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uk

Global Factors Influencing

Business Strategy

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 http://www.bized.co.uk

Global Factors Influencing

Business Strategy

Copyright 2007 – Biz/ed

 http://www.bized.co.uk

Strategy

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Strategy
• Key strategic decisions relate to:
– Access to international markets
• Spotting new markets
• Building exports
– The extent to which the business will be
competitive in international markets
– The effect on decision making of the
existence of trade blocs
– Consideration on the necessity and
importance of acquisitions

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Trade Blocs
• Trade Blocs influence the ease of access to
new markets and affect the relative costs of
trading in different regions of the world:
– EU
– NAFTA
• Locating within a trading bloc could help to
reduce long term trading costs (e.g. Japanese
companies building plants in the UK to help
overcome exposure to the Common External
Tariff)

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International Growth
• Growth not just through expansion of the size of the
firm but also through external growth:
• Acquisitions – mergers, takeovers
• Multi-National Corporations – global presence
• Brings with it a range of issues for the business to
consider - PEST

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Factors

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Factors
• Key factors influencing global
business strategy can be
summarised under the PEST
heading:
• Political
• Economic
• Social
• Technological

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Political
• Political Change – regime change through coup,
violence, etc. Change in government through
democratic election can influence future business
strategy.
– e.g. the opportunities that are now available in Russia and
Eastern Europe following the collapse of communism
• Political Uncertainty – in countries like Zimbabwe,
Sudan, Venezuela. Political uncertainty can lead to a fall
in investment by businesses and influence decisions on
expansion and business ventures
• War/Terrorism – create uncertainty
• Political Doctrine – can affect the ease with which
business is conducted

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Economic
• All these factors need to be considered in any
global business venture:
– Tax Systems
– Investment Considerations and Allowances
– Sophistication of Financial Markets – ease with which
capital can be moved and raised
– Commodity Prices – oil, energy, metals
– Monetary and Fiscal Policies – interest rates, tax
regimes, government aid
– Internal Regulation and Bureaucracy – can be
stifling!
– Exchange Rates

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Social
• Religious Considerations –
appropriateness of some
business ventures – e.g.
selling condoms in staunchly
Catholic countries
• Impact on local communities
of business development –
availability of jobs, training,
environmental impact for
these communities
• Impact on the environment –
The impact on the local environment not only can impact on the businesses
affects human communities but can also inflict image
widespread ecological damage. This imposes social
costs on the environment but also can cost the • Ethical considerations
business large sums in legal costs and
compensation.
• Cultural issues
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Technological
• Availability and developments in technology
can have a powerful influence on global
business strategy:
• e.g.
– Access to bandwidth
– PC ownership
– Technology and sales – processing payments and
sales
– Compatibility of technologies in Business
Management – accounting systems, language
differences, etc.

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