Understanding International Business Environments

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Understanding International Business Environments

Understanding the dynamics of the international business environment is a complex process because there are so many factors that can impinge the success or otherwise of an international business. The business environment is changing and its volatility is increased by the threat of competition and changing business culture. Most importantly, as MNCs venture into new and unknown grounds, they have to carefully consider respective countries' risks that they are dealing with.

Political Ideologies and Economics

An ideology is a set of integrated beliefs, theories and doctrines that helps to direct actions of a society. Political ideology is almost intertwined with economic philosophy. For example, the political ideology in USA is grounded in the Constitution, which guarantees the rights of private property and the freedom of choice. This has helped to lay the foundation for US capitalism. A change in this fundamental ideology would alter the economic environment of the USA. The political and economic ideologies of nations are important factors in managing country risks.

Political systems. In the extreme, there are two types of political systems: democracy and totalitarianism. Democracy is a system of government in which the people, either directly or through their elected officials, decide what is to be done. Good example include the USA, Canada, England and Australia. Common features of this system include (1) the right to express opinions freely (2) election of representatives for limited terms of office (3) an independent court system that protects individual property and rights and (4) a relatively nonpolitical bureaucracy and defense infrastructure that ensure the continued operation of the system. On the other hand, totalitarianism is a system of government in which one individual or political party maintains complete control and either refuses to recognise other parties or suppresses them. There...
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