Modern industrialization and internationalization has led to unprecedented environmental threats while also increasing material prosperity. Emerging issues for international business related to the environment include the extent of environmental damage caused by industry, whose rights are violated by pollution, and obligations to future generations. Digital transformation is impacting business models through increased data collection, customer insights, and connectivity. It allows for improved efficiency, productivity, and new opportunities. Outsourcing and global value chains divide production across borders for cost reduction and specialization. However, labor issues include child and sweatshop labor while environmental issues involve pollution from relocated industries and waste dumping. The COVID-19 pandemic disrupted global trade through both supply and demand shocks.

1. Emerging Issues in
International
Business Environment
Unit 5
Prof. Banditta S Nikam 1

2. Growing
concern
for
ecology
Modern industry and
internationalization has provided
people with a material prosperity
unequaled in the history. It has also
created unparalleled environmental
threats to present generation and to
future generations. The very
technology that has enabled people
to manipulate and control nature has
also polluted the environment and
rapidly depleted the natural
resources.
Prof. Banditta S Nikam 2

3. As the twenty-first century begins, several well-
established environmental trends are shaping the
future of civilization.This includes:
Loss of plant and animal
species.
Population growth
Rising temperature
Falling water tables
Shrinking cropland per person
Collapsing fisheries
Shrinking forests
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3

4. In present scenario
environmental issues
raise large and
complicated ethical
and technological
aspects for the
international business
society which are as
following:
The extent of the environmental damage produced by
present and projected industrial technology.
Extent of largeness that threats pose to the people’s
welfare.
Values people must give-up to halt or slow such damage.
Whose rights are violated by pollution and who should be
given the responsibility of paying for the costs of polluting
the environment.
The time interval of natural resources availability.
Obligations those firms have to future generations to
preserve the environment and conserve the resources.
Prof. Banditta S Nikam
4

5. • With an aim to protect the environment, European countries developed the ISO 14001 standard
to assure that company policies address a variety of public concerns, including pollution
prevention and compliance with relevant laws and regulations. Since the adoption of ISO 14001
in 1996, some 10,000 companies got registered by the year 2000.
• Its purpose is to clarify the best practices for organizations that wish to reduce their
environmental footprint by adopting an effective environmental management system (EMS).
• EMS systems are designed to monitor and report upon the environmental sustainability of a
firm, for both internal and external stakeholders. They are used by firms both for compliance
purposes—allowing them to avoid fines or public relations (PR) scandals—and to increase
business efficiency, such as by reducing waste through the manufacturing or distribution cycle.
• Although the standard had initial hiccups in the United States, it received a boost when Ford
Motor Company certified all its facilities around the world as conforming to ISO 14001.
• Other companies such as General Motors, IBM, and Xerox followed.
• The standard was valuable to Ford for reducing water consumption, disposed paint sludge, and
disposable packing materials. Prof. Banditta S Nikam 5

6. More recently, ecological concerns have focused on
climatic change and global warming.
Global warming refers to the increase in temperature of
the earth’s atmosphere and oceans that is believed to
be caused by the human creation of excess carbon
dioxide.
The increase in temperature may lead to rising sea levels
and an increase in extreme weather.
Managers must now consider how their products and
production processes impact the earth’s climate over
the long-term and seek ways to minimize any negative
consequence of their firms’ activities.
Prof. Banditta S Nikam 6

7. Digitalization
• Digitalization combined with globalization is the current megatrend that
impacting the international business landscape and creates opportunities for
new business models. Embracing digitalization enables firms for speedy
internationalization.
• Digitalization is the use of digital technologies to change a business model
and provide new revenue and value-producing opportunities; it is the process
of moving to a digital business.
Prof. Banditta S Nikam 7

8. Digital transformation is the application of digital capabilities to processes, products and
assets to enhance efficiency, increase customer value, manage risk, and navigate through
new revenue generation opportunities.
This transformation is global and therefore involves adopting digital technologies for both
internal operations and external ones, including sales, marketing, and support efforts.
To adapt, companies must fundamentally change the way they operate, be willing to
accept cultural change and rethink their status quo.
Digitalization is reinventing businesses and capturing unique competitive advantages, but
companies continue to hold back when the time comes to change their current business
models.
Prof. Banditta S Nikam 8

9. Digital Transformation is the process of fundamentally changing the way a business operates to integrate
technology at all levels of the business and moving to a fully connected and online business strategy.
Digital transformation is the way of doing business.
It is not end goal it’s a continuous journey.
It’s a result of learning more about relationship between technology and customer behavior
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10. Digital transformation examples : Automobile experience
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11. Digital transformation examples : Television
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12. Digital transformation examples : Games
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13. Digital transformation examples : Manufacturing
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14. Digital transformation examples : Social Connect
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15. Digital transformation examples : Social Connect
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16. Digital transformation examples : Share Trading
Prof. Banditta S Nikam 16

17. Why Digital Transformation
ENHANCED DATA
COLLECTION
STRONGER RESOURCE
MANAGEMENT
DATA-DRIVEN
CUSTOMER INSIGHTS
A BETTER CUSTOMER
EXPERIENCE
ENCOURAGES DIGITAL
CULTURE (WITH
IMPROVED
COLLABORATION)
INCREASED PROFITS
INCREASED AGILITY IMPROVED
PRODUCTIVITY
Prof. Banditta S Nikam 17

18. Benefits of
Digital
Transformati
on
It reduces costs as a result
of time savings in
processes.
It decentralizes production
by facilitating mobility and
remote communication.
It improves operational
efficiency and productivity.
It opens the door to new
business opportunities and
revenue streams, enabling
the creation of new
products and services.
It increases the speed of
response to changes in
demand in the market.
It generates a competitive
advantage for the company
by being able to enhance
the quality of the products
manufactured.
It drives the culture of
innovation, preparing the
company to anticipate any
disruption.
It improves integration and
internal collaboration by
facilitating communication
between departments.
It empowers decision-
making by deepening data
analysis (Big Data).
It attracts new talent,
fostering the recognition of
systems and awakening the
interest of specialised
professionals.
Prof. Banditta S Nikam 18

19. Outsourcing and Global Value
chains
Outsourcing is the business practice of hiring a party outside
a company to perform services or create goods that were
traditionally performed in-house by the company's own
employees and staff. Outsourcing is a practice usually
undertaken by companies as a cost-cutting measure.
Global value chains (GVCs) refer to international production
sharing, a phenomenon where production is broken into
activities and tasks carried out in different countries.
Prof. Banditta S Nikam 19

20. THE IMPORTANCE
OF OUTSOURCING
COST EFFECTIVE
INCREASED EFFICIENCY
FOCUS
GROWTH
REDUCED RISKS
ACCESS TO TECHNOLOGY
Prof. Banditta S Nikam 20

21. Global value chains (GVCs) refer to international production sharing, a phenomenon where production is
broken into activities and tasks carried out in different countries. They can be thought of a large-scale
extension of division of labor dating back to Adam Smith’s time. In the famed example attributed to Smith,
the production of a pin was divided into a number of distinct operations inside a factory, each performed by
a dedicated worker. In GVCs, the operations are spread across national borders (instead of being confined
to the same location) and the products made are much more complex than a pin.
Prof. Banditta S Nikam 21

22. Prof. Banditta S Nikam 22

23. Labor Issues in International Business
Environment
One of the important social issues in the developed countries in respect of business with the developing countries
pertains to ill treatment of labor and children.
Child labor used in the manufacture of exports from the developing countries is widely criticized by people in the
developed countries. There is protest against this in the developing countries too. For example, it is alleged that
child labor is used by the carpet industry in India and some other countries and social activist in the developed
nations demand ban on the import of goods embodying child labor. Consumers are called upon to boycott such
goods.
Similar issue is the sweat labor. The argument here is that goods are manufactured by labor working in
inhuman/unhealthy working conditions not getting fair wages should be banned or boycotted. Creating important
developing country, like garments, are alleged to be suffering from such problem.
Prof. Banditta S Nikam 23

24. It is a regrettable feature of many export processing zones
that both male and female workers are trapped in low
wage and low skilled jobs and labor relations and human
resource development remain two of the most
problematic aspects of zone function.
The frequent absence of minimal standards and poor
labor management relations have predictable outcomes,
such as high labor turnover, absenteeism, stress and
fatigue, low rates of productivity, excessive wastage of
materials and labor unrest which are still too common.
Another important issue is trade union rights. Absence of
trade union rights in some countries provides them a cost
advantage. It may be noted that many multinationals are
taking advantage of the absence of trade union rights in
some countries.
Prof. Banditta S Nikam 24

25. Environmental Issues in International
Business Environment
• Environmental issues have been engaging increasing discussion in the
international business horizon. As in the case of some other social issues in
the fore, the environmental issues raised are mostly which disadvantage
the developing countries, ignoring or relegating to the background several
serious which hold the developed nations or firms from such nations guilty.
• When the multinationals employ in the developing nations polluting
technologies which are not allowed in the developed countries or do not
care for the ecology as much as they do in the developed nations, it is
essentially a question of ethics.
• Another serious problem is that developed nations some times raise
environmental issues as a trade barrier or a coercive measure rather than
for genuine reasons.
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26. Some countries prohibit the import of goods which cause ecological damage. For example, the US has
banned the import of shrimp harvested without turtle excluder devise because of its concern for the
endangered sea turtles. Countries like India are affected by it.
Developing countries are affected by the relocation of polluting industries from the developed it the
developing ones. Similarly, several products which are banned in the developed nations are marketed in
the underdeveloped world.
The dumping of nuclear and hazardous wastes in developing countries and the shifting of polluting
industries to the developing countries impose heavy social costs on them. The exploitation of the natural
resources of the developing countries to satisfy the global demand also often causes ecological
problems.
Prof. Banditta S Nikam 26

27. Impact of
Pandemic
COVID-19 on
international
trade
• The Covid-19 pandemic has drastically affected lives and livelihoods. In
the process, it has also disrupted economic activities throughout the
world. Worldwide merchandise trade flows decreased by 7% in 2020.
There are several dimensions to the pandemic that are likely to affect
international trade: its direct health impact and associated behavioral
changes; the consequences of governments’ actions to prevent the
spread of the virus; and the impact of the pandemic in third countries.
• Although it seems intuitive to expect negative trade effects due to the
pandemic, at the country level the effect could go in either direction.
• A t its onset, the pandemic delivered a shock from both the supply
and demand sides. Since both are negative, the resulting impact on a
country’s import demand – defined as the difference between its
domestic demand and domestic supply – is a priori ambiguous. The
repercussions of the pandemic on other trading partners of a country,
and on its own demand for imports from a specific country, are also
ambiguous, depending on how third-country demand and supply factors
are affected.
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28. COVID-19 has shaken the trade and development landscape
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