Politics highlight the role of nation governments, as the large global company, the firm has to deal with national political systems differently. The difficulties to negotiate with government conditions including tax systems, regulations and restriction which the firm has to adjust the service conditions and product requirements to get into the nation markets. These will be the huge impact which the firm has to be considered properly in order to work well with the governments and reach customer goals.
However, The political conflict might have an effect on investment decisions of new entry. For example, according to Dibb and Lyndon, the research say that annually, firms in United States have to hand in tax returns to The Internal Revenue Authority on April 15th as the US government required. The other example is in Thailand. Due to inconsistency of Thai government, there was a political protester occurred in Bangkok public places such as national airport and many other important places which stop and extremely harm the economy. This shows the difference of political stability (Thailand’s Protesters Highlight Rifts, 2009).
Economic The fluctuation of national growth rate and fuel price is significant. It can be the greatly impact on the firm. Operational cost and labor cost have to be considered. The firm has to avoid both of deflation and inflation of every countries because the difference of economic growth and the external factors which will affect the firm such as the unpredictable situation which come from the fluctuation of currency exchange. The different currency exchange rate has an influence on the firm in order to predict an economic performance. The term of trade to comparing import price and export price also have to be considered in order to know the balancing payments which will be the main factor causing the currency exchange rate issue.
Social It depends on changes of social trend which affect the national demand. There are many variations that have to be determined including culture, norms, religion and social environment. GE considered the social issues as one of the main factors in order to doing investment in that country.
For example, considering about demographic statistics in order to make the products which can support the people and get into market target. In addition, managing people in organization to work in that invested country to perceive the other opinions which will benefit for developing the product or adapting the services for satisfy the customer needs such as GE healthcare in Japan, they can get into the healthcare market because the firm investigate the market properly and make the right decision to take this advantage by selling high definition of Low-dose scans because Japanese tend to concern about health problems (GE annual report, 2011). However, The failure of investment in developing country is higher than developed country due to quality of life, living expense and social welfare.
Technical According to high pace of competition, the innovative technologies are always being released by utilizing more advance technology from competitors. The firm focuses on innovative products. It will be the key to compete with others by using new business models which invented by GE technology. Whereas the development of existing products is tend to be slow down the businesses performances because the advance technology from competitors. It can see from the table as below.
Environmental The company concerned about the environmental issues because the firm have to deal with different environmental factors in different countries. Although there were a degradation of environmental in Asia, the geography is also benefit to open the new industry because the expense is lower than developed countries which have high tax such as the carbon emission tax which causing the firm performance in Australia and affecting the firm investment (Meng, Siriwardana & Mcneill, 2011). Thus, the company decided to investment in developing countries instead due to low environmental regulation issues.
Legal Free trade agreements signed with Japan, Australia, Vietnam, Malaysia, Thailand, Canada, German, Korea and the opening market in Southeast Asia is significant based on US trade agreements (GE News, 2011). Regarding to Opening free trade market, the firm will able to expand the businesses easily. However, the manufacturers are controlled by the laws and agreements of each country.