Appraising the International Market Environment Sample for Students

The business environment is one of the most important success factors. The PESTLE analysis model emphasizes on the importance of the external business environment. According to the PESTLE model, there are a variety of sectors in which the external environment can be divided into. These include political; economic, social technological, legal and environmental  (Murray-Webster, 2010). Though these sectors are crucial for any business, they are of even more importance to organizations working within the international arena. Consequently, organizations operating in foreign territory have to conduct appraisals on their host countries’ environment. Despite the vast nature of the international business environment, the economic environment is highly important to business success. Essentially, this is the case because the business environment is largely influenced by the various aspects of the economic environment  (Fernando, 2011). Therefore, notwithstanding the importance of ot her sectors of the business environment, this report seeks to show that the economic environment is the most crucial in appraisal of the international market environment. Firstly, Appraisal of the international business environment is necessary because of the increased level of complexity involved. Complexity, resulting from interaction between factors of the external environment, makes it difficult for organizations to evaluate and respond to the changing environmental factors  (Hamilton & Webster, 2015). The importance of the economic environment comes to mind based on one of the most famous business theories. The shareholder theory defines the role of the business as the duty to maximize its shareholder investments into profits (Karata?-Ãâ€"zkan, Nicolopoulou, & Ãâ€"zbilgin, 2014; Stout, 2012). Essentially, this ties the very existence of organizations to economics. In consideration of the international environment, the basic attraction that drives businesses across borders is the potential economic returns to be achieved from the investment. Therefore, without the economic considerations, international trading would be pointless. According to Jain, Trehan & Trehan (2014), the economic environment is the most important of all sectors of the environment. The authors attribute its superior importance to its dynamic nature. International businesses are not only governed by the economic environment of the host country; but also that of any other nation from which they source factors of production  (Jain, Trehan, & Trehan, 2014). The economic environment involves economic conditions; economic policies, economic systems, phases of business cycle, foreign investment, and international organizations among others. In support, Fernando (2011) stipulates that the economic environment is a multi-faceted factor of business that taps into all sectors of the environment. Therefore, it encompasses most of the other specific types of external environments. For instance, economic policies go hand in hand with the legal environment. Similarly, economic planning based on degree of competition is part of the economic environment but also includes social environment factors such as consumer behavior and market structures. Therefore, the economic environment is the most important factor for international businesses to consider. Its influence affects all other environmental sectors. Undeniably, despite the progress of theoretical perspectives about the role of business in society, the primary concern and reason for business’ existence is the development of economic success. Thus, without discrediting the importance of other business environments in the international arena, the economic environment is the most important of concerns to investors. The legal environment is just as important as the rest of the categories. Indeed, without the proper social structure, it would be impossible for organizations to sell their products to local populations; it is also impossible for companies to work in areas that have political unrest. However, the initial thought is the economic viability of the investment then followed by consideration of the other factors. Consequently, it is safe to maintain that the economic environment is still the most important of all factors of the external environment.    Secondly, perhaps it would also be prudent to consider Trichet, President of the ECB, whose speech emphasizes the standardization associated with the economic environment. Economic performance is the standard metrics form used to tally regional, international and global development. For instance, in a bid to demonstrate the importance of emerging markets, Trichet quotes their contribution of over 40% of the world’s GDP. He observes that emerging markets contribute that much having only developed 20% of their potential  (European Central Bank, 2007). Thus, the every determination of a country’s development is pegged on its economic performance and potential. In shocking recent developments, some companies such as Patagonia have come to resist the profit-oriented business model. In response to the rising concerns of environmental degradation, the organization has developed new heights of sustainability. Their product life cycle is not characterized by the maximization o f repeat sales; rather, the company’s campaigns and leading adverts discourage consumers on impulse buying. That’s, they should only buy what they need. The company’s competitive edge in the market is pegged on its sustainability initiatives. Thus, it appeals to the social sector by manipulating the environmental concerns of its consumersConsequently, the main visible sectors in the strategy include the social and environmental fragments of the business environment. However, the bottom line is that the implementation of the unique strategy is aimed at gaining economic advantage over other players in the market. Green friendly consumers are bound to purchase the company’s high-end products because of its standing on sustainability. Therefore, despite the sustainability metrics of success, Patagonia still relies on financial performance to gauge the strategy’s progress and success. From the comprehensive discussion above, the crucial nature of the economic environment in international markets is evident. However, this is not meant to render other sectors irrelevant but merely point out that appraisal of the international markets is highly reliant on the accuracy of the analysis of the economic environment of a host country. Essentially, economies are the sole attractions to foreign markets; they should be effectively appraised for investors to identify opportunities and effectively strategize towards organizational success. In conclusion, international investment requires a comprehensive analysis of the host country’s environment. Contrary to common belief, environmental sectors such as legal and social do not take precedence over the economic environment. As discussed, this is because the economic environment is the sole attraction to which organizations respond. Thus, it is only prudent that companies take note of the host country’s economics. Further, the dynamics of the economic environment make it influential on all other sectors. It is also important to consider that the most common metric of performance and rank is economic performance. Therefore, the importance of the economic sector in environment appraisal is undeniable. Some scholars have taken to emphasizing the importance of the other environmental sectors. However, the influence of the economic environment over them is undeniable. For instance, fragments of the legal environment interlock with the economic environment. Theref ore, most of the other sectors are connected to business by their contribution to the economic value. Consequently, it is safe to conclude that the economic environment takes precedence over other environment sectors. European Central Bank. (2007, November 26). The growing importance of emerging economies in the globalised world and its implications for the international financial architecture. Retrieved from European Central Bank : https://www.ecb.europa.eu/press/key/date/2007/html/sp071126_1.en.html Fernando, A. (2011). Business Environment. New-Delhi: Pearson Education India. Hamilton, L., & Webster, P. (2015). The International Business Environment. Oxford: Oxford University Press. Jain, T. R., Trehan, M., & Trehan, R. (2014). Business Environment: for B.Com-III Semester-V and VI. New-Delhi: VK Global Publications. Karata?-Ãâ€"zkan, M., Nicolopoulou, K., & Ãâ€"zbilgin, M. F. (2014). Corporate Social Responsibility and Human Resource Management: A Diversity Perspective. Northampton, MA: Edward Elgar Publishing. Klapper, L., Laeven, L., & Rajan, R. (2004). Business Environment and Firm Entry: Evidence from International Data. National Bureau of Economic Research, 10.3386/w10380. Murray-Webster, R. (2010). Management of risk: guidance for practitioners. Norwich; NR: The Stationery Office. Stout, L. A. (2012). The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public. San Francisco, CA: Berrett-Koehler Publishers. Sustain-Live. (2015). Patagonia-Sustainable Business Model. Retrieved from Sustain-Live: https://www.sustainlive.org/corporate-social-responsibility-case-studies/sustainable-business-model/