This document provides an overview of international business, including definitions, features, external factors impacting expansion, types of orientation approaches, market entry strategies, the roles of international agencies, and multi-national corporations. It defines international business as goods and services exchanged between countries and business functions expanded globally. It also outlines factors like socio-cultural influences, various market entry strategies such as direct exporting, licensing and franchising, and the roles of organizations like the WTO, IMF, World Bank in facilitating international trade.

1. ANJALI DAS V.M
MBA
RAJADHANI BUSINESS SCHOOL

2. INTERNATIONAL
BUSINESS

3. DEFINITION
Global business in which goods & services are
exchanged between countries.
Expansion of business functions to various
countries targeting international customers.

4. FEATURES
Large scale operations.
Separation of producers from buyers.
Payment in foreign currency.
Large number of middlemen.
High competition
Involving greater risk.

5. FEATURES
Benefits to participating countries.
International restrictions.
Sensitive in nature.
Domination and control of the government.
Multiplicity of documents.
Get knowledge about different laws of the country.

6. EXTERNAL FACTORS
IMPACTING EXPANSION
Socio-cultural factors.
Geographic/environmental factors.
Legal/political factors.
Economic factors.
Technological factors.

7. TYPES OF
ORIENTATION/APPROACHES
Ethnocentric approach
Polycentric approach
Regiocentric approach
Geocentric approach

8. ETHNOCENTRIC
APPROACH
Focusses on the values and ethics of the home
country.
Foreign marketing operations are planned &
carried out from hime base.
Suitable for companies with less investment & risk.

9. REGIOCENTRIC
APPROACH
Firm accepts a regional marketing policy covering
a group of countries.
Strategies are formulated on the basis of entire
region rather than individual countries.

10. POLYCENTRIC APPROACH
Each country is treated as separate entity and
individual strategies are used.
Combination of ethnocentric & regiocentric.
For each country separate local assembly and
marketing organisations are created tor serving
market needs.
Used by MNC s

11. GEOCENTRIC APPROACH
Applies for entire world.
Follows common HR & marketing practices.
Helps to build a common brand image & goodwill.
Used by large scale enterprises.

12. ADVANTAGES
Business development.
Benefits to customers.
Division of labour.
Financial benefits.
Technological benefits.
Production advantages.
Human resource advantages.

13. DISADVANTAGES
Cultural & language barriers.
Political risk involved.
Exchange rate risks.
Risk of proprietary information theft.
Tariffs & trade barriers.
War & terrorism.

14. MARKET ENTRY
STRATEGIES
Direct exporting
Licensing
Franchising
Partnering
Joint ventures
Buying a company
Turnkey projects
Piggybacking
Greenfield investment

15. DIRECT EXPORTING
Company sells its products products directly to
customers in another country.
Profits are greater because of elimination of
intermediaries.
It takes more time, energy and money.
Company have to handle all logistics of the
transactions.

16. LICENSING
Firm transfers the rights to the use of a
product/service to another firm.
Organisation charges a fee or royalty for the use of
its technology, brand & expertise.
Example: Software license.

17. FRANCHISING
Contractual agreement between a franchisor
(producer) and a franchisee(retailer).
Right to use a firm’s business model & brand for a
prescribed time period.
Help to attract customers easily
Buying a well known franchisee is expensive.
Example: McDonald’s.

18. PARTNERING
2 or more organisations share their expertise,
solutions and services to increase their presence.
Helps to increase the revenue.
Cost will be less.
More flexible than merger or acquisition.

19. JOINT VENTURES
Particular form of partnership.
Results in the creation of a 3rd independently
managed company.
1+1=3 process.
2 companies agree to work together and create a
third company to undertake.
Example: Sony Ericsson.

20. BUYING A COMPANY
Buying an existing company may be because of its
market share.
Get existing customer base & brand image.
Helps you to keep the competition low.
Very expensive.

21. PIGGYBACKING
2 or more companies come together to reach
some objective which cannot be done by
themselves.
Involves 2 or more parties called rider & carrier.
Low cost market entry strategy.

22. TURNKEY PROJECTS
Particular to companies providing services like
architecture, construction, engineering etc.
Client is normally government and financed by an
international financial agency like world bank.

23. GREENFIELD INVESTMENTS
Form of a foreign direct investment.
Parent company begins a new venture by
constructing new facilities in a foreign country.
Difficult to overcome competition.
Best examples of firms invested in greenfield
projects are Starbucks & McDonald’s.

24. ROLE OF
INTERNATIONAL
AGENCIES

25. INTERNATIONAL
AGENCIES
WTO
GATT
IMF
World Bank

26. WTO

27. ABOUT WTO
World Trade Organisation came into being in
1995.
Successor of GATT.
One of the youngest international organisation.
Only global international organisation dealing with
rules of trade between nations.
Has nearly 150 members.

28. ROLES
Trade negotiations.
Implementation & monitoring.
Dispute settlement.
Building trade capacity.
To ensure the optimum use of world resources.
To assist international organisations like IMF &
IBRD.

29. IMF

30. ABOUT IMF
International Monetary Fund was created in 1945,
Organisation of 189 countries.
Primary purpose is to ensure the stability of the
international monetary system.
Also helps to monitor the global economy.
Gets money from quota subscriptions paid by
member countries.

31. ROLES
Promotion of international monetary cooperation.
To facilitate expansion & balanced growth of
international trade.
To promote exchange stability.
Help the members by providing temporary funds.
To assist in the establishment of a multilateral
system of payments.

32. GATT

33. ABOUT GATT
Signed in 1947.
General Agreement In Tariffs & Trade was a legal
agreement between many countries.
Primary purpose was to increase international
trade through by reducing tariffs.

34. ROLES
Established a set of standard to guide the contracting
parties to participate in international trade.
Helps to achieve liberalisation in international trade.
Reduced the tariff and discrimination in tariff.
Protects the benefits of developing countries to
international trade.
Provides a platform for negotiations & dispute
settlements.

35. WORLD BANK

36. ABOUT WORLD BANK
International financial institution which provides
loans to countries for capital programs.
Established in 1944.
Having 189 member countries.
Official goal is the reduction of poverty.
Promote foreign investment & international trade.

37. ROLES
Helps in poverty reduction.
Assists developing countries to formulate liberal
trade policies.
Provides technical assistance or policy advice to
the governments.
Helps to develop techniques & policy tools for
analysing the impact of trade policy reforms.

38. MULTI NATIONAL
CORPORATIONS

39. MEANING
Owns & manages business in 2 or more countries.
Incorporated in 1 country & extend its operations
beyond the home country.
Headquarters are located in the home country.
Examples: Cadbury, Suzuki, Philips etc.

40. FEATURES
World wide operation.
High efficiency.
Huge assets & turnover.
Advanced technology.
Professional management.
Better quality of products.
Spend huge money for advertising & marketing.

41. ADVANTAGES
Proper use of idle resources.
Employment generation.
Improves the GDP.
Improvement in standard of living.
Brings foreign currency to the host country.
Gets access to cheap labour.
End of local monopolies.

42. DISADVANTAGES
No benefit to poor people.
Exploitation of natural resources may occur.
Complex legal requirements from country to
country.
Exploitation of labour.
Selfish promotion of alien culture.

43. THANK YOU