4 Most Important Dimensions of International Business Environment

1. In Terms of Levels, Kew and Stredwick have mentioned general environment (also known as the societal environment, the far environment or the macro environment) and task environment. Forces in the general environment have a major impact at the level of the industry.

These forces include national culture, including historical background, ideologies and values; scientific and technological developments; the level of education; legal and political processes; demographic factors; available resources, the international environment; and the general economic, social and industrial structure of the country.

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The task environment covers the forces relevant to an individual organisation within an industry. These include consumers, suppliers, competitors, regulators, the local labor market, and specific technologies. According to Kuratko and Hodgetts, task environment includes elements or groups that directly affect and are affected by an organisation’s major operations. The task environment of a venture is often referred to as its industry. The societal environment includes more general forces – those do not directly touch the short-run activities of the organisation but can, and often do, influence its long-run decisions.

Luffman et al have used the terms ‘given’ and ‘Discretionary” environments. Given environment is one where a company can do little about the general state of politics, economics and so on, but discretionary environment refers to a state where it has some discretion over who it buys from and sells to.

The distinction between general and task environments is not a static one. Elements in the general environment are continually breaking through to the task environment, and impacting on individual organisation.

2. In terms of perspective, Coulter has summarised the various studies of organisational environments from two different perspectives – (i) environment as a source of information (as an information perspective the environment is viewed as a source of information for decision making), and (ii) environment as a source of resources.

The more the environment complex, and dynamic, the more uncertain it is, more the information managers need about the environment to be able to make decisions. And where do managers get this information? They get it from doing an analysis of the external environment.

In the second perspective, environment is viewed as a source of scarce and necessary resources which are sought by competing organisations. As the environments become more “hostile”, organisations are subjected to greater uncertainty, and managers look for ways to acquire and control those critical resources.

3. One another way of classifying environment is to describe it as (/) Internal, (ii) Macro, and (iii) Micro. Internal environment refers to those variables which can be controlled by the organisation as they reside within the organisation. Macro environment is the same as ‘general environment’ discussed above.

Any one component of macro environment may influence on other component(s) of macro environment. Macro environment is comprised of Political, Legal, Economic, Demographic, Socio-cultural, Technological, global, and National Competitive Advantage. The micro environment refers to the competitive environment, referred as industry environment, the environment in which an organisation faces in its specific arena.

4. One more way to classify environment is on the basis of systems approach, referred to as input-output approach. If an organisation is receptive to its environment it is called ‘open system’. Herein an organisation is affected by the environment and can also influence that environment. Where the environment is not dynamic but stable, the organisation can afford to have closed system.

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