Relationships with the External Environment

Abstract

International firms, like their purely domestic counterparts, meet and have to cope with external socio-political challenges thrown at them, except that these are far more complex and varied because of the complex and varied ‘world’ in which they operate. The intensity of these challenges, however, depends on the degree of internationalisation of the companies concerned — the deeper and wider their wings spread, the more complex their external environment and the more intense the challenges they have to face. For a single-nation firm with no direct international interest, the host-country characteristics are virtually irrelevant, if not non-existent. As a firm becomes engaged in international activities, from import/export to foreign direct investment, it becomes more deeply involved with foreign people and institutions as customers, business partners, suppliers and employees; its fate becomes more and more entwined with theirs, and its tasks more and more challenging. Table 5.1 illustrates this point.