Global Factors Affecting Business Essay

Words: 1024
Pages: 5

Global factors affecting business
The way of running the business differs from country to country. The marketing, sales and technical skills are required to increase the productivity of business. Business in general is enhanced when people from different cultures find new approaches to old problems, creating solutions by combining cultural perspectives and learning to see issues from the viewpoint of others.
Business Environment consists of factors influential to the business operations. These factors are classified into two broad categories. These are:

a) External or Uncontrollable factors of Business environment. b) Internal or Controllable factors of Business environment.

External Factors: The factors those are not
…show more content…
In case of reduction in demand the prices will go down. Business strategies should be developed keeping in mind these fluctuations. Other economic changes that affect business include changes in the interest rate, wage rates, and the rate of inflation. Incase of low interest rates and increase in demand Businesses will be encouraged to expand and take risks. Therefore, business strategies should have room for such fluctuations.
All these factors need to be considered in any global business venture:

a. Tax Systems
b. Investment Considerations and Allowances
c. Sophistication of Financial Markets – ease with which capital can be moved and raised
d. Commodity Prices – oil, energy, metals
e. Monetary and Fiscal Policies – interest rates, tax regimes, government aid
f. Internal Regulation and Bureaucracy – can be stifling!
Exchange Rates

d. Political factors - This refers to the changes in government and government policies. Political factors greatly influence the operation of business. This has gained significant importance off late. For example: companies operating in the European Union have to adopt directives and regulations created by the EU. The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. Business must consider the stability of the political environment, government’s policy on the economy etc.

• Political Change – regime change through coup, violence, etc.