This document discusses the various external factors that make up the business environment for multinational corporations operating internationally. It identifies factors such as geographical, economic, socio-cultural, political, legal, and technological forces in different countries that multinational companies must consider. These external environment factors can influence a company's decisions, operations, and strategic success on a global scale. The document also provides examples of some specific external factors within each category that are particularly relevant to international business.

2. • The buying and selling of the goods and services across the
border.
• The national border are crossed by the enterprises to expand
their business activities like manufacturing, mining,
construction, agriculture, banking, insurance, health, education,
transportation, communication and so on.

3. • Trade means exchange of goods and services for the satisfaction of
human wants.
• When trade is confined to the geographical limits of a country, it is a
domestic or national trade.
• International or foreign trade refers to the trade between two
countries.
• Technically, domestic trade and International trade are more or less
identical and are based on the same basic principles of trades.

4.  MNC is a corporate organization that has its operations and facilities in more
than one country. MNC is a large corporation which produces and sells its
goods and services in number of countries. Generally, MNC firm has a
centralized head office and number of offices in other countries. Thus, MNC’s
are large size firms that have their operations in number of countries and all
the operations are centrally controlled by parent company

5.  Various companies are involved in transacting their goods, services and capital across the
national borders and are affected by number of factors. various restrictions are also imposed on
companies that are transacting their business at international level. various internal and external
factors directly impact the working of these business firms. Various external environment factors
directly affecting the working of large MNCs include social conditions of economy, political and
legal factors, etc. However, internal factors can be controlled by the management team of
companies by taking various strategic initiatives.

6. In the context of a business firm, environment can be defined as various external
actors and forces that surround the firm and influence its decisions and operations.
The two major characteristics of the environment as pointed out by this
definition are:
1. these actors and forces are external to the firm
2.these are essentially uncontrollable. The firm can do little to change them

7. Two types of Environment
Micro
Macro

8.  Foreign Environment
 Geographical Environment
 Economic Environment
 Socio-Cultural Environment
 Political Environment
 Legal Environment
Technical Environment

9. •Foreign environment consists of geographical, economic, financial, socio-cultural, political,
legal and ecological forces.
•From a business perspective, the primary incumbent in an international business
environment is the multinational enterprise (MNE), which is a company that pursues
strategic success in global production and sales (i.e. operating within a number of country
borders). The number of examples of this type of firm is constantly growing. From fast food
chains like McDonald’s to auto manufacturers like Honda to smartphone designers like
Samsung, the number of international players in most markets is constantly on the rise.

10.  Environment factors such as weather, climate change, temperature etc. affects the
business firm and the demand pattern of various goods and services. Increasing
environment awareness has made this external environment factor a significant issue
to be considered by business firms. Move towards environment friendly products and
services also have affected the demand pattern of various goods and services.

11. Economic factors relates to the economic system of the country where the firm has its
operations. Various economic factors such as inflation rate, interest rate, income
distribution, employment level, allocation of government budget, etc., directly impacts
the operations of business firm. Various economic factors such as purchasing power of
customers also determine the demand of various products and services.

12.  Business is as much a socio-cultural phenomenon as it is an economic activity.
 Per capita income in two countries may be the same, yet the consumption patterns in these countries
may differ.
 Socio-cultural forces have considerable impact on products people consume; designs, colors and
symbols they like; dresses they wear and emphasis they place on religion, work, entertainment,
family and other social relations.
 Socio-cultural environment influences all aspects of human behavior and is pervasive in all facets
of business operations.

13.  Various political factors affect the international factors. Political factors such as changes in tax rates,
policies and actions of government, political stability of country, foreign trade regulations etc. affects the
working of an international business firm. Lack of political stability in the country directly impacts the
operations of business firm. Also, various tax policies and government initiatives sometimes hinder the
expansion of business in other countries. Thus, effective political environment of business influences the
growth of business firm

14. Legal factors relate to the legal environment of the country in which firm
operates. Different laws prevail in different countries and international business
firms have to abide by the laws of each country. Laws relating to age and
disability discrimination, wage rates, employment and environment laws affect
the working of business firms. Along with this, various international lending
agencies affects the legal culture and working policies of business firm

15. A technological change in the industry has both positive and negative impacts
on the working of business firms. Technological changes and development of
automated work processes helps in increasing the efficiency of business
processes. However, technological changes also threaten the demand of various
products and services in the industry.