This chapter discusses the concepts and tools used to analyse global industry. It acknowledges that a specified set of products and geographical boundaries are needed to achieve a satisfactory market. It explains how a more highly concentrated market is correlated to the concentrated power in the hands of a few firms to manipulate prices, the quantity and quality of goods and services, and the terms and conditions of the sale. The chapter also looks at the Porter Five Forces model as a means to analyse industries. It highlights that firms sometimes make strenuous efforts to avoid price competition through the establishment of cartels and systems of price leadership. Moreover, the chapter cites the significance of product differentiation as a major element of competitive strategy and entry barriers in other industries. It adds how complementary products are included as the sixth force of the Porter model.
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Chapter
Analysing Global Industries
Chapter
Assessing Country Attractiveness
This chapter focuses on the process of assessing the attractiveness of countries. It starts with an explanation of how firms tend to follow the process of internationalization through exporting and the establishment of overseas subsidiaries. The chapter lists the reasons for foreign indirect investment (FDI) such as market access, lower production cost, and access to resources. It recognizes China as the leader in scouring raw materials in the world. The chapter explains how firms screen other countries for export and import via their attractiveness of new markets and production locations. It mentions numerous commercial organizations specializing in country and marketing analysis.
Book
Paul Wetherly and Dorron Otter
The Business Environment provides a ‘themes and issues’ approach to this topic. The core business environments and their interrelationships are explored using the established STEEPLE framework in Part One. Part Two then looks beyond these topics and invites readers to analyse a range of contemporary issues such as globalization, corporate power, equal opportunity, and entrepreneurship. Case studies illustrate key topics in real-life, international, and wide-ranging business settings. Unilever's corporate responsibility policy, Samsung and South Korean economic development, and Starbucks on sustainability are just some of the case studies in this book.
Chapter
Conclusion: Looking ahead—managing in a dynamic environment
Dorron Otter and Paul Wetherly
This chapter looks into future trends in the business environment. It discusses challenges for the future global political and economic environments while referencing global and national economic governance, global climate change, global inequality, and political instability. Additionally, the chapter forecasts some social environment trends like migration, social inequality and relative affluence. It includes the predicted trends in the technological environment and global political environment as well. The chapter then explores how analysing underlying political, economic, social, and technological factors could help navigate through the dynamic nature of business environments. Finally, it highlights the complexity of business environments.
Chapter
Corporate Social Responsibility
This chapter looks at the firms’ economic, social, and environmental obligations which come under the term ‘corporate social responsibility’ (CSR). It highlights the idea that firms’ alleged only obligation is to maximize profit in line with CSR. The chapter explains how the international business environment is also battling cultural imperialism alongside different economic and legal contexts. It highlights concerns about child labour and corruption. Then, the chapter looks at the standard company guide provided by Global Compact. It includes a discussion on the UN’s efforts to alleviate poverty called Millennium Development Goals and Sustainable Development Goals.
Chapter
Creating effective trading blocs: what lessons does the European Union provide?
Stratis Koutsoukos and Dorron Otter
This chapter discusses the issue of creating effective trading blocs in line with the European Union. It looks into the advantages and disadvantages of the different levels of economic and political integration at the regional level. The chapter explores various forms of integration and trade in theory. It highlights the role of the World Trade Organization in creating trading blocs in relation to the European Union's institutional and policymaking framework. Next, the chapter differentiates the forms of economic integration relevant to the European Union's development and issues arising from successive enlargements. It also includes a study on the performance of the euro on the global stage.
Chapter
Does business have too much power?
Paul Wetherly
This chapter looks into the issue of businesses having too much power. It defines various aspects of power before differentiating political power against corporate power. Next, the chapter explores shareholder relationships under the play of power concept. It also argues that bargaining power depends largely on the number of buyers and sellers. The chapter references consumer sovereignty and industrial relations to highlight this point. The chapter then outlines various methods used by businesses to influence government decisions. It discusses the political process as a play of interests and power involving interactions of business, government, labour, and civil society organizations. Additionally, the chapter presents case studies to look into the political influence of business.
Chapter
The Ecological Environment
This chapter focuses on ecological impacts on businesses. It highlights the need for concerted action on a global level, which can then be translated into national and local environmental action. The chapter points out that firms have large roles to play in the environment as they convert resources into products. It notes a growing interest in being sustainable and discusses the global impact of climate change. The chapter looks at the Rio Declaration and Agenda 21 to show how they have established a comprehensive set of principles that the UN Global Compact translated into prescriptions for responsible business behaviour. The chapter notes that businesses have to balance the risk of incurring costs for environmental compliance and the risk of doing nothing in relation to climate change. It suggests that if businesses do not redouble their efforts to reduce their ecological impact, there will be calls for tougher environmental regulation.
Chapter
The economic environment
Dorron Otter
This chapter looks into the economic environment. It explores the essential characteristics of the economic environment. The chapter also includes how human beings are always in need of resources due to needs and wants before listing labour, land, capital, and enterprise as to how resources would be grouped. Anything that satisfies needs, wants, and desires are considered commodities. In addition, the chapter explains addressing allocation, distribution, and production makes up for an efficient economic environment. It discusses the operation of neoclassical and Marxist political economies. The chapter also expounds on how markets operate in line with demand, supply, price, and surplus. It then highlights the significance of equilibrium.
Chapter
The ethical environment: corporate responsibility
Simon Robinson
This chapter situates the ethical environment in line with corporate responsibility. It explores the concepts behind corporate responsibility, corporate citizenship, and business ethics. The chapter then lists free market theory and stakeholder theory as alternative perspectives on corporate responsibility. It also looks into the three-fold view of responsibility which is agency, accountability, and liability. Additionally, the chapter uses Unilever as a case study while referencing an overview of corporate responsibility policy and process. It explores the framework for corporate social responsibility in line with the practicalities of running a business. The chapter then lists the elements of a corporate responsibility response: data gathering, value clarification, responsibility negotiation, and auditing.
Chapter
The Financial Framework
This chapter looks at the impact of the financial environment on businesses. It highlights that the financial environment plays a significant role through the provision of money and credit; the operation of system payment; and monetary phenomena like inflation, interest rates, or exchange rates. The chapter references financial markets and large institutions in London, New York, and Tokyo to emphasize their importance in the effective functioning of businesses and economies. It acknowledges the difficulties of accessing finance for international businesses. The chapter considers the businesses industry’s size, diversification, and internationalization, which continue to pose great challenges to regulatory authorities. The chapter notes the argument that the improvements in regulation seem inadequate. It also states that the international finance system’s stability should not be taken for granted.
Chapter
From starting to scaling and beyond: how do entrepreneurs and SMEs innovate and grow?
Simon Raby and Geoff Gregson
This chapter focuses on entrepreneurs and small and medium-sized enterprises (SMEs). It explores the advantages and disadvantages of working for a smaller enterprise such as lower cost structures and less formality and rigidity of business operations. Additionally, the chapter expounds on the concept of entrepreneurship as it is often associated with new venture creation, while entrepreneurs are people that can identify the potential of an idea and display the willingness to act on it. It notes the key processes involved in creating a new venture. The chapter then looks into how entrepreneurship applies across different business environments. It highlights the correlation between entrepreneurship and innovation.
Chapter
The Global Business Environment
This chapter explores the global external business environment. It notes that the factors in this environment are highly interdependent but can be analysed using the PESTLE model. The elements of the PESTLE model are political, economic and financial, socio-cultural, technological, legal, and ecological. The model regards the business environment as increasingly complex, dynamic, uncertain, and hostile. The chapter notes that firms need to scan the environment in order to identify opportunities for new markets, cost reductions, and sources of supply. Moreover, the chapter shows how firms need to avoid threats posed by competitors, economic and financial volatility, political instability, new technology, and natural disasters. The chapter explains how organizations assess the impact of external issues by looking into their effect on the industry structure and the organization’s stakeholders.
Chapter
The Global Economy
This chapter looks at international patterns of wealth, international trade, and exchange rates. It identifies the USA as the richest economy while noting that China has the bigger purchasing power parity (PPP). The chapter explains what it means to make a GDP comparison between countries. It explains that the UNDP also looks at other indicators such as income inequality, life expectancy, literacy rates, and school enrolments to determine a country’s degree of development. The chapter states that economic growth is the key to raising living standards. It looks at the growth of international trade, which is predicted to reach 34% by 2030. The chapter points out that fluctuations in exchange rates could have a major impact on businesses. It considers the accusation that some countries manipulate the exchange rates of their respective currencies to make their goods more competitive in the global market.
Chapter
Globalization
This chapter focuses on globalization. It begins by considering the three main indicators of globalization: international trade in goods and services, transfer of money between countries, and the movement of people across borders. The chapter points out that culture has been influenced by globalization via mass media. It identifies competition, reduction in regulatory barriers, and technology as drivers of globalization. Moreover, the chapter discusses barriers to globalization such as government policies, protection of intellectual property rights, culture, corruption, geography, and border and immigration controls. It argues that globalization simultaneously presents opportunities and threats to business and notes that globalization affects cultural, social, and economic dimensions as well.
Chapter
Globalization of business: good or bad?
Dorron Otter
This chapter focuses on debate regarding the globalization of business. It starts by listing the six main aspects of globalization: international trade, globally organized production, investment flows, migration, communication flows, and creation of the global market place. Globalization links together all the spatial levels of business activity while growing due to the expansion of capitalism. Then, the chapter discusses various perspectives on globalization such as neoclassical/neoliberal views, comparative advantage, socialism, Marxism, and structuralism. It explores the concept of ethical dilemmas in relation to global business activities such as the 2008 global crisis, the end of the Washington Consensus, human rights, environment, market power abuse, international migration, graft and corruption.
Chapter
How has macroeconomic policy changed in an era of uncertainty?
Chris Mulhearn and Mike Franco
This chapter looks into the issue of how macroeconomic policy has changed in an era of uncertainty. Macroeconomics is concerned with the behaviour and performance of the economy as a whole wherein the focus is simultaneously on all consumers, firms, and organizations in all the markets. These together constitute a national economy. The chapter also lists the objectives of macroeconomic policy: stable economic growth, a stable level of employment, and a steady inflation rate. It looks into the split perspective on the stabilisation policy debate why referring to the UK's macroeconomic policy framework. Additionally, the chapter also analyses macroeconomic implications of Brexit for the UK economy.
Book
Leslie Hamilton and Philip Webster
The International Business Environment integrates global examples and a wide range of case studies to explore the challenges that organizations face globally. The first of its two parts is about the global context and looks at globalization, the global economy, and global industries. It also examines the global business environment, corporate social responsibility, and country attractiveness. The second part, Global Issues, considers the social-cultural framework before considering the technological framework. It then moves on to the political and legal environments. The financial framework is also given consideration. Finally, the ecological environment is examined.
Chapter
Introduction:
‘Business’ and its ‘environment’ in a ‘globalizing world’
This chapter introduces the concepts of business in relation to the environment and globalisation. It highlights the themes and issues that will be discussed through the text such as diversity, internal/external, complexity, local to global, dynamic, interaction, stakeholders, and values. Business as an activity can be defined broadly as the transformation of inputs into diverse outputs to meet the needs and wants of consumers. The chapter notes the controversy concerning the private sector business' nature and purpose. It explores how businesses respond to the changing environmental factors in an effort to operate successfully. Additionally, the chapter lists business environment analysis tools such as the PEST framework and SWOT framework.
Chapter
Is inequality bad for business?
Dorron Otter and Paul Wetherly
This chapter explores the issue of inequality in relation to business. It looks into the correlation of equality of opportunity, social mobility, and equality of outcome. The chapter then recognizes developments in the business environment boosting equality up the political and business agendas. Here it references women's rights, occupational segregation, the gender pay gap, and work flexibility for parents. It discusses the data showing patterns of inequality in the UK which are in line with recent trends showing the wealth gap, incentives, income inequality, and social cohesion. Additionally, the chapter includes the values and interests that inequality raises concerning implications for businesses. It notes the trend of increasing inequality as well.
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