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Understanding the global business environment

March 28, 2024
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Globalization has made it increasingly easy to build meaningful business connections with people worldwide. Many companies have launched international business partnerships. In 2023, for example, the American company Visa and the Belgian business Swift joined forces to improve cross-border money transfers.1 Additionally, the Allegheny Health Network and the Israel Innovation Network partnered in 2023 to support Israeli medical startups.2

These partnerships are part of the global business environment, a phrase that encapsulates the cultural, economic, legal and social factors that affect how international businesses operate and collaborate across borders.3 Global business plays a significant role in the modern economy. Increase your understanding of the global business environment with this article, which explores the dynamics, challenges and opportunities of international business.

The rise of the global economy

The World Bank defines globalization as “an extension beyond national borders of the same market forces operating at all levels of economic activity.”4 In other words, market forces like inflation and wars affect the cross-national flow of products and services.

Global business has increased in the last 60 years due to technological advancements and other factors. In the 1970s, the manufacturing and agriculture industries surged because communication technology made services more tradable. In the 1980s, China became a leader in globalization and a driver of the world economy. More recently, COVID-19 and the war in Ukraine have led to new global challenges, such as slower trade reforms.4

Despite challenges throughout history, globalization ultimately has a positive impact on businesses, economies and individuals. This phenomenon has led to rapid economic development and increased quality of life for many people and has allowed companies to share resources and tap into new international markets.4

Key elements of the global business environment

The global business environment is complex and constantly evolving. Let’s explore the critical factors that organizations seeking to have successful business dealings in different countries should address.

Cultural dynamics and the international business environment

Being successful in international business means understanding the culture of the country in which you are operating. Every country has unique cultural and social dynamics that businesses must consider. Nations often have drastically different beliefs, communication styles, customs, languages and business practices. Successful business leaders respect these differences and prioritize cultural competence, adapting their business operations to suit the cultural environment. For example, they may hire local professionals to translate advertising materials to avoid blunders.3

Economic factors in international trade

The economic environment also directly influences global trade. Before entering foreign markets, business leaders should consider each country’s average annual income, level of economic development and exchange rates. This information can help you determine if it’s worth it to market your company in other countries.3 If you will be basing operations in a foreign country, it's also important to understand the country's economic policies, particularly those related to foreign direct investment and international trade. The Organisation for Economic Co-operation and Development (OECD) publishes information that can help you familiarize yourself with the investment environment in member countries.5

Legal and regulatory environment

Differences in legal and regulatory environments across countries create challenges for businesses involved in international trade. Businesses must follow the requirements for every country they operate in or face legal consequences.3 For example, the European Union fined Meta $1.3 billion in 2023 after the social media company violated the GDPR privacy and data protection laws.6

International business strategies

Business professionals use many strategies to succeed in global markets. Companies can start by conducting international market research. This process involves gathering trade data from foreign marketplaces and U.S. export statistics. Countries with large or rapidly growing markets for your product may offer expansion opportunities.7

Once you’ve identified the most promising nations, you can use various strategies to expand into international markets. Many companies partner with local businesses so they can benefit from their networks and expertise. In addition to developing staff competence in relevant foreign languages, You should also research the customs and preferences of customers in each market and tailor your products accordingly.8

Global business challenges

Globalization can lead to exciting opportunities for business growth, but it may also present unique obstacles. International events like pandemics and extreme weather can disrupt supply chains and increase production costs, limiting your ability to conduct successful international business dealings.9 Additionally, the recent cost-of-living crisis and global inflation have driven up prices and caused some companies to restrict trade.10

Companies can use many strategies to mitigate the risk of common global business challenges. The International Trade Council recommends businesses invest in political risk insurance to safeguard against political violence and trade restrictions. Diversifying operations across multiple countries also reduces the risk of fluctuating markets. Business leaders should also monitor changes to relevant laws and regulations to ensure they remain compliant.11

The role of technology in international business management

Technological advancements have streamlined and improved international business management. Many leaders use virtual communication tools to share information and manage employees across borders.12 Video conferencing platforms allow managers to speak with teams worldwide in real time, while email and shared documents can enhance cross-cultural communication and collaboration.

Digital marketing also enables companies to connect with customers in new ways.12 Businesses can expand their audiences by sending clients personalized emails or creating social media ads that are optimized to the countries where they're used.

Sustainable business strategies for the global market

Many multinational companies prioritize environmental and social responsibility. Sustainable global business strategies include developing “good neighbor” agreements between communities and corporations. These voluntary programs have reduced the environmental impact of the chemical industry and other sectors.13

Additionally, in 2000, the United Nations created the Millennium Development Goals to guide corporate responsibility. These goals include increasing access to new technologies and promoting sustainable production processes.13

Current international business trends

Emerging technologies are reshaping the global business environment. Some companies have improved communication with simultaneous speech translation technology. This tool instantly translates spoken words into the user’s language during video conference meetings, opening new opportunities for collaboration and communication.14 Such exciting technology developments, however, make it even more important for international business executives to understand how communication styles reflect differences in cultures.

Artificial intelligence (AI) is also revolutionizing the global workforce. This technology automates repetitive tasks and may negatively affect advanced economies by replacing human workers. However, the full impact of AI on the workforce isn’t understood yet.15

Future opportunities in international business

Companies can prepare for the next era of global business challenges by embracing new opportunities. For example, agile supply chain management helps businesses increase flexibility and overcome disruptions. This method involves adopting a customer-centric viewpoint and adjusting supply chain processes in response to market conditions.16

In other developments, a continental free trade agreement in Africa may lead to new global business opportunities. Companies may also find new markets in the Asia-Pacific region.14

Drive growth and innovation with an online MBA in global business

Learn about the latest international business trends and techniques with Marquette University’s online Master of Business Administration (MBA) program. You’ll build the skills needed to thrive in the global workplace by completing flexible online core courses like Corporate Social Responsibility, Leading People and Change and Business Essentials: Operations and Supply Chain. You can also enhance your expertise by specializing in Finance or Health Systems Leadership.

Marquette University's Business Career Center provides resume critiques, networking events, and other services. You can also network with alumni and explore job opportunities through the Handshake platform. Schedule a call with an admissions outreach advisor to learn more, or apply today.

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  4. Retrieved on January 26, 2024, from blogs.worldbank.org/trade/globalization-retreat-here-what-new-study-shows
  5. Retrieved on January 26, 2024, from oecd.org/economy/reform/2956455.pdf
  6. Retrieved on January 26, 2024, from nytimes.com/2023/05/22/business/meta-facebook-eu-privacy-fine.html
  7. Retrieved on January 26, 2024, from trade.gov/conducting-market-research
  8. Retrieved on January 26, 2024, from forbes.com/sites/forbesbusinesscouncil/2022/05/10/expanding-your-business-internationally-15-essential-things-youll-need-to-do/
  9. Retrieved on January 26, 2024, from weforum.org/agenda/2022/09/5-challenges-global-supply-chains-trade/
  10. Retrieved on January 26, 2024, from weforum.org/publications/global-risks-report-2023/in-full/1-global-risks-2023-today-s-crisis/
  11. Retrieved on January 26, 2024, from tradecouncil.org/mitigating-risk-in-international-trade/
  12. Retrieved on January 26, 2024, from ncbi.nlm.nih.gov/pmc/articles/PMC10072045/
  13. Retrieved on January 26, 2024, from ncbi.nlm.nih.gov/books/NBK53982/
  14. Retrieved on January 26, 2024, from imd.org/ibyimd/2024-trends/globalization-in-2024-the-clouds-are-clearing/
  15. Retrieved on January 26, 2024, from imf.org/en/Blogs/Articles/2024/01/14/ai-will-transform-the-global-economy-lets-make-sure-it-benefits-humanity
  16. Retrieved on January 26, 2024, from ncbi.nlm.nih.gov/pmc/articles/PMC10111088/