Global Business Report: Implications, Factors in Developing Countries

This report delves into the complexities of global business, specifically examining the implications for international firms operating in developing countries. It addresses the challenges and opportunities arising from globalization, emphasizing the importance of understanding legal, political, cultural, and economic differences between home and host countries. The report highlights the significance of macro-environmental factors, particularly economic indicators like balance of payments and business cycles, in shaping business strategies and influencing profitability. It also explores the use of tools like PESTLE analysis to assess market trends and identify potential risks and opportunities. The analysis underscores the need for businesses to adapt to local conditions, consider factors such as labor laws and cultural nuances, and navigate the complexities of international trade to achieve sustainable growth.

Global Business

Table of Contents
INTRODUCTION...........................................................................................................................1
O 1 Implications for International firm doing business in developing country's...................1
O 2 Explaining the most relevant macro-environment factor for an international business
when choosing to internationalise into an emerging/developing country?............................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8
APPENDIX....................................................................................................................................10

INTRODUCTION
Global business is defined as International trade. It refers to all business activities
which involve cross border transactions of goods, services, and resources between different
nations. The global business is also known as global business. Global business is being
conducted by organisation in order to reduce the impact off various economic factors on
business operations. The company operating in global environment has worldwide approach to
market, production activity and operations in many countries.
The aim of the study is to development the understanding about the implications for
international companies doing business in developing countries. It also includes the significant
consideration for international enterprises. The report will have focus on explaining the most
relevant macro environment factors for global business that is planning to operate their
business activity in developing country.
O 1 Implications for International firm doing business in developing country's.
It has been stated by article that Globalisation is a major challenge that is being faced
by major of the companies planning to operate their business globally. The article start up
have become more popular in emerging market has stated that international market are poised
for huge growth that will bring prosperity for the organisation. But there are many obstacles
can occur in realizing this potential (Lynch and Hawkins, 2017). Various start up accelerator
programmes are initiated in order to assist firm to accelerate their growth progress. According
to this article the aim of emerging market include Encouraging start ups organisation to
develop their potential for raising growth capital (Startup Accelerators Have Become More
Popular in Emerging Markets — and They’re Working, 2017)
Due to globalisation it has become more difficult to identify global strategies and to
select countries for doing business. Many of the firms are using traditional strategy .This
strategy have focus on standardized approaches to new market. Many of the organisations are
struggling to formulate successful strategies.(Caganova, Cambal and Weidlichova Luptakova,
2015)
Yes the legal, political, cultural and economic differences in home and host countries
are the important factors to be considered by international organisation. These factors have
great impact on the growth, profitability and sustainability of enterprise. These factors require
special consideration in order to avoid various risks associated with launching product in
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internal market. Developing understanding about legal, political, social and economic
environment increase the probability of product success in market. It reduces the various risk
associated with organisation profitability and reputation. The degree of risk in conducting
business in particular country have great influence on manager decisions. These factors may
create barriers in operational activities and they have direct effect on firm decision making
process. Gaining knowledge about various external factors helps managers in analysing and
identifying various opportunities and threats that are related to facilitating international trade.
It provides opportunity to business unit in determining the potential of growth and revenue. It
is essential for business to develop understanding about these elements in order to evaluate the
effectiveness of their strategies and to align plan with powerful forces of changes impacting
business operations.
It has been identified that Political, economic and environmental issues are increasing
becoming the remit of international business. If the purpose of the enterprise is to gain
competitive advantage in international business. The basic consideration include the enterprise
structure and its location. In order to gain competitive advantage the company is required to
have focus on its business structure. It is needed by firm to develop expertise in their
employees depending on their industry, product and size of their business. These elements
have direct effect the demand of their product in the market. Employees get more influenced
by these constituents.(Caiazza and Audretsch, 2015)
Along with structuring business unit and gaining competitive advantage in
international environment. Its is important for the organisation to develop understanding about
laws and regulations of host country. The business is needed to fulfil requirement in order to
conduct successful international business. Before planning to conduct business operation in
developing country it is essential for business entity to analyse its eligibility to trade and to
consider legal cost as well as tariff required to facilitate international business. These factors
have direct impact on the growth and success of business.(Cavusgil and Knight, 2015.)
The enterprise should also focus on the other requirement such as labour and
employees. They should consider these factors as the need of these factors differ from country
to country. For instance Labour Act in Australia may differ from labour law in south Africa.
In such case it is advisable to organisation to investigate to gain knowledge about various laws
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and regulation in Host country. As this factors have direct effect on the sustainability and
profitability of firm.
Besides from legal and economic factors the company is required to have focus on
cultural factors as well. These factors may create challenge for the business unit to survive in
competitive environment. The organisation doing business in global environment must follow
Foreign Corrupt Practises act. The aim of the act is to eliminate bribery and unethical business
practices. The company can engage themselves in legal activities in order to gain brand
reputation in international market. These activities will assist firm in increasing their profit and
enhancing their growth process.
In order to avoid negative effect of these elements it is required by enterprise to
facilitate country analysis. This analysis will assist business entity in facilitating core global
business activities in effective and successful manner. This technique will help business unit in
determining the needs and demands of customers in host country. It will enable the company
to fulfil demand of customers and it will provide opportunities to increase their market share
globally (Demangeot, Broderick and Craig, 2015)
Pestle analysis is the effective tool that can be used by organisation in order to develop
better vision about the significant market form in terms the present and future market trends.
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O 2 Explaining the most relevant macro-environment factor for an international business when
choosing to internationalise into an emerging/developing country?
According to the article in newspaper News corp Said digital advertising now
accounted for almost 40 percent of its profits and wanted to increase their earning at Australis'
REA group in coming years. Chief Financial officer Susan LEE Puccini would not put a dollar
on how much it expected to cut from the newspaper in 2017-2018 .According to the article
News Corp made heavy job cuts in its Australian news publishing arm during the year. Its is
taking initiatives and framing policies to reduce $ 40 million in cost from the business
(McCann, Bartosek and Aboud, 2017)
The article has focus on reviewing the macro environment indicators to develop better
understanding about them. Environment refers to the set of separable components, which are
external to environment (Australia must make the environment integral to economic decision-
making, 2017)
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Illustration 1: External environmental factors
Sources: (Marketing environment, 2016)

Its states that it is essential for organisation to recognise the need of natural capital for
continuing business in effective manner. It’s also important for enterprise to analyse the
availability of other resources. Firm should conduct various analysis in order to measure the
effect of various macro factors on business operation.
The macro environmental constituent consists of nonspecific aspects in the business
surroundings that affects the enterprise growth and influence its strategies. The macro
environmental factors includes social, political, economic, and technological factors.
The economic factors are considered to be the most relevant factors for an international
business when selecting to internalise into a developing country. Economic factor is defined as
the character and direction of economic system within which organisation operates. Economic
elements include balance of payment, the state of business cycle, distribution of income
among population, government monetary and fiscal policies (Clark, and et.al., 2016.) The
economic factor have direct effect on the growth and profitability of firm. For instance in
value of dollar may create and increase in value of South Africa currency may create
transactional benefit for organisation. These elements have both positive and negative impact
on firm. The impact of these elements varies according to the industry. Such Factors have
positive impact on the industry those products are being protected by the trade barriers. This
elements assist firm in exploring opportunities to stimulate its market and allow them to
develop enough potential to create economies of scale. For instance the price inflation may
decrease the quality of various products offered by the organisation. The import restrictions
can create barriers for firm to fulfil their demand of various resources required for facilitating
business operation .The economic crisis in the host country have direct effect on the growth
and profitability by firm. According to this ecosystem accounting gives platform for Full
integration of nature with standard economic data on production, income and wealth. The
Accounting ecosystem framework melds human production and consumption with the benefit
provided by environmental ecosystem./(Demangeot, Broderick and Craig, 2015.)
Balance of payment is defined as the difference in the value of gods bought and sold
by the domestic people in host country. (Ehrlich, Shoham and Asseraf, 2016.)
The business cycle is one other element that have consequences on the operation of the
firm .The economic crisis in the host country have direct effect on the growth and profitability
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by firm. Period of recession and depression have great effect on the capacity of the
organisation to purchase raw material for manufacturing goods. In such situation the enterprise
generally prefer to postponed their purchase as this may lead to compromise with the quality
of product and it hinders the production process. The organisation avoids to purchase of
various equipments and they postponed their expansion strategy.(Schmid, Grosche and
Mayrhofer, 2016.) Economic factors have direct influence on the consumers. Lower income of
consumer may lead to decrease in demand for company product these may further lead to
reduce profit. The economic downturns result in decrease in production capacity by industry,
increased borrowings etc.(Kaynak and Kucukemiroglu, 2015)
Besides negative impact economic factors have positive influence as well. Recession
may lead to minimising waste, developing more realistic perception about working
environment. Postpone purchase may lead to increase in focus on service and maintenance of
existing machinery which will further results in reduction in cost of purchase and efficient use
of resources. This factors provide an opportunity to firm to built its image and to achieve its
objective of cost reduction. Limited job opportunities during period of depression motivates
person to get satisfactory jobs. In period of depression the firm has low profit and there is
decrease in demand for its product. In order to avoid the effect of seethe factors it is required
by organisation to reduce their product prices and profit margins. In this situation it is
necessary for industry to create low cost strategy.(Niederwieser and et.al., 2016.)
The method adopt for distribution system may varies according to the economic
system. The two countries that have same income level may adopt different method for
distributing income. The majority of population in South Africa belongs to middle income
level. On the other hand there are very small number of people belonging to high level of
income group.
There are many developing countries whose citizens are either highly rich or extremely
poor. The income level of individual have great impact on the person buying behaviour. The
changes in individual income may change its preference that has direct effect on the
organisational profitability. The increase in income of individual may lead to rise in demand
of company products and that may further results into profit for firm.
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Transfer payment within Australia has changed the distribution of income.. Money is
provided to individual using transfer payment system. This system has enabled the country to
reduce the income gap and has provided the individual and organisation to make purchase of
various goods that are being demanded by them.(Adar, and et.al.,2016)
Various momentary and fiscal policies framed by government has direct effect on the
business activities. These factors have effect on the money supply and interest rate. Monetary
policy is implemented by central bank while the fiscal policy decisions are taken by national
government. However both these policies are framed by government in order to influence the
performance of economic system. These policies have positive impact on the business as it
helps organisation in maintaining their financial stability and enhancing their financial growth.
The negative impact of these factors is that it influence the firm decisions regarding the
allocation of various resources. The various other economic factors such as change in
exchange rate, interest rate and economic trend have direct influence on various business
decisions. These elements have direct effect on the various strategies adopted by company for
fostering growth and success.(Mor, Kaur and Khaiwal, 2016.)
CONCLUSION
The study has concluded that various macro environmental factors have great impact
and influence on the firms' growth and success. Among all the factors economic force is the
most relevant macro-environment elements that require special consideration by organisation
that are planning to operate their business in global environment. It has been analysed by the
report that legal, political, cultural and economic differences are very significant factors that
are required to be considered by the enterprise as these have direct impact on the various
strategy and decision of company. It has been concluded from second article that the recent
advances in environmental factors have provided organisation various opportunities and
increase the possibilities for firm to operate successfully in global environment.
The various strategy has been suggested by the project in order to select best country
for expanding its business. Adoption of this strategy by industry will help them in gaining
competitive advantage in international business environment.
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APPENDIX
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