Social and Cultural Environment:
The biggest environment is the social environment because business is carried on by the
people (businessmen), for the people (consumers), and through the people (executives and
workers). Social and cultural factors in various countries of the globe which affect the
international business environment are:
Attitude of the consumers and management;
Changes in the population pattern.
Influence of religion and tradition.
Spread of education and its quality.
Role of social and cultural institutions.
General standard of living.
Technological Environment:
Nothing ever is permanent except change. Technological improvement brings about new
techniques of production, new products, automation and modernization. Technology changes
rapidly and the firm, which cannot adjust to such a changing technological environment, may
not survive. The technological environment consists of:
State of indigenous technology
Intermediate or appropriate technology
Transfer of technology
Technological collaborations
Policy and legal framework 'for research and development
Fiscal incentive for research and development
These technological changes enabled international business' to take the shape of multinational
and transnational business.
Economic Environment: - International business is mainly affected by the economic policies
adopted by the governments of various countries. The global economic environment has
become favorable due to the establishment of the WTO and emergence of the global market.
The changes in the international economic environment have been revolutionary after 1990.
The following factors determine international economic environment:-
- Types of economic system adopted by the country
- Continuous growth in quality and quantity of industrial output
- Liberal and progressive policies of government
- Rising levels of income and employment
- Just and equitable Type distribution of wealth in the economy
- Check over monopolies
Political Environment: - Change in the government policies or government itself, many times
bring about practical difficulties in carrying on business operations. Sometimes, the
government takes over some key units in the interest of the nation. Political environment in
the country is created by the following factors: -
Political system accepted by the country, viz., capitalism or socialism
Existence of political parties, i.e., dual party or multi party system
Parties in power, i.e., ideologies and policies of the government
Legislative and judiciary systems
External affairs and relationship
International Environment: - International marketing environment is also affected by the international environment.
The factors which make up the international environment are: -
International socio-economic and political changes
Contribution of foreign capital
Import and export trade
Functioning of multinationals and transnational
International trade cycles
International relations and agreements
War and peace conditions
Legal Environment: - In every economy, whether socialistic or capitalistic, private sector is
subject to government control. Government controls the functioning of private sector through
its various policies and legislation. The factors which determine regulatory environment are :-
Industrial planning and policies
Tax structure and subsidies
Import controls, tariff and duties
Licensing system
Policy regarding Foreign Direct Investment (FDI)
Policy decisions on joint ventures and foreign collaborations
Ecological Environment: - Ecological degradation and its protection have become a major
issue in most of the developed and developing countries of the world. In order to protect our
precious environment, series of acts and regulations have .been made by the government.
These acts and regulations also affect the international marketing: environment.
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