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Introduction and background information

Discuss general and historically relevant responses to the four types of factors which can influence the environments in which businesses operate.

The report analyses the four factors that can have an influence in the environment of the business that operates. For this the company that has been taken into account is Abbott Australia, which is a pharmaceutical company and that makes huge investment in expanding the business in China. It made the investment in expanding the business in many places like New Zealand and other places. Now it has taken the decision to expand the business in China. In order to measure the factors that can affect the environment of the company can be measured by doing a PEST analysis. The four factors are the Political factors, Environmental factors, the Social factors and the technological factors. A company goes through huge financial risk while making an investment to expand their business in some other place. The report further consists of the solution of the environmental risks that have explained in the earlier report. Abbott Australia is a leading company in the pharmaceutical market. The company has focused the interest on earning profits from the FDI trade. The company chose China as it has the highest capacity of grabbing maximum amount of customers and capitalizing the benefits. FDI has developed the most in China as the company has developed the most in developing FDI. The major reason for this is the huge competitiveness. The company has maximum chain of customers and they have huge chain of productivity and value chain. The competitive position of the country has strengthened from earlier. However the company face lack in certain environmental factors. The political factors helps to access the political factors that are responsible for creating a hindrance in the process of doing the business. It involves the lack of support of the local government and other factors that will be discussed in the report. The environmental factors involve the factors that can cause problem in the environment in which every individual dwells in. the social factors involve the cultural aspects as well as the acceptance of the product by the consumers and the technological factors include the advancement that the company has made in the field of technology that can be considered to be one of the most important factor of in developing a business in the contemporary world (Fitzgerald, 2018). These are discussed in detail in the report.

Body of information and discussion of relevant topics

The four types of factors which can influence the environments in which Abbott operates:

Abbott is a pharmaceutical company and it had decided to expand the business in China. It has faced certain factors that has influenced the environment in which the company operates. The first and foremost is the political factor. They have significant role in determining the factors that can impact Abbott in their long-term profitability in China (Yabuki, 2018). The company can face the risk of military influence in China. The legal framework for contract enforcement can affect the company. The company needs to maintain the safety regulations for the employees as well as for the management. The other influencing factor is the regulations of the price for the healthcare sector. The taxation of the company is also an influencing factor. China has a huge chain of trading partners, therefore this is an influencing factor for the company. The factor of anti-trust laws that are related to medical appliances and equipment are related to these factors (Connolly, 2016).

The other factor is the economic factor. These factor include the inflation rate, the savings rate, the interest rate, the foreign exchange rate and the economic cycle. In this case the economic system of China is a factor that should be considered. The stability of the economy of China is highly dependent on this (Till, 2017). The factor of the intervention of the government of China in the free market and the related Healthcare can have huge effect on the business. The other factor that affects the environment of the business is the decision of the company whether they should invest on the local market. It depends on the fact whether the company should raise their capital. The economic infrastructure quality is dependent on the quality in Medicine Appliances and Equipment Industry (Wei et al., 2014). It envelops the fact of comparative advantages of China and the healthcare sector in the China. The education level in the economy is a deciding factor. The other aspects involves the economic growth rate, the discretionary growth rate, the unemployment rate, the inflation rate and the interest rate (Bukhari, Hwei & Jantan, 2015).


The other factor is the social factor. The culture of the society and the way do doing things leaves a huge impact on the culture of the organization in an organization. It has shared beliefs and the acceptance of the product by the people living in the society plays a huge role in the social factor (Paíga et al., 2017). The social factors that can affect the environment of Abbott is the demographics and the skill of the population, the class structure, the hierarchy and the power structure in the society. The other factors are the gender roles, the social conventions. The aspects like entrepreneurship spirit and the broader nature of the society is a factor that affects the society. It depends on the fact whether the society of China supports the entrepreneurial venture of the company (Brekke, Holmås & Straume, 2015).

Conclusion and summary

The other factor is the technological factor. The aspects that can affect the business of Abbott is the recent technological developments that is done by Abbott and also the technological advancements made by the competitors of Abbott (Kotabe & Kothari, 2016). It is dependent on the impact of the offering of the product. The factor of cost structure in the company is an influencing factor. Apart from all these factors the impact on the value chain structure in the health sector is an important factor. The rate of technological diffusion is a deciding factor. There are other factors like the legal and the environmental factors that forms a strong point of consideration. These include the laws and the environmental factors like the environment, weather etc (Beeson & Zeng, 2016).

In the previous work few challenges have been observed that was faced by Abbott. The instability in the political scenario caused hindrance in the development of the business. This can be solved by identifying the set of rules and norms that can clear the hindrances that occur in the development. Apart from this it has been observed that the economy in China has achieved the leading position. Therefore, the company must follow the economic condition before they intend to expand their business. The acceptance of the pharmaceutical products in china is difficult. The company must monitor the preference of the people and they must study the culture of the region (Rogers, Lee & Yan, 2015). The government of china intends to make the country a environmental-friendly nation. The company must therefore, keep in mind the environmental factor. This can be a problem as the company does not abide by the environmental factors. They need to change their set up because of this. However the company must determine the environmental factors during the formulation and implementation of the FDI in china. These are the challenges faced by the company and they can be resolved by applying the solutions that has been discussed (Aithal, 2017).

Conclusion and summary

The company intends to expand the business in China in order to earn benefits and profits. The company intends to increase the revenue. The company can earn benefit from the expansion of the business. The above report explores the factors that can affect the environment of the business. The study analyses the issues that can be faced by the company and how the factors like the political, environmental, social and the technological can affect the development of the company. The company should follow the above mentioned solution in order to overcome the challenges. It is necessary for the company to follow the norms of the country in order to expand the business. Abbott is a pharmaceutical company that can face the challenges while expanding the business in China, however the company has huge scope of business in China. China is a developed nation and therefore the company can take the challenge of expanding the business in China and overcome all the factors that can seem to pose threat on the factors of growth of the company. The most important aspect that the company needs to follow is the products should be economical, it should be based on the need of the customers and should consider their preference and it should be environment-friendly and technologically advanced

References

Aithal, P. S. (2017). An Effective Method of Developing Business Case Studies based on Company Analysis.

Beeson, M., & Zeng, J. (2016). Chinese views of Australian foreign policy: Not a flattering picture. Australian Journal of International Affairs, 70(3), 293-310.

Brekke, K. R., Holmås, T. H., & Straume, O. R. (2015). Price regulation and parallel imports of pharmaceuticals. Journal of Public Economics, 129, 92-105.

Bukhari, S. N. A., Hwei, N. S., & Jantan, I. (2015). Recent Advances in Solid-State Analysis of Pharmaceuticals. Open Pharmaceutical Sciences Journal, 2(1).

Connolly, G. (2016). Conservative futures: What next for the'forgotten people'in post-Abbott Australia?. Meanjin, 75(1), 37.

Fitzgerald, J. (2018). Why Values Matter in Australia’s Relations with China. In International Relations and Asia’s Southern Tier (pp. 247-260). Springer, Singapore.

Kotabe, M., & Kothari, T. (2016). Emerging market multinational companies’ evolutionary paths to building a competitive advantage from emerging markets to developed countries. Journal of World Business, 51(5), 729-743.

Paíga, P., Rodrigues, M. J., Correia, M., Amaral, J. S., Oliveira, M. B. P., & Delerue-Matos, C. (2017). Analysis of pharmaceutical adulterants in plant food supplements by UHPLC-MS/MS. European Journal of Pharmaceutical Sciences, 99, 219-227.

Rogers, D., Lee, C. L., & Yan, D. (2015). The politics of foreign investment in Australian housing: Chinese investors, translocal sales agents and local resistance. Housing Studies, 30(5), 730-748.

Till, G. (2017). Australia’s Maritime Intentions: To Expand or Not to Expand?. In The South China Sea Disputes: Flashpoints, Turning Points and Trajectories (pp. 141-144).

Wei, Y., Zheng, N., Liu, X., & Lu, J. (2014). Expanding to outward foreign direct investment or not? A multi-dimensional analysis of entry mode transformation of Chinese private exporting firms. International Business Review, 23(2), 356-370.

Yabuki, S. (2018). China's New Political Economy: Revised Edition. Routledge.

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