The term international business is very wide because it involves wide range of activities across national boundaries. An enterprise has to operate business activities with all these factors which exist outside or near any unit. This is called environment. If firm operates according to environment it may survive otherwise not.

 Helps in Conducting Business Operation  Different Strategies  Depth Knowledge  Market Potential  Help in Adopting Marketing Mix  To Keep Pace With Dynamism  Easy to Identify Controllable and Uncontrollable Factors

1. Economic Environment – Economic factors are one of the most important factors to be considered for formulation of international marketing strategy. Economic development, income including national income, per capita income all affect marketing strategies. (1) Low Income Countries (2) Moderate Income Countries (3) High Income Countries Economies classified according to industrial structure:- (a) Subsistence Economies (b) Raw Material Exporting Economies (c) Industrialising Economies (d) Industrial Economies

2. Social and Cultural Environment – Social and Cultural factors both affect the international market environment. An international marketing mix can only be effective as long as it is relevant to a given culture. Social behaviour and comments have different meanings in different cultures. Some components of culture are:- (1) Religion (2) Education (3) Technology and Material Culture (4) Law and Politics (5) Language (6) Aesthetics (7) Values and Attitudes (8) Social Organisation

3. Political Environment- The Political Environment of a country plays a vital role in influencing the market. Price, size of market coverage, advertisement etc. influence the market. The political situation is likely to be different in different countries. So political environment of overseas country should be studied in detail.

4. Legal Environment- Legal Environment refers to rules, regulations and principles that national govt consider binding upon themselves. Exporters have to deal with different legal systems.

5. Physical Environment-Physical Environment consists of natural resources including minerals, animal population etc. Global warming, deforestation, dangerous levels of air and water pollutions are some of the critical issues faced by the marketers

6. Technological Environment- Technology is one of the important determinants of success of a firm as well as the economic and social development of a nation.Science and technology are fast changing. These types of factors affect the market.

7. Business Environment- The trade environment of a country also effects the international marketing decisions. An exporter should know the trade customs and behaviours of trading country so that he may gain faith and goodwill of local middlemen and customers.