Physical and Environmental Forces | Forces Affecting Trading in Global Markets

Physical and Environmental Forces

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Certain physical and environmental forces can also have an important impact on a companys ability to conduct business in global markets. In fact, technological constraints may make it difficult or perhaps impossible to build a large global market. For example, some developing countries have such primitive transportation and storage systems that international distribution is ineffective, if not impossible. This is especially true with regard to food, which is often spoiled by the time it reaches the market in certain countries. Compound this fact with unclean water and the lack of effective sewer systems, and you can sense the intensity of the problem.

American exporters must also be aware that certain technological differences affect the nature of exportable products. For example, houses in most developing countries do not have electrical systems that match those of U.S. homes, in kind or capacity. How would the differences in electricity available (110 versus 220 volts) affect an American appliance manufacturer wishing to export? Also, computer and Internet usage in many developing countries is very thin or nonexistent. You can see how this would make for a tough business environment in general and would make e-commerce difficult, if not nearly impossible.

Doing Bad by Trying to Do Good

CEO of a major pharmaceutical manufacturer decided to set up what she considered to be a generous program to fight the growing AIDS epidemic in developing countries. She decided her company would give it's expensive AIDS-related drug for free to government clinics in several of the poor countries. To her surprise, the decision was roundly booed by many humanitarian groups, which complained the company should instead lower the price of the drug so that everyone could afford it rather than give it away to only part of the affected population. The company currently charges regular customers approximately $8 for one pill. Critics claim that the company could lower the price to 40 cents per pill (a few cents over cost) and really help fight the dreaded disease. Puzzled by the reaction, the CEO said, "We are doing more than anyone else and are still criticized. We should work together to fix this problem." What are the CEO's alternatives? What are the consequences of each alternative? What would you do?

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Posted in Business Post Date 11/19/2018


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