Global Environment | Global Environment: Importance & Components – Video & Lesson Transcript | Study.com

Today, the success of businesses depend on the approach business managers use to address different global environments impacting business ventures. In the context of international business, the global environment definition can be explained as the environment found in any self-governing state that originates exterior to the local environment of an organization that impacts the decision making capabilities of such an organization and resource utilization matrix. The definition of global environment can be understood from the multivariate environmental factors, which impact the entire planet. These factors include competition, political influence, legislation, economic factors, and consumerism trends.

The global environment is at the core of the operations of business organizations. The factors of the global environment affect businesses in their daily transactions, but they are generally beyond the control of management, plus they constantly change. Businesses that align with global environment factors’ requirements achieve increased performance, elevated morale to their employees, and ultimately a higher profit margin for individuals and their businesses.

A practical example of an organization that has felt the impact of the global environment is Apple company. Apple company faces importation constraints of some of the essential production items and constraints to sell their products both in local and international markets, primarily due to trade disputes between the United States and China. Apple, however, enjoys opportunities, due to the global environment, such as improved trade policies and a stable trading environment provided by stable political states in developed countries.

Components of the Global Environment

The components of the global environment can be broadly categorized into general environment and task environment.

General environment

During decision-making processes, businesses can use the PESTEL analysis to analyze the general environment of a business using the following six parameters:

Six external global business environment factors useful in decision-making processes.