The External Business Environment

THE EXTERNAL
BUSINESS
ENVIRONENT

INTRODUCTION
The factors which emerges from outside the boundaries of business but affects the
operations of the organisation internally both at micro as well as at macro level is considered as
external business environment. These are such forces on which the business has no control but to
accept them and make changes according to it. The factors are so influencing and powerful that
they forces the management to change or modify their decision which they has taken for the
business growth and survival. When thinking of making entry into international business the
external factors along with the modes are to be considered very carefully. In this research the
researcher has analysed some external forces such as political, economical, socio-cultural and
technological factors. Secondly, the modes of entry into international business and its operations
are also taken into consideration in this research. Lastly, the role of global agents such as World
Trade Organisations and International Monetary Funds are studied with reference to a UK based
electric vehicle manufacturing multinational company that is Arrival Ltd. (Ben Khaledand, and
Gond, J.P., 2020)
PEST FRAMEWORK
PEST is an acronym for the external business environment factor that is Political,
Economic, Socio-cultural and Technological factors. These factors hinders the company's
internal performance from outside the business and impacts the organization at macro level.
Companies wishing to go global must concentrate more on external factors because every
country differs in terms of environment so a proper study and analysis is required for
international business. Considering the external factors impact equally at international level will
prove a mistake for the companies in case of dynamic international market. (Brouthers, 2020)
(Ellington, and Milas, C., 2018). The analysis of each factors are done below:
 Political Factor: Political factor is concerned about the governmental rules, regulations,
and policies which every government formulates for their country's business operations.
When the government changes they mostly modifies the rules and regulations according
to them and the businesses have to follow them whether they like it or not. Arrival Ltd.
operating in numerous countries faces political changes and difference in their rules and
policies. Some countries proves hard for the company whereas some countries proves

good. Arrival Ltd. enjoys some incentives and benefits from the government which
motivates the company to grow.
 Economic Factor: This factor refers to the country's economical and financial conditions
in the form of GDP, GNP, Inflation rate, etc. This factor affects the organisations success
at a macro level. Crude oil prices, share market price at international level affects the
company's success as the share market is very volatile so it is very difficult to find the
right conclusion for the long period of time. The prices of crude oil is very uncertain in
market but Arrival Ltd. by manufacturing electric vehicles supports the economy in its
growth. Now a days people are concern for the environment and are preferring the
electric vehicles which is increasing Arrival Ltd.'s sales ultimately contributing to the
economic growth.
 Socio-cultural Factor: The factor is focused on the demographics and the cultural
behaviour of the society in which every company operates. It is the responsibility of
every organisation to pay attention to the preferences, culture and the behaviour of the
society if wishes to survive for long term. Arrival Ltd. by adopting a low carbon emission
phenomenon and use of renewable energy in its cars supports the society's preference and
works to meet the society's culture. (Fu, 2018)
 Technological Factor: Technological factor involves any kind of change or modification
in the technology which is the need of the hour. If any company not accepting the
technological change then it will become tough for the company to survive in the market
and meet market demands. Arrival Ltd. is known for its latest technological acceptance
which indulges the upgraded technology as soon as possible in its company and offers
updated cars to its customers.
The external environmental factors are uncontrollable in nature by the company, it does
not affects only the organisation but also to the whole industry. Whether they like it or not they
have to adhere the changes and operates accordingly. Every company should scan the external
environment on regular basis so that it does not affects much at a later stage. Neglecting any of
the external environment may prove hazardous for the company and can rise a question on its
survival even. (Hannah, and Scottand Wilkinson, R., 2017)