International Business Environment Report

This report analyzes the international business environment, focusing on Ford Motor Company. It examines the impact of globalization and international trade on national economies, analyzes the company's micro and macro environment, and explores the benefits, opportunities, and challenges of international trade. The report also discusses the importance of CSR and sustainability in supporting business success and potential conflicts between corporate strategy and ethical responsibilities.

International Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Business techniques used to analyse international business environment.......................1
1.2 Impact of globalisation and international trade on national economies...........................3
TASK 2............................................................................................................................................4
2.1 Analysis of micro and macro environment of Ford Motor Company..............................4
2.2 Benefits, opportunities and challenges of international trade and globalization..............6
TASK 3............................................................................................................................................7
3.1 Implications for businesses of regulatory and cultural diversity in international markets7
3.2 Significance of CSR and sustainability in supporting business success..........................7
3.3 Potential conflicts between corporate strategy and ethical, social, sustainable
responsibilities........................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
International Business Environment (IBE) is a multidimensional concept which includes
cultural differences, political risks, legal and taxation issues and exchange risks (International
Business Environment, 2017). In the present assignment, chosen organisation is Ford Motor
Company which is a multinational auto-maker of America headquartered in Dearborn, Michigan,
U.S. This report covers evaluation of business techniques used to examine IBE and impact of
international trade and globalization on national economies. It also includes analysis of macro
and micro environment along with evaluation of benefits, challenges and opportunities of
international trade and globalization. At last, significance of CSR and sustainability in business
success and potential conflicts between ethical, social responsibilities and corporate strategy are
defined in this project.
TASK 1
1.1 Business techniques used to analyse international business environment
In today's competitive business environment, it is very necessary for organisations to
analyse the surroundings in which they run their operations. This assists businesses in attaining
high growth and success. In analysis of international business environment, different tools and
techniques are used by businesses which are defined below:
SWOT analysis:
It is the tool used by businesses to analyse strengths, weaknesses, opportunities and
threats exist in internal and external environment of a particular enterprise. It includes collection
and delineation of information about intrinsic and extrinsic variables which may have influence
on business. It allows manager of firm to synthesize insights acquire from internal analysis of
strengths and weaknesses of business with those from evaluation of external threats and
opportunities (Tools for International Business Environment Analysis, 2017).
Benefits:
 Helps in identifying future goals. Focuses on key external and internal variables affecting the firm.
Disadvantages:
 No prioritization of variables.
 Factors are delineated too broadly.
1

Porter's five force analysis:
Porter's five force model uses five forces to identify industry profitability and shape
competitive strategy of company. It classifies and analyses key forces that affects intensity of
competition. This tool helps businesses in formulating strategies to enter into international
business environment. These forces determine structure and level of competition in an industry.
A sector with having few suppliers and buyers but many substitute goods, low barriers to enter,
more competitors will be considered as less competitive and therefore, not so attractive because
of low profitability. The five forces includes in this tool are:
 Threat of new entrants.
 Bargaining power of customers.
 Bargaining power of suppliers.
 Threat of substitute. Industry rivalry.
Benefit: It gives a comprehensive framework that assists in thinking about competitive forces
includes within simple business structure.
Disadvantage:
 It is incomplete as it doesn't address broader issues of business in multi-channel,
multinational and multi product marketplace.
PEST Analysis:
It is the analysis of economic, political, technological and social factors in firm's external
environment, which can influence its performance and activities. It is a model of macro factors
utilized as environmental scanning element of international business management. This tool
helps organisations in understanding business position, potential, market growth and decline and
directions for operations.
Advantages:
 It assists to create an objective view of new environment when entering a new market,
region or country. Helps in reducing impact of potential threats to company.
Disadvantages:
 It requires constant reviewing and revising by management.
2

 It consumes a lot of efforts and time in acquiring data from resources.
1.2 Impact of globalisation and international trade on national economies
Globalization refers to the process of integration and integration between people, firms and
government worldwide. It represents the integration of investments, international trade, cultures
and technology at global level. Globalization has a tremendous effect on national economies. Its
formulation was based on future creation of the new global nation with aim of unifying
economies, people, nations and cultures under the vision of wellbeing and prosperity worldwide.
However, it never happened and has created an unstable and turbulent global socio political
environment defined by initiation of huge inequalities among nations (Effect Of Globalization
On National Economies, 2015).
Globalization as well as its supportive mechanism like global investment banks
developed big issues in many countries. Low wages, high employment rate, high public deficit,
lower GDP's, elimination of small medium size firms and social instability are certain common
features of free market doctrine because of lack of needed regulations that would domain social
and economic balance (Glatzer, 2012). However, globalist are calming that globalization assists
in developing economies of poor nation as it brings technology, growth capitals and know how,
creates better living conditions, jobs and huge opportunities for next generations. It introduces
new ideas, weeds out unproductive and opens up new markets. It allows low production costs
and bigger profits.
International trade refers to the exchange of goods, services and capital across
international territories or borders. In most nations, such trade depicts a significant share of GDP.
It enables countries to enjoy benefits of international specialization as per its comparative costs.
This results in increasing real income and improving living standard of people. International
trade enables more efficient and better utilization of resources of nation that increase real
national income and thus, has growth promoting impact on economy. Foreign trade assists in
increasing capital formation and renders stimulus for investments. By developing conditions for
increased formation of capital in underdeveloped countries, it contributes in economic
development (Kehoe and Ruhl, 2013). International trade develops possible of benefiting from
potential empowerment of economy, as per the available relative benefits and reveals clear
symbol for investment in profitable economic projects. Also, international trade affects
economic growth rate through access to international market, resources and technology.
3

TASK 2
Curriculum Vitae (CV)
Name:
Address:
Mobile no:
Career objective: To get opportunity of participating in internship programme of a reputed
organisation and get learning that helps in my future career growth.
Qualification
MBA (Master in Business Administration)
Experience:
0 years (apply for internship)
Personal skill
 Good communication skills
 Decision skills Leadership skills
Declaration:
I declare that all the mention information are correct as per my knowledge and experience.
2.1 Analysis of micro and macro environment of Ford Motor Company
Start with a brief introduction of the provided scenario.
Macro environment: These are external uncontrollable factors that are beyond control
of firm which exist in business environment. Consideration of these variables helps Ford Motor
Company in identifying opportunities or threats and formulating strategies to address these
effectively. Different factors of macro environment are defined below: Political: Technological innovations of Ford Motor Company to improve economic
conditions is increasingly supported by government. It provides an opportunity for firm
to utilize government incentives for environment friendly products, innovation and
sustainability. The company has also an opportunity for expansion based on trade
agreements that makes easy for it to enter into foreign markets (Ford Motor Company
PESTEL Analysis, 2017).
4

 Economical: The biggest market of Ford Motor Company is U.S. and growing economy
of country provides an opportunity of growth to firm. It has also an opportunity of growth
in high potential developing nations, where firm has limited presence. Yet, strengthening
U.S. Dollar reduces the profit margins as well as attractiveness of company's products. Social: Increasing demand of electric and hybrid auto-mobiles provides an opportunity to
Ford Motor Company in market. Its innovative products help firm in attracting large
number of customers. Yet, increasing wealth gap is a macro economic environment
situation that threatens firm's luxury products with high prices, i.e., Ford's Lincoln auto-
mobiles (Craig and Campbell, 2012). Technological: Rising utilization of mobile computing is one of the external factor that
brings opportunity of growth for Ford Motor Company through mobile marketing and
mobile service support. However, limited network of alternative fuel stations poses a
threat for firm in its potential growth in offering alternative fuel vehicles. Environmental: It includes climate change, weather, geographical location etc. Climate
change creates an opportunity of growth to company through products that assists in
conservation of environment. It could take benefit of low carbon trend. Declining oil
reserves poses a threat for Ford Motor Company as oil is use in all its cars.
 Legal: It includes laws and regulations made by government. Ford Motor Company
compliance with environmental protection regulation made by legal authority of
respective country that provides it an advantage to improve business sustainability in
market. Increasing laws of intellectual property provides more protection to company for
its intellectual rights and properties.
Micro factors: These are nearby factors that influence decision making process of firm
and affects its productivity. It includes employees, suppliers and customers. Micro factors that
impacts on operations of Ford Motor Company are defined below:
Suppliers: Raw material suppliers of firm are its source of strength, but because of
increased prices of inputs, Ford Motor Company needs to engage in cost cutting strategies in
order to minimize its operational cost (Stock and Seliger, 2016).
Customers: The firm has great diversity of clients from distinct backgrounds. Ford Motor
Company has been able to develop large number of loyal customers throughout the world. Its
strong brand image in market provides it competitive and enables firm to retain more customers.
5

Employees: Ford Motor Company has skilled and knowledgable manpower which assists
in increasing productivity and profitability of company and provides it high competitive
advantage in market over its competitors.
2.2 Benefits, opportunities and challenges of international trade and globalization
Ford Motor Company is one of the leading auto-mobile firm that offers its products
globally. It turns its attention to key markets of world including Europe, Asia and South Africa
where firm faces challenges in terms of overcapacity and slowing sales. All three regions brings
challenges for next leadership group, but in Europe, the situation is critical and could derail hard
fought of ford to come back from bankruptcy (Dunning, 2014). The issues confronting in
European market as overcapacity, sovereign debt issues, less demand of vehicle. In past three
years, firm has been navigating Europe's issues – initiating with debt crisis and developing by
potentially seismic shifts and high pension costs in buying behaviour. Issues in Russia are of
specific concern. From Ukraine political crisis to rapidly deteriorating economy of Russia, the
nation's woes are hurting results of Ford Motor Company. South America is also striving
Opportunities:
Growth and business expansion in international markets is seen as a big opportunity for
Ford Motor Company. The firm has an opportunity of growth and expansion through market
penetration as well as product development. The company has also an opportunity to enhance its
financial standing through its supply chain expansion to attain more improved economies of
scale and decrease production cost (Shenkar, Luo and Chi, 2014). In global market Ford Motor
Company has an opportunity of growth through innovation and expansion. Firm can manufacture
its electronic hybrid car in order to attract more number of customers and gain high profitability
in international markets. Ford Motor Company is aggressively expanding its market share
globally and is anticipated to record CAGR of % by marking a million unit sales till year 2020.
Benefits of globalization and international trade:
The free trade agreement of North America is entered into force on 1 January, 1994
which eliminates most barriers to free trade among United States, Mexico and Canada. Ford is
one of the company which is able to benefit by improving its production operations without any
distortion of tariffs as well as other custom barriers. In Mexico, firm has three manufacturing
facilities that provides several benefits to Ford. The nation has relatively low cost and skilled
labour and is geographically well located to ship to South America or U.S., has wide ranging
6

government policies and trade agreements that promoting exports. In year 2015, Ford and two
other companies exported around 1 million vehicles to over 100 distinct foreign markets
(International Trade, 2015). A large part of company's woes in Europe root out from the reality
that in United Kingdom, Ford is a number one brand where most of the European profits of auto-
maker are generated (Ford Motor Company's Third-Quarter Results, 2018).
TASK 3
3.1 Implications for businesses of regulatory and cultural diversity in international markets
A firm can not only depend on its current approach of conducting business when it comes
to taking business at international level. Each nation has distinct set of variables that can be new
for offshore firm. For instance: rules and regulations, culture etc. Expansion of business into
international boundaries can be either by mergers and acquisitions or through internal growth. In
case of internal growth, there may exist cultural mismatch and decisions to establish business in
new country from scratch as it takes a lot of time to learn and adopt new culture and its traits
(Hsu, Chen and Cheng, 2013). Merger and acquisition provides benefits to business in terms of
its growth in international market as the parent firm already operated as per the local cultural
preferences. It is not easy for firms to expand their businesses in international markets as each
country has its own distinct culture and regulations. It is very necessary for companies to keep
aware with laws and regulations as well as culture of respective country before taking decision of
expanding business in international market. Operating business in international market is
attainable if firm is flexible enough to work in local regulations and laws. Businesses needs to
review some aspects like duties and treaties, corporate organisation practices, trademark
requirements, labour and employment laws etc.
3.2 Significance of CSR and sustainability in supporting business success
Corporate Social Responsibility refers to an approach that contributes to sustainable
business development by delivering social, environmental and economic benefits for all its
stakeholders. It is when a firm operates in sustainable and ethical manner and deals with its
social and environmental impacts. It highly contributes in success of business by improving its
brand image in society (Jizi and et. al., 2014). CSR has many advantages for business like better
brand recognition, operational costs savings, organisational growth, better financial performance,
easier access to capital, positive business reputation, increased sales, high customer loyalty and
7

greater ability to attract and retain talented staff. All this ultimately leads the business towards
long term success. Engagement of firm in CSR activities improves its image in society and
provides it competitive advantage in market that leads company towards success.
Business Sustainability refers to managing triple bottom line, which is a process through
which firms manage their social, environmental and financial risks, opportunities and
obligations. It is a key success factor of business as sustainable practices leads it towards more
reliable products, better corporate culture and greater profitability for long term. Sustainability is
important for businesses as stakeholders are now demand high economic performance along with
being environmentally and socially sustainable. As the external environment is frequently
changing and needs of customers are evolving very fast, sustainability helps businesses in
managing risks (Bansal and DesJardine, 2014). Material risk for any firm might include
migration, cyber security, climate change impacts, energy prices or corruption. A well-managed
strategy to sustainability can assist in managing biggest risks in organisation. Maintaining
sustainability within business allows company to acquire economic value.
3.3 Potential conflicts between corporate strategy and ethical, social, sustainable responsibilities
Organisations engage in CSR takes responsibility for influence of its activities on
employees, customers, communities, environment and shareholders in all operational aspects.
This effort extends beyond obeying laws as firms voluntarily takes steps for improving the life
quality of manpower, their family and society as well. CSR creates impediments in operating
business. With growth in business complexity and concerns regarding sustainability, their might
be conflict among improvement of long term profitability of company and its contribution to
society welfare (Hilson, 2012). One main issue is that corporate social responsibility simplifies
some complex evidence and fails to acknowledge that. At last, trade-offs should be made
financial position of firm and ethical outcomes.
CONCLUSION
As per the above mentioned report, it has been concluded that International Business
Environment comprises of economic, social and cultural, tax, regulatory, technological, legal and
political environment. Various tools like SWOT analysis, PESTLE analysis, Porter's five force
model are used by businesses in order to analyse international markets. Consideration of macro
and micro environment factors helps firms in formulating effective strategies and policies that
8

provides competitive advantage to company. Corporate social responsibility and sustainability
are essential aspects and are highly important for businesses as it assists in improving its image
in society and gaining high competitive advantage in market over competitors.
REFERENCES
Books and Journals
9

Bansal, P. and DesJardine, M. R., 2014. Business sustainability: It is about time. Strategic
Organization. 12(1). pp.70-78.
Craig, T. and Campbell, D., 2012. Organisations and the business environment. Routledge.
Dunning, J. H., 2014. The Globalization of Business (Routledge Revivals): The Challenge of the
1990s. Routledge.
Glatzer, W., 2012. Cross-national comparisons of quality of life in developed nations, including
the impact of globalization. In Handbook of social indicators and quality of life research
(pp. 381-398). Springer, Dordrecht.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Hilson, G., 2012. Corporate Social Responsibility in the extractive industries: Experiences from
developing countries. Resources Policy. 37(2). pp.131-137.
Hsu, W. T., Chen, H. L. and Cheng, C. Y., 2013. Internationalization and firm performance of
SMEs: The moderating effects of CEO attributes. Journal of World Business. 48(1).
pp.1-12.
Jizi, M. I. and et. al., 2014. Corporate governance and corporate social responsibility disclosure:
Evidence from the US banking sector. Journal of Business Ethics. 125(4). pp.601-615.
Kehoe, T. J. and Ruhl, K. J., 2013. How important is the new goods margin in international
trade?. Journal of Political Economy. 121(2). pp.358-392.
Shenkar, O., Luo, Y. and Chi, T., 2014. International business. Routledge.
Stock, T. and Seliger, G., 2016. Opportunities of sustainable manufacturing in industry 4.0.
Procedia Cirp. 40. pp.536-541.
Online
Effect Of Globalization On National Economies, 2015. [Online]. Available through:
<https://www.linkedin.com/pulse/effect-globalization-national-economies-business-
stamatis-alamaniotis>
Ford Motor Company PESTEL Analysis, 2017. [Online]. Available through:
<http://panmore.com/ford-motor-company-pestel-pestle-analysis>
Ford Motor Company's Third-Quarter Results, 2018. [Online]. Available through:
<https://www.fool.com/investing/2018/10/26/the-good-the-bad-and-the-ugly-in-ford-
motor-compan.aspx>
International Business Environment, 2017. [Online]. Available through:
<https://enterslice.com/learning/international-business-environment-ibe/>
International Trade, 2015. [Online]. Available through:
<http://www.americanautocouncil.org/international-trade>
Tools for International Business Environment Analysis, 2017. [Online]. Available through:
<https://enterslice.com/learning/business-environment-analysis/>
10