Physical and Social Factors Affecting International Businesses

International Business is an essential part of global economy these days. Many countries trade for the products that cannot be manufactured in their homeland or for raw materials which are not found there. However, in international business, there are various physical and social factors to be considered by the companies, a few of which are listed below:
Climatic Conditions
It is found that climatic conditions may dictate the product adaptation in different regions; for example, some products like oils will not be good to export to cold climatic areas. Therefore, a brief research of the climatic conditions of the destination region is done by the companies before the business is started there. It is also checked if the company’s products will be able to survive and used in the specific regional climate.
Topography
It has been found that the transportation methods and the routing of goods are influenced by the geographical location of the market. Increased transportation costs may result in ultimately higher cost of the product, which would affect the buyer. Thus, organizations tend to prefer easy modes of transportation.
Exchange Rates
Exchange rates depict how expensive it would be to purchase products from foreign countries. Exchange rates are an important key factor to be considered in international business. It is important to note that the exchange rates are constantly fluctuating, which affects the methods of international trades. Usually the companies belonging to countries with devalued currencies do not prefer to import more goods but rather emphasize on exporting more, and vice versa.
Culture
The culture of a specific market definitely affects the extent of product demand and the nature of the product. For example, a luxury item like a very sophisticated gadget may be in demand in a developed country, but it might not be the case for developing countries. Material culture has a significant impact on the distribution and marketing strategies. For example, rivers and canals are widely used in European countries for transportation, whereas in the United States, highways and rail transport are the principal means for transportation. A company planning to expand the business internationally should consider and explore all the cultural aspects of the destination region.
Religious Beliefs and Social Organizations
Since there are diversified religious beliefs in different regions of the world, a considerable influence is exerted on people’s actions and viewpoints because of their religions. Although there are very few religions involved in business activities directly, the impact of the religion on people’s minds is significant. For example, primitive tribesmen are found to be quite superstitious about life and do not appreciate much of technology in their lives, whereas those residing in advanced regions think that their lives are incomplete without technology. Companies tend to research for the religious beliefs and social structures of the market and design their products accordingly.
In short, the social and physical factors are really important while expanding your business internationally. Without considering these factors, no business can be successful in the new markets worldwide.

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