External Factors Of International Business

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The international business environment is highly characterized and influenced by politics, culture, trade policies, resources, and infrastructure development in which the firm is located. The internal structure of a company, including company culture, leadership, and behavior of employees, can also influence the productivity growth of a firm. The push and pull factors of company location should be carefully assessed in order to maximize the chances of success.

The external environment of the location of a firm refers to the conditions, entities, events and factors surrounding an organization that can ultimately influence the success of a firm. The most prominent factor includes the utilization of resources, including natural and human resources.
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Specifically focusing on foreign investment to stimulate economic growth, the private and public sector works closely together as the policies support specific industries with low or no-interest loans, tariffs, export subsidies... This allows companies to have government support, as well as possibly benefitting from substantial tax breaks. However, firms located in communist China must learn to adapt to the local “culture” and work with the government to suceed. Microsoft realized the importance of “guanxi” after 10 years of expanding its business in China, finally working for the central government as well as national banks to provide technological services. Foreign or multinational companies needs to foster strong relations and understand the priorities of the government in order to expand and thrive in the country. Additionally, China, with a population of 1.4 billion people, provides a massive market of consumers. With the biggest market for e-shopping, luxury goods, wines and spirits as well as autos, China forms an ideal target of …show more content…
Firms in Germany demonstrate a quintessential system of effective company culture with its investments in human resources, government acts, and high incentives. Germany’s Mittlestand companies achieve success by limiting workers (often under 500 employees) to skilled, well-trained employees and keeping the companies as family owned. This ensures the quality of products produced, which is also reinforced by their significant investments in human resources. The government made acts such as the Employment Promotion Act made in 1969 ensures that every German worker has the right to paid employment training and retraining. The Co-Determination Act of 1976 states that companies with more than 2000 employees much have a equal representation of all levels of workers, promoting a horizontal system of management where employees have more equal input in decisions and tasks. This allows the employees to develop new skills to work in any industry without concerns about the lack of short-term source of income. These company cultures in German firms promotes productivity, allowing German companies, especially Mittlestand companies, to be the world’s leading

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