International Trade

Environment
Submitted By
Aarushi Sharma
Meaning of International Trade
Environment
 International marketing environment is a set
of controllable(internal) and uncontrollable
(external) forces or factors that affect
international marketing
 A firm operating in international market

encounters three different sets of

environment:
◦ Domestic environment
◦ Foreign environment
◦ Global environment
Components of International Trade
Environment
1. Natural Environment
2. Demographic Environment
3. Socio and Cultural Environment
4. Economic Environment
5. Political Environment
6. Legal Environment
7. Technological Environment
8. Global Environment
Demographic Environment
 Age or Life Cycle Stage: purchasing capacities
 Gender: variation in consumer perception
 Income: impacts consumer needs and
preferences
 Educational Level: buying pattern and
standard of living
 Race and Religion: consumption pattern
 Size of family: quantum of purchases of

consumers
Social Environment
 Social environment of business has two
dimensions
◦ External Social Environment
◦ Internal Social Environment
 Factors that affect flow of international trade:
◦ National Taste Eg. Nestle brew diff. coffee
◦ Language Eg. South Korean learnt Indian language
◦ Values and beliefs Eg. white indicates death in
China but bridal in Europe
◦ Literacy
◦ Female Workforce
Cultural Environment
 Culture can be defined as all the ways of life
including arts, beliefs and institutions of a
population which are passed from generation
to generation
 Levels of culture
◦ National Culture
◦ Business Culture
◦ Organisational Culture
 Elements of culture are language, religion,
values and attitudes, members, education and
aesthetics
Economic environment
 The economic environment for international
marketing can be broadly studied from three
perspectives:
◦ Home country economic environment
◦ Host country economic environment
◦ Global economic environment
Home Country Economic Environment
 Liberalisation of domestic economic policies
is the pre-requisite for internationalisation of
business operations
 Factors impacting are:

◦ Economic policies: Commercial policy, foreign trade

policy, monetary policy, policy on FDI etc should be
liberal
◦ Promotional and Regulatory measures: Local
business should be provided adequate support and
assistance like tax rebate, subsidies, price support
etc.
Host Country Economic Environment
 Size of Market
 Gross Domestic Product
 Industrialisation
 Development of Banking Facilities
 Purchasing Power and Standard of Living
 Foreign exchange
 Income levels
 Economic Diversity
Global Economic Environment
 International Organisations: WTO, World
Bank, International Monetary Fund etc affect
the flow and direction of world trade
 Trading Blocs: Associations of countries
situated in particular region. Eg. NAFTA,EU
 Strategic Locations: Some ports have strategic

locations from international trade point of

view. Such are called transit ports. Eg.
Singapore
Political Environment
 Following factors contribute to favourable
political environment in the country
◦ Stable and reliable government
◦ Freedom of expression which can establish
dialogue between business and state
◦ Progressive economic policies
◦ Peaceful and productive external relationship
Legal Environment
 Legal environment consists of constitutional
provisions, industrial laws and judicial system
of the country
 Legal and political environment provides a
framework within which business has to
function.
 International legal environment has three
aspects:
◦ Home Country Laws
◦ Host Country Laws
◦ International Laws
Technological Environment
 Systematic Discipline
 Dynamic
 Composition
 Creative Destruction
 Innovation
 Determinants
 Information and Communication Technology
 Technology transfer Mechanism
Competitive Environment
 Professor Michael Porter of Harvard Business
School has demonstrate state of competition
in an industry as a composite of five force.
The five forces of completion are:
◦ Threat of Competitors
◦ Threat of New Entrants
◦ Threat of Substitutes
◦ Bargaining Power of Suppliers
◦ Bargaining power of Buyers
Thank You