2. INDEX
INDEX
• Introduction to International Business
• Nature & Scope & Feature of I B
• Importance of I B
• Approaches of I B
• Motivation to do I B
• Need for I B
• Adopting to Customers Needs
• Problems in I B
• Entry Strategy
• Advantages & Disadvantages of I B
• Reasons for recent I B Growth
• International Organization
3. WHAT IS INTERNATIONAL BUSINESS ?
WHAT IS INTERNATIONAL BUSINESS ?
• The exchange of
goods & services,
Resources,
Knowledge,
& Skills , among individuals & businesses in multiple/two
or more countries.
• Transaction that are carried out across national borders
to satisfy the objectives of individuals and organization
4. WHAT IS INTERNATIONAL BUSINESS ?
WHAT IS INTERNATIONAL BUSINESS ?
• All Commercial transactions that take place between two
or more countries. –
1-Private & Government
2-Sales
3-Investments
4-Logistics
5- Transportation
5. NATURE OF IB
NATURE OF IB
1. Accurate Information & timely
2. The size of the international business
3. Market segmentation
4. International markets have more potential than
domestic markets
6. SCOPE OF IB
SCOPE OF IB
1. International Marketing
2. International Finance and Investments
3. Foreign Exchange
4. Global HR
7. FEATURES OF IB
FEATURES OF IB
1. Large scale operations
2. Integration of economies
3. Dominated by developed countries and MNCs
4. Benefits to participating countries
5. Keen competition
6. Special role of science and technology
7. International restrictions
8. IMPORTANCE OF IB
IMPORTANCE OF IB
1. Earn foreign exchange
2. Optimum utilisation of resources
3. Achieve its objectives
4. To spread business risks
5. Improve organization's efficiency
6. Get benefits from Government
7. Expand and diversify
8. Increase competitive capacity
10. I B APPROACHES
I B APPROACHES
1. Ethnocentric approach
2. Polycentric approach
3. Regiocentric approach
4. Geocentric approach
11. I B APPROACHES
I B APPROACHES
1. Ethnocentric approach
• Under this approach , target market is own
country , Exccesive production will export
due to change in customer taste, preferences
12. 1. Ethnocentric approach
Organization Structure
Managing Director
↓
↓
↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻↓
MGR MGR MGR MGR
MGR
R & D FIN PROD HRD
MKTG
↓
↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻↓
Asstt. Mgr Asstt. Mgr
Asstt. Mgr
13. I B APPROACHES
I B APPROACHES
2. Polycentric approach
• Under this approach, the companies
customizes the marketing mix to meet the
taste, performance and needs of the
customers of each international market.
14. 2. Polycentric approach
Organization Structure
Managing Director
↓
→→→ C E O
↓ FOREIGN SUBSIDIARY
↓ SOUTH AFRICA
↓
↓
↓
↓
↓ ↓ ↓ ↓ ↓
⁻⁻⁻⁻⁻⁻⁻⁻ ⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻ ⁻⁻⁻⁻⁻⁻⁻⁻⁻ ⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻
MGR MGR MGR MGR MGR
R & D FIN PROD HRD MKTG
15. I B APPROACHES
I B APPROACHES
3. Regiocentric approach
• Under this approach, the company operating
successfully in a foreign country thinks of exporting
other neighbouring countries of the host country.
• At this stage, the concerned subsidiary considers the
regional environment ( such as laws, culture, policies
etc) for formulating the policies & strategies.
16. 3. Regiocentric approach
Organization Structure
Managing Director
↓
→→→ C E O
↓
↓ SOUTH AFRICA
↓ ↓ ↓ ↓
⁻⁻⁻⁻⁻⁻⁻ ⁻⁻⁻⁻⁻⁻⁻⁻
↓ Mktg Mktg Mktg
↓ ( Lesotho) ( Kenya) ( Nambia)
↓
↓ ↓ ↓ ↓ ↓
⁻⁻⁻⁻⁻⁻⁻ ⁻ ⁻⁻⁻⁻⁻⁻⁻⁻ ⁻⁻⁻⁻⁻⁻⁻ ⁻⁻⁻⁻⁻⁻⁻⁻
MGR MGR MGR MGR MGR
17. I B APPROACHES
I B APPROACHES
4. Geocentric approach
• Under this approach, the company analyses the tastes,
preference and needs of the customers in all foreign markets
and then adopts a standardized marketing mix for all the foreign
markets.
• Coca-cola adopted this strategy by selling its popular soft drink
with the same content, packaging, branding & advertisement
themes worldwide
• Whirlpool designs a world-washer – small, stripped-down
automatic washing machine for Mexico, Brazil & India. However,
it modified its product for Indain market to wash the
delicate “sarees”.
18. 4. Geocentric approach
Organization Structure
Managing Director
Headquarters India
↓
↓
↓
↓ ↓ ↓ ↓
⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻ ⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻ ⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻
Subsidiary Subsidiary Subsidiary Subsidiary
India South Africa Kenya Nambia
19. MOTIVATION TO DO I B
MOTIVATION TO DO I B
1. Proactive:
to increase profit
to take advantage of product life cycle
to achieve Economies of scale
2. Reactive:
Competitive pressures
Overproduction and excess capacity
Declining domestic sales
saturated domestic markets
20. NEED FOR I B
NEED FOR I B
1. Achieve higher rate of profits
2. Expanding the production capacity beyond the demand
of the domestic country
3. Availability of technology and managerial competence
4. Cost of manpower, transportation & Nearness to R/M
5. LPG Implt.
6. Market share
21. ADOPTING TO CUSTOMERS NEEDS
ADOPTING TO CUSTOMERS NEEDS
1. Products and Services should meet to foreign
market
2. Price adjustments by considering the cost of
foreign trade, such as transportation, taxes,
exchange rate
3. Distribution system through existing transportation
system, suppliers and stores
4. Promotion should be modified based on different
languages, law, and culture from country to
country
22. PROBLEMS IN I B
PROBLEMS IN I B
1. Political factors
2. High foreign investments and high cost
3. Exchange instability
4. Entry requirements
5. Tariffs, quota etc.
6. Corruption and bureaucracy
7. Technological policy
8. Quality Management
23. ENTRY STRATEGY
ENTRY STRATEGY
1. Exporting
• Indirect & Direct
2. Licensing
• Agreement
• Patent, trademark, copy right, technology,
production processes, and product
• licensee’s fee
24. ENTRY STRATEGY
ENTRY STRATEGY
2. Franchising
– by franchisers to franchisee
– Usage
3. Foreign Assembly
– Subsidiary
– local assembly
25. ENTRY STRATEGY
ENTRY STRATEGY
4. Turnkey Operation
– Staff of an operating facility
– foreign buyer
5. Foreign production subsidiary
– Establishment
– Purpose
26. ENTRY STRATEGY
ENTRY STRATEGY
6. Foreign production subsidiary
– Purpose of production
7. International Firm
– Significant portion
– In foreign countries
28. ENTRY STRATEGY
ENTRY STRATEGY
10. Foreign Direct Investment
– Arrangement in which a firm buys or establishes
tangible assets
– In another country
– Through direct investment
– By buying a company stock in capital markets
30. ADVANTAGES OF I B
ADVANTAGES OF I B
1. Faster growth
2. Access to cheaper inputs
3. Increased quality and efficiency
4. New market opportunities
5. Diversification
31. DISADVANTAGES OF I B
DISADVANTAGES OF I B
1. Increased costs
2. Foreign regulations and standards
3. Delays in payments
4. Complex organizational structure
32. REASONS FOR RECENT GROWTH IN I B
REASONS FOR RECENT GROWTH IN I B
1. Expansion of technology
2. Business is becoming more global because
•Transportation is quicker
•Communications enable control from afar
•Transportation and communications costs are more
conducive for international operations
3. Liberalization of cross-border movements
4. Lower Governmental barriers to the movement of
goods, services, and resources enable Companies to
take better advantage of international opportunities
33. INTERNATIONAL ORGANIZATION
INTERNATIONAL ORGANIZATION
• General agreement on Tariff and trade
(GATT) – an international organization formed to
reduce or eliminate tariff and other barrier to
international trade
• International Monetary Fund (IMF) – an
international financial organization that lend money to
countries in conducting international trade
34. INTERNATIONAL ORGANIZATION
INTERNATIONAL ORGANIZATION
• World Bank – an international financial
organization that lend money to underdeveloped and
developing countries for development
• Economic Communities – the creation of
common economic policies
– World Trade Organization (WTO)
– European Community (EC)
– North American Free Trade Agreement (NAFTA)
– Asian Free Trade Agreement (AFTA)
35. • Rahul Boddhul - MBA
• UNIVERSITY of SOLAPUR
Presented by -
Thank you !
Thank you !
