Reasons to Enter into IB, Benefits of IB, Disadvantages, Risks, Challenges of International Trade

1. INTRODUCTION TO
INTERNATIONAL BUSINESS
INTERNATIONAL BUSINESS

2. Reasons to Enter into IB
Individual Angle Government Angle
1. Managing the product life cycle 1. Earning valuable foreign exchange
2. Geographic expansion as a growth
strategy
2. Interdependency of Nations
3. The adventurous spirit of the
younger generation
3. Trade theories and their impact.
(Absolute advantage, comparative
advantage etc)
4. Corporate ambition 4. Diplomatic relations
5. Technology advantage 5. Core Competency of nations
6. Building corporate image 6. Investment for infrastructure.
7. Incentives and business impact 7. National Image
8. Labour Advantage 8. Foreign trade policy and targets
9. New business oppurtunities 9.WTO and International Agencies
10. Emergence of SEZ’s , EOU’s , AEZ

3. Benefits of International Business
 New Markets for domestically produces goods
 Introduction of new products into domestic markets.
 Access to different resources,
 More economic and efficient production
 Increased domestic security and independence
 Reduces its dependence on domestic crops.
 Helps in stabilizing market fluctuations.
 Economic Development
 Optimum use an allocation of resources
 Employment
 Healthy Competition
 Technological Progress
 Efficiency
 Increase in Investment
 Enhancement of Consumer Welfare.

4. Certain Disadvantages
High Initial Costs of entering a new foreign market
Strict International Trade Laws
Challenge for domestic producers

5. International Trade Risks
Poor Quality Risk
Transportation Risk
Political Risk
Legal Risk
Unforeseen Risk
Credit Risk
Exchange Rate Risk
 Quality of the products should be
assured or else chances of getting
rejected in high
 Theft ,damage, goods not arriving on
time etc.
 Government policy or political
instability
 International laws and regulations
change frequently.
 Terrorist attack , natural disaster etc
 Checking the creditworthiness and
reputation of an importer
 Uncertainty of future value of currency

6. Challenges of International Trade
Global Trade Practices
Role of Culture and
Language
Foreign Politics
Economic and Financial
Challenges
Social Factors
Natural Environment
Exchange Rate
movements.
 Methods of managing business
should be good.
 Different attitudes, culture ,
language, acceptance etc.
 Change in foreign government can
change our action plans.
 International financial crisis, oil
rate changes etc.
 Population levels, youth etc
 Water and air should be retained

7. Challenges of International Trade
Global Trade Practices
Role of Culture and
Language
Foreign Politics
Economic and Financial
Challenges
Social Factors
Natural Environment
Exchange Rate
movements.
 Methods of managing business
should be good.
 Different attitudes, culture ,
language, acceptance etc.
 Change in foreign government can
change our action plans.
 International financial crisis, oil
rate changes etc.
 Population levels, youth etc
 Water and air should be retained