International Bank Expansion

Introduction

There are many factors to consider which can affect an organization looking to expand their business internationally. Elements which affect an organization are driven by both internal forces and external forces. Internal forces are those which happen within the internal walls (environment) of the organization. These internal forces can be managed by the organization and have a large affect on larger organizations than smaller organizations. External forces are those forces which can affect the organization outside of their walls and their control. An organization’s macro-environment is comprised of general elements which can affect an organization’s surroundings and their strategies when looking to expand from a domestic organization to an international one.

The Macro-Environment

Forces originated outside of an organization are known as the macro-environment. The macro-environment can not be influenced by the actions of an organization but are influenced by forces such as socio-cultural, economic, political and legal, and technological and international variables. Socio-cultural environmental forces are those forces which affect an organization’s ability to obtain resources, successfully adapt to the environment (society), and produce goods and services. Take population changes for example; as the population within a society changes it affects the demographic of that society resulting in a change in demand for goods and services. The education level within a society is another example of a socio-cultural force which affects an organization. The higher the educational levels of a society are, the higher the probability will be for people within that society to earn a higher income affecting the costs to operate a business within that society. Another socio-cultural force which affects organizations consists of the norms and values existing within each culture. Norms and values are the attitudes and behaviors readily accepted within a society. These norms and values can directly influence organization strategies to meet the expectations of consumers; for example, quality. More and more U.S. based organizations are implementing Japanese management styles as the demand for quality increases amongst consumers in these United States.

Economic forces which can affect an organization include balance of payments, the current position of the business cycle, distribution of income (transfer of payments), and governmental monetary and fiscal policies. These economic forces are extremely important when considering the international expansion of any financial institution such as a bank and as well in the manufacturing industry. During various periods of the business cycle such as an economic downturn, manufacturing companies may suffer from lower profits in contrast to financial institutions which see an increase in borrowing due to