Definition Of International Business –

“The economic system of exchanging good and

services, conducted between individuals and businesses in
multiple countries.”
PEST ANALYSIS
P - Political changes

E - Economic changes

S - Socio - Cultural changes

T - Technological changes
IMPORTANCE OF PEST
ANALYSIS
While entering in new business

Helps to break free of unconscious assumptions

Help to effectively adapt to the realities of the new

environment
KOTLER’S VIEW ON PEST
ANALYSIS

a useful strategic tool

framework for reviewing a situation
applied by companies to review a strategic directions
effective for business and strategic planning,
marketing planning, business and product development
and research reports.
PEST analysis is also known as:
STEP, PESTEL, PESTLE, PESTE, PESTLIED,
SLEPT, STEEPLE, STEEPLED, LE PEST C and
LEPEST analysis.
SOURCES FOR PEST ANALYSIS
Newspapers, periodicals, current books

Trade organizations

Government agencies

Industry analysts

Financial analysts
POLITICAL ANALYSIS
CASE OF MCDONALD’S
 McDonald’s established in California
during the 1940s
 Aggressive plan to expand in all other cities
of Pakistan
 Franchises owned by Lakson Group of
Companies in Pakistan
 In Pakistan- consumer protection laws are
not very strong
 In countries like US, where the consumer
protection laws are very strong
SONY
Government laws for minimum wage
Less profit unless they increase prices of items.
CASE OF ENRON
An American energy company based in Houston,
Texas.
In 1992, the Dabhol power plant near Bombay
Supply 2,000 megawatts of electricity
Decentralized government control over industrial
licensing
opened the country more to foreign investment.
Failed due to endless disputes over prices and
terms of the deal
ICI PAINTS(Bekshire, UK) :
World’s largest manufacturing of paints and
industrial coatings.
In 1965 ICI UK acquired a 50% in “Fullers Paints
Pakistan Ltd”
Government has imposed 15% sales tax and heavy
duties on imports and raw materials.
As ICI import 75% of its raw materials.
Profit margin have decreased.
ECONOMIC FACTORS
Businesses are affected nationally and globally
Affect consumer confidence and behaviour
Impact upon the nature of the competition faced by the
business.
Affect the purchasing power of potential customers
ECONOMIC FACTORS
• Economic growth

• Interest rates

• Inflation rate

• Budget allocation

• The level of inflation

EFFECT OF INTERNATIONAL
BUSINESS ON INDIAN ECONOMY
Entry of MNCs in India

Reason :-
new economic policy by government of India in July
1991
incentives to the foreign investors

Now the question is how the MNCs are affecting

Indian economy whether they are useful for our
economy or not ?
MNC’s AND INDIAN
INDUSTRIES:
Economists view –
MNCs are helpful for Indian industrial sector
New technique of production management techniques
Increase competition in the industrial sector
Demand for skilled persons
Inflow of Foreign capital
SOFTWARE SECTOR

TCS , Infosys have controlled salary escalations,

resulting in Wipro, Satyam, HCL to follow suit
Difficult for them to remain the price setters
Under pressure to match salaries with those offered by
MNCs
MNC’S are increasingly recruiting employees
BISLERI’S EXPANSION IN
EUROPE
Ramesh Chauhan owned brand, Bisleri, is set to sell
sparkling water in Europe and US.
Scope for BISLERI in the field
Compensate the deterioration of image
Silence the critics and increase the faith of the
customer
International brand image
Witness a major tussle between Bisleri and Coca-
Cola's Kinley
“The fact that we have reached out to international
markets is an acknowledgement of our quality and our
penchant for safety and purity”
- Ramesh Chauhan
INFLATION
In Asia, Vietnam becomes the country suffered most
from inflation.

Struggle for their lives every day, unemployment rate

goes higher, and many companies and factories have
to shut down because of inflation.
CEMENT COMPANIES
AFFECTED
Higher input costs, low market valuations and scaled
up capacity amidst reduced demand

Growth rate is projected to drop below 10 % for the

current fiscal

High inflation and home loan rates have slowed down

the growth trajectory of the real estate sector
INCREASE IN SPANISH
INVESTMENTS
The Spanish investments in india rose five times to
$158 million in last year
Over ten leading companies entered the country
Many Spanish companies are present in sectors like
infrastructure, insurance, auto components and ports
and more are keen to enter the market as India’s
economy is quite promising
Invest in Spain is a government agency for promotion
and attraction of foreign investments in Spain.
Spanish investment - $158 mn increased by 500%
from the previous year
Investing in the automotive and infrastructure
segments in India
Indian corporate like Infosys, Tata Consultancy
Services, ICICI Bank, Essar Group, Navneet
Publications, X L Telecom & Energy, Tata Motors and
Kingfisher Airlines met Spanish delegates.
BUDGET 2009: RETAIL SECTOR
DISAPPOINTED
Budget had not mention FDI or industry status for
retail

Plans for increasing expenditure in infrastructure under

various programes, besides hiking the income tax
ceiling, will increase consumption

Abolition of FBT and hike in allocation for rural and

urban areas will lead to boost in demand.
PROVIDE STIMULUS TO REAL
ESTATE SECTOR
Indian economy as a whole has largely been insulated
against the global economic slowdown
The Indian real estate sector has been severely been
affected keeping in sync with the fortunes of the global
real estate sector
Need for the Government to provide a stimulus for the
industry to revive this ailing spectrum of sectors
 SOCIO-CULTURAL ANALYSIS
MCDONALD AND HINDU CULTURE
McDonald’s is the world’s largest user of beef
“Maharaja Mac” – which
is made form mutton.
“McAloo Tikki Burger”, which is
made from chicken.
Found beef extract in the oil.
Close McDonald’s 27 stores in the country.
PROCTER & GAMBLE’S CASE:
 Camay soap.
 Diapers.
COCO COLA: Labeled “No- alcohol”
on their bottles supplied
to the Gulf countries.
NOKIA:Introduced Hindi SMS
for Indian users.
TECHNOLOGICAL FACTORS
Major impact on the business

Affects business prospects, cuts down the profits and

forces the management to change the course of the
business operations

Change in technology changes the work cultures, the

methods and the systems
 Technological environment consists of:-

State of domestic or indigenous technology

Facilities for Research and Development

Technical Collaborations etc

IMPORTANCE
OFTECHNOLOGICAL
ENVIRONMENT
Non- replacement of new technology affects the
survival and growth prospects
Advances helps to improve quality of product, increase
output and reduce the cost of production
Latest technology enhance marketability of products
and face competition
iPHONE

Apple deserved kudos for coming up with a product idea

like the iPhone and also implementing it successfully

Aggressive entry into the mobile phone market and had

managed to attract the attention of the existing
competitors
AIRLINE INDUSTRY
Increasing use of the Internet has provided many
opportunities to airlines
Long-term effort to promote Indian aviation
infrastructure
The Authority is developing modern communication,
navigation, surveillance, and air traffic management
systems for India's aviation sector that will help the
country meet the expected growth and demand for air
passenger and cargo service over the next decade
Helps in attracting investments in improving the
infrastructure and services
Microsoft's operating system Vista most recent
generation released worldwide on January 30, 2007

Vista was aimed to improve the security of the most

widely used PC operating system in the world
Reasons for Failure:-
- securities features were not much better than the
previous versions of Windows
- came with its own list of hardware requirements
- Vista ran slower on PCs than XP
Prevented Vista from taking over from its predecessors
FAILURE OF HD-DVD
HD-DVD group was holding a press conference,
Warner Bros withdrawing its support for HD-DVD
Exclusively supporting backing rival format Blu-ray
There were several factors that led to HD-DVD format
lose out to Blu-ray
Most commonly cited explanation is that Sony did a
better job convincing major film studios