Please read Case 2: Venezuela under Hugo Chvez and Beyond
Analyze the effects of culture, politics, and economic systems in the context of international business
Identify the major components of
Carry out effective self-evaluation through discussing in the international business context case study and questions are attached
International business
International business refers to trading services and goods in a worldwide market. It can also be recognized as the globalization of trade. An International Business Environment (IBE) refers to the surroundings in which international companies carry on their businesses. It plays a critical role in the development and growth of a country.
An International Business Environment (IBE) involves different aspects like political risks, cultural differences, exchange risks, and legal and taxation issues. Thus, it is mandatory for the people at the managerial levels to work on factors comprising the international business environment as it is crucial for a countrys economy.
Forms of International Business Environment
- Cross border trading (Import and export)
- Franchising
- Licensing
- Joint venture
- Foreign Direct Investment (FDI)
Types of International Business Environment
The various types or aspects of the international business environment are provided below.
Political Environment in International Business
The political environment means the political risk, the governments relationship with a business, and the type of government in the country. Conducting business internationally implies dealing with different kinds of governments, levels of risk and relationships.
There are different types of political systems, such as one-party states, multi-party democracies, dictatorships (military and non-military) and constitutional monarchies. Thus, an organisation needs to take into account the following aspects while planning a business plan for the overseas location:
- Political system of the business
- Approach of the government towards business, i.e. facilitating or restrictive
- Incentives and facilities offered by the government
- Legal restrictions for licensing requirements and reservations to a specific sector like the private, public or small-scale sector
- Restrictions on importing capital goods, technical know-how and raw materials
- Restrictions on exporting services and products
- Restrictions on distribution and pricing of goods
- Required procedural formalities in setting the business
Economic Environment in International Business
The economic environment refers to the factors contributing to the countrys attractiveness to foreign businesses. It can differ from one nation to another. Better infrastructure, education, healthcare, technology, etc., are also often associated with high levels of The levels of economic activities combined with infrastructure, education, and the degree of government control affect the facets of doing a business.
Usually, countries are divided into three main economic categories, i.e. more industrialized or developed, less developed or third world, and the newly emerging or industrializing economies. There are significant variations within each economic category. Overall, the more developed countries are rich, the less developed are poor, and the newly industrializing are those moving from poor to rich. These distinctions are made based on the Gross Domestic Product per capita (GDP/capita).
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