BUSINESS IS DEFINED AS A SET OF ACTIVITIES RELATING TO INDUSTRY AND COMMERCE. WHEN BUSINESS ACTIVITIES ARE CARRIED ACROSS THE POLITICAL BORDERS OF A COUNTRY, IT IS TERMED AS INTERNATIONAL BUSINESS. A BUSINESS ENVIRONMENT INCLUDES VARIOUS EXTERNAL ACTORS AND FORCES THAT SURROUNDS A FIRM AND IMPACTS THE OUTCOME OF ITS DECISIONS AND OPERATIONS. THE OBJECTIVE OF BOTH DOMESTIC BUSINESS AND INTERNATIONAL BUSINESS IS “MAKING PROFIT THROUGH CUSTOMERS SATISFACTION AND SOCIAL WELFARE” TYPES OF BUSINESS ENVIRONMENT - 1. CONTROLLABLE ENVIRONMENT a.) PRODUCTION b.) FINANCE c.) HUMAN RESOURCE d.) MARKETING 2.UNCONTROLLABLE ENVIRONMENT - a.) DOMESTIC ENVIRONMENT b.) FOREIGN ENVIRONMENT c.) GLOBAL ENVIRONMENT ANOTHER MAJOR CLASSIFICATION - 1. MICRO ENVIRONMENT 2. MACRO ENVIRONMENT RELEVANCE of international business environment - Knowledge of international business environment is very important. -Environment affects a firm’s strategic as well as tactical decisions so it becomes imperative for the firm to have in-depth knowledge of the various components of domestic, foreign and global environment.

2.  BUSINESS IS DEFINED AS A SET OF ACTIVITIES RELATING
TO INDUSTRY AND COMMERCE

3.  WHEN BUSINESSACTIVITIESARE CARRIED
ACROSSTHE POLITICAL BORDERS OF A
COUNTRY, IT ISTERMED AS INTERNATIONAL
BUSINESS.

4.  A BUSINESS ENVIRONMENT INCLUDES
VARIOUS EXTERNAL ACTORS AND FORCES
THAT SURROUNDS A FIRM AND IMPACTS
THE OUTCOME OF ITS DECISIONS AND
OPERATIONS

5. THE OBJECTIVE OF BOTH DOMESTIC BUSINESS
AND INTERNATIONAL BUSINESS IS “MAKING
PROFITTHROUGH CUSTOMERS SATISFACTION
AND SOCIALWELFARE”

6. CONTROLLABLE
ENVIRONMENT
UNCONTROLLABLE
ENVIRONMENT

7. CONTROLLABLE-
INTERNATIONAL
BUSINESS
DECISIONS
PRODUCTION
FINANCE
HUMAN
RESOURCE
MARKETING

8. 1. •DOMESTIC ENVIRONMENT
2. •FOREIGN ENVIRONMENT
3. •GLOBAL ENVIRONMENT

9.  THESE FACTORS OPERATE AT
THE NATIONAL LEVEL, FIRMS
ARE GENERALLY FAMILIAR
WITHTHEMANDARE ABLETO
READILY REACTTOTHEM
 SOME FACTORS OF DOMESTIC
ENVIRONMENT –
1. COMPETITIVE STRUCTURE
2. ECONOMICCLIMATE
3. POLITICALAND LEGAL
FORCES

10. Firms are generally not cognizant of these factors and their
influences on business activities.
It includes-
1. Geographical environment – country’s climate, topography,
natural resources and people
2. Economic environment – Economic development, Income(
GNP and Per Capita income), expenditure Pattern, Infrastructure
3. Financial Environment - Monetary and fiscal policies,
commercial and Foreign investments policies, balance of
payment account
4. Demographic Environment – size, age and gender wise
composition of a population
5. Socio- cultural environment- language, aesthetics,
Education, Religion and superstitions, attitudes andValues,
Material culture,Technology, social groups and organizations
and business customs and practices
6. Political environment
7. Legal environment
8. Ecological environment

11.  World Economic Conditions
 International Financial System
 International agreements and
treaties
 Regional Economic groupings
 World wide economic
recessions
 International Financial Liquidity
or stability
 Working of International
Organizations
 Generalized System of
Preferences
 International Commodity
agreements

12. MICRO ENVIRONMENT
These are the actors in the firm’s
immediate environment Which
directly influence the firm’s
decisions and operations
These includes:
- Suppliers
- Market intermediaries and service
- organizations
- Competitors
- Customers
- General public
MACRO ENVIRONMENT
It affects the firm as well as other
actors in the firm’s micro
environment
These includes:
- Geographical
- Economic
- Financial
- Socio cultural
- Political
- Legal
-Technological
- Ecological

13.  Knowledge of
international business
environment is very
important.
 Environment affects a
firm’s strategic as well
as tactical decisions so it
becomes imperative for
the firm to have in-
depth knowledge of the
various components of
domestic, foreign and
global environment