Victoria University of Wellington
BUSINESS ENVIRONMENTAL REPORT
POLITICAL AND TECHNOLOGICAL ENVIRONMENT
Name: LE ANH KHANH MINHStudent ID: 300269419LECTURER: NGUYEN HUU LOC8/31/2012 Word count: 2100
TABLE OF CONTENT
2. Political environment
3. Technological environment
“Tom, the playing field is being leveled”, said Infosys’s former Chief Executive Officer Nandan Nilekani to Pulitzer Prize winner Thomas Friedman in an interview in 2004. In the era of continuous technological advances and innovation, of consumer’s more convergent tastes and preferences but higher demand, of the rise in economic integration, competition for market share on a global scope becomes fierce and relentless than ever before. As the battle gets harsher, surviving in the market, not to mention making profit, is now more challenging a task. For that reason, organizations operating international business must pay great attention to the four factors which have significant influence on the success of companies and firms: social/cultural, technological, economic and political environment. This report emphasizes on the political and technological aspects faced by firms while doing business internationally. In terms of political environment, I concentrate on government intervention in the production and distribution of certain products, exemplified by the case of Singapore, where the government bans chewing gum all over the nation. Next, with regard to technological environment, I examine the importance of radical innovation as a competitive advantage of MNEs. One illustration of this is Sony and the advent of the world’s first portable music player – Sony Walkman. 2. Political environment:
Getting involved in international business entails country risk – “exposure to potential loss or adverse effects on company operations and profitability caused by developments in a country’s political and/or legal environments” (Cavusgil, Knight, Riesenberger, Rammal & Freeman, 2012, p.181). Country risk takes root from the home or host country’s political or legal system, in the form of government confiscation or expropriation of assets, sanctions and embargoes towards other countries, official ban on the export and import of certain products or services, variances in accounting, reporting or managing system, differences in laws and regulations, or political instability…(Cavusgil et al., 2012) Country risk is ever present, hence, focal firms should scan the political environment proactively and thoroughly to fully understand the institution system and avoid violating the rules and regulations of foreign countries. One of several types of country risk is the government intervention in the production and distribution of a specific kind of product or service. The authority may prohibit the manufacturing, supplying, marketing, importing and exporting of that product for the purpose of protecting national economy or domestic industry, defending security, or conserving culture and identity…(Cavusgil et al., 2012) Besides, government intervention may serve as a tool for strategies or to reduce unemployment rate. A typical case for this type of country risk is Singapore’s chewing gum official ban, which was enacted in 1992. By law any individual or organization that imports, distributes or sells any kind of gum, except medicinal gum, is consider outlawed and against the Control of Manufacture Act, chapter 57 (Control of Manufacture Act, 1959) and the Regulation of Imports and Exports (Chewing gum) (Regulations of Imports and Exports Act, 1995). The rationale for this could be traced back to the late 1980s, when Singapore’s famous transportation system MRT (mass rapid transit) was brought into operation. However, the service was disrupted several times due to the disposal of gums on doors, causing delays and bearing high costs for removal and maintenance. In addition, sticky adhesive...
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