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International Business
For making your business successful in the foreign markets, you must learn how to deal with different factors involved in international environment and the effects that they pose on your brand’s success. That’s why it is important to plan ahead to compete against your competitors along with some other challenges that your brand will face like Sociocultural differences among nations, the restrictions posed by legal as well as political reasons, keeping technological advancements in quick progressions and the factors involving customers’ security. The factors above are of extreme importance, that’s why we compiled this article to assist you to get that extra help through which you can overcome such hurdles. So, read on!
Factors Affecting International Environment Sociocultural Environment Getting the hold on cultural differences for any organization that plans to enter the foreign market is extremely necessary, since failure in doing so can lead to huge misunderstandings and mistrust between the brand and its new “would-be” customer base. Furthermore, the brand must learn how to prioritize the target market’s cultural taboos and practices according to conditions in the international environment.
In addition to formal differences of cultures, management differences as well as variances of the importance of work for employees from country to country and brand to brand. For example, the belief of considering the work an important part of their life for Japanese makes them hard working. The priority of Chinese in considering the harmonious environment to be a lot better than day to day productivities or the leadership qualities of Moroccan women can give your brand that huge boost which it deserves. Furthermore, the most powerful of all other sociocultural differences are the language dissimilarities that expect a lot more hard work than they would have done in their own localities. Moreover, it is important to note that not all of the words of one language can be translated to others whereas meanings of phrases change from language to language. Just like Coca Cola’s slogan “Coke adds life” gets the Japanese translation of “Coke brings back life to your ancestors”, the examples are endless. This thing proves that most of the companies are set back just by lingual diversities as compared to all other environmental resistances.
Legal Environment Well! It’s not just culture that changes from country to country, in fact, the legal aspects of the business are also subject to change from border to border. It is a fact that in America, new laws are regulated every now and then to ensure complete elimination of negativities of activities of US firms that involve them in international trade. Furthermore, it is also true that the rules of the country may be taken for granted in other countries like bribery which is forbidden in the US but in another foreign market, it might be a part of regular business. It is necessary to know this because when a business enters the international environment, it has to follow the rules of the host country. Therefore, making your brand adaptable in such conditions is surely going to pay off either sooner or later.
Moreover, variations in tax terms and policies and the payment gateways, as well as the amount of tax that is to be paid by the brand in that foreign market also, determines the success rate of any firm out there. Since in some countries, the rules for outside firms are pretty much strict as compared to the domestic firms and therefore, the tax rates may be higher accordingly. It is also better to gather as much information as possible for the economic structures of the target marketplaces. Let’s say what if the population of that market suffers from very low income, then it is not going to matter that how much brand is popular and how much it is going to be helpful for them, they won’t be able to buy it. Therefore, the brand may fall prey to decline. Moreover, the study of inflation, as well as the fluctuations in exchange rates, is also necessary for long-term stability of your brand name.
Customers’ Security With the growing number of products and technological advancements as well as their connectivity to the whole world, ensuring your customer’s security both physically and in terms of privacy is vital for your brand for keeping itself in working condition. Because of strict US policies different governmental agencies take steps to put investigations against the products that can lead to potentially unsafe conditions for their country’s dwellers. For the US, such policies result in long waits between new product and idea releases as well as immense increase in the costs of research but the situations may not be same in every country in the international environment.
Technological Environment Technological advancements ranging from classical cell phones to most modern robots are occurring around the world but the advancement level of a country may not be similar to other, therefore a thorough research for the compatibility between brand’s tech to the host country’s is necessary. That’s when a company can expect sales of its products in the target market. Furthermore, making some friends that are technically more or equally advanced than yours in the international market can surely help you gain a high pace both in terms of research as well as development. Therefore, it’s important to choose friends wisely.
Political Environment An example of an ever-changing international environment full of fostering and hindering factors that can prove it to be one of the primary potential threats to a brand success is the political environment. The stability of any country’s government is extremely volatile and is subject to the changing behaviors of citizen groups and their support, therefore a government’s economic and political thinking can change overnight.
Dangerous situations may arise for foreign businessmen if execution of proper steps is not ensured in the outer markets. The case is stronger for political unrests and relative instabilities of governments of Iraq, Honduras, Somalia and especially Russia. Moreover, civil wars and a sudden power change can lead to the international environment, which can be hostile to foreign firms and their investments.