What factors should international business managers consider in determining the economic and cultural risk with countries?

The economic environment relates to all the factors that contribute to a country's attractiveness for foreign businesses. The economic environment can be very different from one nation to another. Countries are often divided into three main categories: the more developed or industrialized, the less developed or third world, and the newly industrializing or emerging economics. Within each category there are major variations, but overall the more developed countries are the rich countries, the less developed the poor ones, and the newly industrializing (those moving from poorer lo richer). These distinctions are usually made on the basis of gross domestic product per capita (GDP/capita). Better education, infrastructure, technology, health care, and so on are also often associated with higher levels of economic development. Clearly the level of economic activity combined with education, infrastructure, and so on, as well as the degree of government control of the economy, affect virtually all facets of doing business, and a firm needs to understand this environment if it is to operate successfully internationally. While analysing the economic environment, the organisation intending to enter a particular business sector may consider the following aspects: Economic system to enter the business sector Stage of economic growth and the pace of growth. Level of national and per capita income. Incidents of taxes, both direct and indirect. Infrastructure facilities available and the difficulties thereof. Availability of raw materials and components and the cost thereof. Sources of financial resources and their costs. Availability of manpower-managerial, technical and workers available and their salary and wage structures. The cultural environment is one of the critical components of the International Business environment and is one of the most difficult to understand. This is because the cultural environment is essentially unseen; it has been described as a shared, commonly held body of general beliefs and values that determine what is right for one group, according to Kluckhohn and Strodtbeck. National culture is described as the body of general beliefs and values that are shared by a nation. Beliefs and values are generally seen as formed by factors such as history, language, religion, geographic location, government, and education; thus firms begin a cultural analysis by seeking to understand these factors. Firms want to understand what beliefs and values they may find in countries where they do business, and a number of models of cultural values have been proposed by scholars. The most well-known is that developed by Hofstede in 1980. This model proposes four dimensions of cultural values including individualism, uncertainty avoidance, power distance and masculinity. Individualism is the degree to which a nation values and encourages individual action and decision making. Uncertainty avoidance is the degree to which a nation is willing to accept and deal with uncertainly. Power distance is the degree to which a national accepts and sanctions differences in power. Masculinity is the degree to which a nation accepts traditional male values or traditional female values. This model of cultural values has been used extensively because it provides data for a wide array of countries. Many academics and managers found this model helpful in exploring management approaches that would be appropriate in different cultures. For example, in a nation that is high on individualism one expects individual goals, individual tasks, and individual reward systems to be effective, whereas the reverse would be the case in a nation that is low on individualism. While analyzing social and cultural factors, the organisation may consider the following aspects: Approaches of the society towards business in general and in specific areas; Influence of social, cultural and religious factors on acceptability of the product; Life style of people and the products useful for them: Level of acceptance of, or resistance to change: Values attached to a particular product i.e. possessive value or functional value in the product; Demand of specific products for specific occasions: Propensity to consume and to save.