition within competitor is high when there are several competitors, lowcustomer loyalty, products are not differentiated etc.. PESTEL Analysis - It is tool that utilise by marketer for analysing international businessenvironment or external marketing environment factors which directly impact on business. HerePESTEL stands for political, economic, social, technological, environment and legal (Schrader,Freimann and Seuring, 2012). It is important for an organisation to analyse all these factorswithin effective manner because they have wide impact at international business environment. Impact of globalisation and international trade on national economiesGlobalisation and international trade have its impact on nation economies of any nationbecause it change any nation in terms of economic development policies. Most important impactis that globalisation provide free movement of trade & investment, labour and assets. With theassistance of international trade and globalisation economy of particular nation grow at globallevel and it also result in opening up barriers of international trade which enhance stability aswell as create positive effect on life quality of particular nation population. Along with this, growth of economy through globalisation have its both positive as wellas negative impact on nation (Voegtlin, Patzer and Scherer, 2012). Through this economy growthtake place which have main advantage of higher per capita income as well as living standard ofpeople because of increasing output. In addition to this, globalisation and international tradecreate employment opportunities which take economy of nation towards prosperity. International
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