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1. Overview Of Global Business

1. Overview Of Global Business






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    1. Overview Of Global Business 1. Overview Of Global Business Presentation Transcript

      • To understand the basics of
      • international business and its
      • environment
      • To develop the analytical skills
      • required to compete effectively in
      • this environment
      International Business By Pankaj Agrawal
      • Evaluation and Grading
      • Internal Evaluation 50:
      • Individual Assignments: 20%
      • Attendance: 10%
      • Project work: 10%
      • Modular Tests 20%
      • End Term: 40%
      • ---------------------------------------------------------------
      • TOTAL 100%
      • External Evaluation 50:
      • PU Board Exam: 100%
      • Project work is group work and presentation at the end is
      • mandatory for it
      • Late submission of assignment will result in grade
      • reduction
      By Pankaj Agrawal
      • Reference Books
      • Hill, Charles W.L. & Jain, Arun Kumar (2007):International Business (Competing in the Global Marketplace): Tata McGraw Publishing Company Ltd.
      • Bennett, Roger (2006): International Business: Pearson Education
      • Daniels John D., Radebaugh Lee H. & Sullivan Daniel P.(2007): International Business (Environments and Operations): Pearson Education
      • Hill, Charles W.L. (2005):International Business (Competing in the Global Marketplace): Tata McGraw – Hill Edition
      • - Please make good use of INTERNET
      • - Please do keep update with the changes
      By Pankaj Agrawal
      • Meaning of international business and
      • globalization
      • Drivers of globalization
      • Overview of changing global picture
        • Declining trade barriers
        • Change in communication, information
        • and transportation technologies
      Overview of Global Business By Pankaj Agrawal
    • International Business
      • International Business involves
      • Commercial activities that cross national frontiers
      • International movement of goods, capital, services, employees & technology, import and export
        • licensing and franchisee
        • investment in physical infrastructure
        • buying and selling in foreign countries
      By Pankaj Agrawal
      • Political risk
      • Commercial risk (market failure, product not appeal to customers)
      • Financial risk (inflation, tax rate, exchange rate)
      • Manager skill should be broad range
      • Dependence on foreign consultant, intermediaries, advisers
      • Difficult to monitor trends and activities in foreign countries
      International Business By Pankaj Agrawal
    • International Business & Domestic business
      • Special problems and cases that arises in IB that normally not experienced in domestic
      • Deals carried out in foreign language under foreign law, customs and regulations
      • Information on foreign countries required difficult to obtain
        • - Exchange rate
        • - Cultural differences
        • - Complex control and communication
        • - High risk level
      By Pankaj Agrawal
    • Why IB?
      • Expand Sales
      • Acquire source from foreign countries
      • Diversify activities
      • Saturation in domestic market
      • Discovery of lucrative opportunity in foreign
      • market
      • Obtain economics of scale and also
      • economics of scope might also be available
      By Pankaj Agrawal
    • Why IB?
      • High cost of new product development
      • process
      • Cross border trade is easier to organize than in
      • past (better communication, visit)
      • Spreading commercial risk in several
      • countries
      • Involvement in IB can facilitate ‘experience
      • curve’ effect
      By Pankaj Agrawal
    • Globalization
      • Globalization: the trend towards a
      • more integrated and interdependent
      • global economic system
      • - Effects of globalization can be seen
      • everywhere:
          • - the cars people drive
          • - the food people eat
          • - the jobs where people work
          • - the clothes people wear
      By Pankaj Agrawal
    • Globalization
      • Globalization of markets:
      • -Historically distinct and separate national markets are merging into one huge global marketplace
      • - Tastes and preferences of consumers in different nations are beginning to converge upon some global norm
      • Examples: Sony Playstation Citicorp credit cards , Coca-Cola, McDonald's hamburgers
      By Pankaj Agrawal
    • Globalization
      • Globalization of production:
      • Source goods and services from different locations around the globe
      • Take advantage of national differences in the cost and quality of factors of production (such as land, labor, capital and energy)
      • Compete more effectively against their rivals.
      • Examples: Boeing, Adidas, Nike
      By Pankaj Agrawal
    • Globalization
      • Emergence of GLOBAL INSTITUTIONS like WTO, IMF, World Bank, UN
      • Help to regulate, manage and police the global market place and promote the establishment of multinational treaties to govern global business system
      • Drivers of globalization
        • Declining trade and investment barriers
        • - Technological change
      By Pankaj Agrawal
    • Drivers of Globalization
      • Declining Trade and Investment Barriers
      • - Industrialized countries of the West began the process of removing barriers to the free flow of goods, services, and capital between nations after World War II
      • - Under General Agreement of Tariffs and Trade GATT, over 100 nations negotiated further decreases in tariffs & also non-tariff barriers
      By Pankaj Agrawal
    • Drivers of Globalization
      • Under the WTO: dispute resolution and the enforcement of trade laws, and cut tariffs on industrial goods, services, and agricultural products
      • Removal of barriers to trade has contributed to increased international trade (the export of goods or services to consumers in another country), world output, and foreign direct investment
      • With removal of trade barriers many countries have also removal of restrictions in FDI
      • Growth of FDI outflow increased from $ 25 billion in 1975 to a record of $1.3 trillion in 2006
      By Pankaj Agrawal
    • Drivers of Globalization By Pankaj Agrawal
    • - Firms are dispersing parts of their overall production to different parts of location around the globe to drive down production costs and increase product quality - Economies of the world`s nation-sates are becoming more intertwined and expansion of trade nations are becoming increasingly dependent on each other for important goods and services Drivers of Globalization By Pankaj Agrawal
    • Drivers of Globalization By Pankaj Agrawal
      • The Role of Technological Change
      • The lowering of trade barriers made globalization of markets and production a theoretical possibility, technological change made it a tangible reality
      • Microprocessors and Telecommunications : Major advances in communications and information processing have lowered the cost of global communication and therefore the cost of coordinating and controlling a global organization
      Drivers of Globalization By Pankaj Agrawal
      • The Internet and the World Wide Web: Web-based transactions have grown from virtually zero in 1994 to nearly $7 trillion in 2004
      • Transportation Technology : the most important developments are probably development of commercial jet aircraft and super freighters and the introduction of containerization, which greatly simplifies trans-shipment from one mode of transport to another
      • Improvements in transportation technology have enabled firms to better respond to international customer demands
      London – New York 1930: Steam ships, 10 days 1950s: Propeller Aircraft 200-300 mph, 2 days 1960s: Jet Aircraft 500-700mph, 8 hours 1990s: Supersonic Jets, 3 hours Drivers of Globalization By Pankaj Agrawal
    • The Shrinking Globe By Pankaj Agrawal
    • Changing Demographics Of Global Economy
      • In the 1960s:
      • -U.S. dominated the world economy and the world trade picture
      • -U.S. multinationals dominated the international business scene
      • -About half the world-- the centrally planned economies of the communist world-- was off limits to Western international business
      By Pankaj Agrawal
    • Changing World Output and World Trade Picture
      • In the early 1960s, the U.S. - world's dominant industrial power , 40.3 percent of world manufacturing output
      • By 2005 the United States accounted for only 20.1 percent
      • Rapid economic growth is now being experienced by countries such as China, Thailand, and Indonesia with share of world output
      • Decline in the share of world output by industrialized countries such as Britain, Japan, and the United States
      By Pankaj Agrawal
    • Changing World Output and World Trade Picture By Pankaj Agrawal
    • Changing Foreign Direct Investment Picture
      • -Share of world output generated by developing countries has been steadily increasing since the 1960s
      • -Stock (total cumulative value of foreign investments) generated by rich industrial countries has been in decline
      • - Flow of foreign direct investment (amounts invested across national borders each year) has been directed at developing nations especially China
      By Pankaj Agrawal
      • Stock of FDI by the world’s six most important national sources
      By Pankaj Agrawal
      • - A multinational enterprise is any business that has productive activities in two or more countries.
      • Non-U.S. Multinationals
      • Expect the growth of new multinational enterprises from the world's developing nations e.g. Wipro, Infosys
      • Rise of Mini-Multinationals
      • - Number of mini-multinationals (small and medium-sized companies) is on the rise
      Changing Nature of Multinational Enterprises By Pankaj Agrawal
      • -Collapse of communism in Eastern Europe represents a host of export and investment opportunities for Western businesses
      • - Economic development of China presents huge opportunities and risks (in spite of its continued Communist control)
      • Mexico and Latin America also present tremendous new opportunities both as markets and sources of materials and production
      • In recent days there is some socialist movement/trend in Latin America (Bolivia, Venezuela)
      The Changing World Order By Pankaj Agrawal