Legal, economic and political environmental
factors are important considerations & should be
evaluated for best configuration of production and supply chain in
international economies.
They play an important role to influence the marketing and
strategic decisions for the various organisation that are competing
globally.
Legal Factors & related criteria
- The legal factors mean adhering to all rules and regulations so
it helps to define the means of production and also gives
direction to distribution strategy in the country.
- The per capita aspect helps to define a nation's overall wealth
and helps to determine marketing strategies to target a potential
market. The class structure helps to define the distribution of
wealth in a country and shapes the marketing effort depending on
what percentage is upper, middle and low-income families in the
economy.
- The supply and demand analysis helps to position the marketing
mix in the best manner and gives proper results.
- The rules and regulations offer a lot of advantages to the MNC.
The tariffs and duties on important defined the operations within
the country.
- Currency conversion, risk and safety regulations also define
the marketing mix of a business in a country.
All these legal factors become important for selecting a
particular economy, country, supply chain management in the market
for international business.
Role of Political Factors
- The political and legal factors influence the marketing efforts
globally as the interest of the government, ideologies, interest of
pressure groups and legal laws governing the system has to be
analysed.
- These factors are important as they impact the
production capacity, cost, design & marketing of the
product.
- Licensing and various permits and approvals required for
operating in a country define the importance of such political
factors.
- Various taxes, fees and tariffs have to be
assessed to plan & implement the business model and
marketing efforts. Various governments have different policies and
all have to be taken into account while operating & marketing
internationally.
- The currency risk as a political factor plays
an important role to plan marketing efforts as a wrong decision can
lead to massive losses.
The production & supply chain can be hugely impacted by such
political factors and should be taken into consideration.
Role of Economic Factors
- The economic factors have a macro-level impact on company
operations. It helps to define the means of production and also
gives direction to distribution strategy across the
globe.
- The per capita aspect helps to define a nation's overall wealth
and helps to determine marketing strategies to target a potential
market.
- The class structure helps to define the distribution of wealth
in a country and shapes the marketing effort depending on what
percentage is upper, middle and low-income families in the
economy.
- The supply and demand analysis helps to position the marketing
strategy in the best manner and gives proper results.
Other Economic Factors:
- One of the important factors is the stability of the
political situation and related policies as it directly
impacts the development of the economy.
- The economic and legal factors help to bring reforms and
transformation in the International Business. Various rights and
privileges related to contractual system and properties help to
differentiate the growth between various economies.
- The culture of innovation and entrepreneurship
is also a major factor that contributes to the economic growth of
any business. The investment and support for research and
development, building a culture of innovation and providing a
healthy environment for entrepreneurs helps to contribute towards
long-term growth.
- The planning of the entire economy helps to
define goals and makes them measurable. It helps to focus on a
certain key aspect of policies leading to efficient resource
utilisation.
- The domestic and local market having an external orientation to
operations helps to bring economic development. It helps to compare
with competition and makes it export friendly.
- All the factors involved in the production process like land,
raw material & resources, labour, technology and quality of
management helps to create a great environment for economic growth
and sustainability.
- Support and focused growth of the industrial
sector is another important factor. Economies having
specialised focus and resources for industrial sector creates
opportunities and leads to optimal resource utilisation.
- Privatisation and globalisation confidence for state/government
owner enterprises helps to bring innovation and modernisation in
the economies. Privatisation brings new technologies and better
results in terms of productivity. It helps to make production &
supply chain operations efficient & modern.
Here are some of the future opportunities that must be checked
as it will will help to make the advantage of the same:
- The Supply chain
digitisation offers a great future and helps the firm to plan
better in a fast, highly competitive & complex business
environment. It will help to improve the speed, dynamics and
comntinituiy of the supply chain.
- Artificial intelligence is the future opportunity area
for logistics management - with numerous application it
can help to improve & automate warehouse management. Robotics
and automation can make the supply chain run without challenges and
also help in repetitive tasks making the overall process
efficiency.
- Another opportunity area involves strong and better
collaborations to improve overall logistics management. It
will lead to stronger relationships & help avoid risks. It will
also reduce the overutilisation of resources & time.
- Risk management techniques and companies adopting the same
is the future of logistics management. Outsourcing practices,
offshoring, diversity & versatility of the product, security
and interdependency can be managed better with these risk planning
tools & techniques.
- Knowledge and
data work will be more important and will go up in
future - as the business will become,e fully global
the knowledge work will go global as well. It will allow global
companies to work from headquarters and manage all the
operations.
- The wearable devices will be the future and be used by
the warehouse teams to work in a fast manner and get an
accurate collection of inventory data, keeping track of items and
distribution channels.
Software as service models and also much-developed logistics
& supply chain visibility are future opportunities which will
help to increase the efficiency of the entire process. The mobile
point of sale sensors will make drastic changes to the entire
logistics management.
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