Factors That Aect a Multinational Corporation

by Paul Cole-Ingait
When thinking about the international business environment, concerns over
economic, political, cultural, technological and regulatory conditions of your
target markets will always crop up. The dynamics of the international business
environment are driven by complex combinations of these factors. As such, it is
always important to consider the implications of country-specific investment
climate when making operational and strategic decisions for a multinational
corporation.
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Political Factors
Political factors concern government policies, laws and administrative
orientations of different countries and regional economic blocks. The political
factors form the basis for regulating international trade with respect to tariffs,
quotas and technical standards. For example, the European Union has regulations
that guarantee preferential trade treatment for member countries. Political
stability is also an important aspect of the international business environment.
Frequent political unrest and military coups could force a multinational
cooperation to suspend or close operations.
Economic Factors
Rates of economic growth influence the levels of demand for your goods or
services in international markets. However, economic growth rates may be high in
some countries and low in others. For example, the 2010-2012 Eurozone debt
crisis slowed down economic growth in many European countries at a time when
countries in other regions were experiencing an economic boom. Consider such
disparities of economic growth in the operational and planning activities of a
multinational corporation.

Technological Factors
The availability of technological infrastructure and technical capacities determine the prosperity of a multinational corporation in
host countries. Factors such as broadband connectivity and technical training have become essential ingredients of successful
operations in the modern business world. Moreover, the levels of technological developments in a given country determine the
scope of technical understanding among its population. While it may be easier to establish and maintain technical operations in
high-technology countries, the same cannot be said of low-technology countries.

Social Factors
Demographic factors such as religion and culture affect the types, quality, functional features and demand levels of your products
in international markets. Cultures attach different meanings to time, objects, names, color and attitudes. For example, General
Motors suffered low sales when it introduced the Nova car in Latin American markets because the car name translated to it does
not move in Spanish. Therefore, a multinational corporation must have the ability to interpret and understand varying cultural
cues and patterns that are characteristic of the international business environment.
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