What are the external factors affecting international business.?

Answer 1

External Environment and its Factors (PESTLE Analysis Model)

The external environment of a business consists of a set of conditions and influences outside the

business but which shape the life and continued existence of the business. These conditions and

influences are outside the firm as a business unit, but which effect changes in the organization and the

business entity cannot control but only adjusts to them.

1. Political Factors; These entail the extent and process of government direct or indirect

intervention and influence on businesses in an economy. Specifically, political factors include such

areas as tax policy, labour law, environmental law, trade restrictions, tariffs, incentives, other

encouragements and political stability. Political factors may also include goods and services which the

government wants to provide or be provided (merit goods) and those that the government does not

want to be provided (demerit goods or merit bads). Furthermore, governments have great influence on

the health, education, and infrastructure of a nation

2. Economic Factors;

3. Social Factors;

4. Technological Factors;

5. Legal Factors; and

6. Ecological Factors.

Answer 2

External factors such as the economy and governmental interference have effects on international business. Other factors could include catastrophic weather, earthquakes, and fires.