The environment provides both Constraints and Opportunities. Explain it by reference, to International Business.
It is rightly said that business environment provides both constraints and opportunities, particularly in international business. Environments in foreign countries are different and also unfamiliar to a business firm. Some of the constraints of foreign environment include economic conditions, customs, government regulations, availability of natural resources etc.
International business environment provides numerous opportunities also which include changing needs of customers and markets, technological progress etc. One of the example of a constraint is that despite many initiatives foreign direct investment in India is not picking up like China due to political and bureaucratic reasons.
One of the example of an opportunity is that the growing demand for air-conditioners has attracted many newcomers, domestic being GE-Godrej and Kirloskar and multinationals like L.G. Electronics, Whirlpool, Electrolux etc. into the industry.
Even though environmental forces can act as a sea that influence a business organization in many directions, it can also create opportunities for expansion and growth through the opening of new markets, technological advances and the constant evolution of vital conditions such as demographics. Hence, it is essential to forecast environmental conditions prior to entering into any international business agreement.
Further, business environment is dynamic and is undergoing fast and significant changes. A firm dealing in international business has to be extremely careful in identifying the various environmental forces operating at the home country, host country and global levels and should examine their influence on production, personnel, financial and marketing operations of the firm.