Factors that affect International Business
Clarke Ricks
School of Business, Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
April 8, 2021
Factors that affect International Business
Various companies are involved in transacting their goods, services and capital across
the national borders and are affected by number of factors. various restrictions are also
imposed on companies that are transacting their business at international level. various
internal and external factors directly impact the working of these business firms. Various
external environment factors directly affecting the working of large MNCs include social
conditions of economy, political and legal factors, etc. However, internal factors can be
controlled by the management team of companies by taking various strategic initiatives.
Political factors:
Various political factors affect the international factors. Political factors such as changes
in tax rates, policies and actions of government, political stability of country, foreign trade
regulations etc. affects the working of an international business firm. Lack of political
stability in the country directly impacts the operations of business firm. Also, various tax
policies and government initiatives sometimes hinders the expansion of business in other
countries. Thus, effective political environment of business influences the growth of
business firm (Shaw, 2018).
Micro environment of business includes various internal environment factors of
business firm that affects the performance and decision making of an organization. various
micro environment factors of international business include customers, competitors,
distribution channels, suppliers, public, etc. Thus, micro environment factors are factors that
exist in the immediate operation environment of business and directly impacts the
operations of business organization. Micro factors of business also involve various factors
relating to resource availability and usage of resources (Pratap, 2019). Following is the detail
discussiCustomers are important micro environment factor of business that impacts the
operations of business organization.
Customers have gained lot of importance in 21st century. Business firms in current
times cannot successfully run a business without fulfillment of needs and wants of
customers. Also, customer preferences changes at regular pace which influences the
working of business firms (Seidel, 2019). Thus, customer focus and engagement have
become key factor for business firm to be considered while determining the type of
products and services to be offered to customers. Customer engagement also influences the
competitive position of business firm. For instance, Woolworths has taken various initiatives
to provide convenient services to customer. Woolworths also has developed online portal to
provide convenient shopping facility to customers. Various store innovation has also been
done by Woolworths to ensure that customer do not face any difficulty in shopping.
Woolworths also ensures that customers get fresh fruits and vegetables. Along with this,
Woolworths is known for providing superior services to customers at reasonable prices. All
these initiatives have helped Woolworths to achieve competitive position in industry. In
addition to this, Woolworths also has adopted number of rapid prototyping techniques to
try new ideas with customers and to gain their feedback from customers regarding various
products and services (Woolworths Innovation Lab,on of various micro environment factors
of business: Suppliers provides various raw materials, technology, human resources and
other components to the company. international business firms operate on large scale and
procure resources and other supplies from number of suppliers. It is must for international
business firm to have well managed supply chain.
Business firms should remain in touch with various suppliers to reduce their operational
cost and to ensure that various raw materials required in business are readily available (HQ,
2015). However, growing concern for quality products and need for sustainable and ethical
products has increased the bargaining power of number of suppliers. Location, price
charged by suppliers, quality of products provided by suppliers etc. affects the selection of
suppliers by the business firm. Also, price charged by various suppliers directly impacts the
cost structure of various goods produced by the business organization. For instance,
Woolworths has developed effective supply chain management system by developing
effective relations with number of suppliers and procuring timely supplies from suppliers.
Various products of suppliers such as fresh fruits and vegetables are directly stored in the
retail stores of the company. Thus, Woolworths ensures that fresh and quality produce is
procured from suppliers.
Competitors factors affecting business:
Various competitive factors also affect the working of company. Large number of
competitors exist in the industry and initiatives undertaken by competitors directly
influences the working of company. Market share of the competitors also affects the
profitability of business firm. However, larger competition in the market signified huge
demand for the product in the market. Products and services provided by competitors also
creates new demand trends in the industry by creating demand for new products and
services which further reduces the demand of firm products and services in the industry.
Rapid change in the needs of customers is also the result of actions taken by
competitors. This further influences the business organization to bring some innovation and
develop products according to the needs of customers ("Competitive Forces Affecting
Business Environment", 2019). Thus, it is must for business firms to provide differentiated
products to customers to gain larger market share. For instance, Woolworths has reduced
its prices as a result of reduced prices of ALDI and coles stores. Also, Woolworths also has
taken ndustry rivalry affecting business:
Rivalry among the existing competitors also affects the operations of business firms.
Behavior of competitors affects the operations of business organization. Competitive rivalry
also pressurizes business firms to offer quality produce to customers at reasonable prices.
Also, competitive rivalry influences business firms to increase their spending on product and
service innovation. For instance, huge competition exists in the retail industry and various
dominating firms such as Coles supermarkets, Wes farmers, ALDI, etc. are competing against
one another to achieve higher market share in the retail industry ("Woolworths's
Competitors, Revenue, Number of Employees, Funding and Acquisitions", 2019).
Porter 5 forces analysis
porter 5 force analysis is one of the important framework that helps in evaluating the
competitive position of business firm. Various factors influence the profitability of business
firm. Rivalry among existing competitors, chance of entry of new firms, availability of
substitute products, availability of customers and suppliers etc. directly affects the
profitability of business organization (CHAPPELOW, 2019). Porter 5 forces are the
competitive forces that helps in determining the strengths and weaknesses of business firm.
