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Introduction to InternationalBusiness, Globalization andTrading Environment ofInternational TradeInternational Business Management Mrs. Charu Rastogi, Asst. Prof.

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Agenda Meaning and features of International Business Management Globalization ◦ Meaning ◦ Dimensions ◦ Stages ◦ Boon or bane Trading Environment of International Trade Mrs. Charu Rastogi, Asst. Prof.

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International Business Mgt :Meaning Very simply, IB refers to business transactions crossing national borders at any stage of the transaction. It refers to all business activities which involve cross border transactions of goods, services, resources between two or more nations. Transaction of economic resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc. Mrs. Charu Rastogi, Asst. Prof.

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International Business Mgt :Features Large scale operations Integration of economies (uses diff resources from diff countries) Dominated by developed countries and MNCs (as they have the best financial, human and technical resources) Benefits to participating countries (foreign capital, technology, industrial dev, employment) Keen competition (weak position of developing cuntries) Special role of science and technology International restrictions (on capital and technology flow; barriers, duties, trade blocks are there) Sensitive nature (Any changes in the economic policies, technology, political environment, etc. have a huge impact) Mrs. Charu Rastogi, Asst. Prof.

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Globalization : Meaning IMF defines globalization as: ‘the growing economic interdependence of countries worldwide through increasing volume and variety of cross- border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology’ Globalization is the movement towards the expansion of economic and social ties between countries through the spread of corporate institutions and the capitalist philosophy that leads to the shrinking of the world in economic terms It is characterized by growing economic, financial, trade, and communications integration. Mrs. Charu Rastogi, Asst. Prof.

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Mrs. Charu Rastogi, Asst. Prof.

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Mrs. Charu Rastogi, Asst. Prof.

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Globalization : Dimensions Economic: global finance and economy, multinationals, networking, international trade and business, new labour markets, new development cooperation Political: human rights, international terrorism, war and new security problems Democracy: good governance by people’s participation, Human rights. Ecological: sustainable globalization: use of common resources and legislation (biosphere; water, forest, earth, air, atmosphere) Cultural: multicultural society of different identities: local, political, gender, family, religious, national, Mrs. Charu Rastogi, Asst. Prof. individual and social.

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Stages of GlobalizationStages 1. Domestic 2. International 3. Multinational 4. GlobalStrategic Domestically Export Oriented, Multinational GlobalOrientation Oriented Multi-domestic Explosion ofStage of Initial foreign Competitive Global internationaldevelopment investment positioning operationsCultural Of little Somewhat Critically Very ImportantSensitivity importance important ImportantManager The least cost Many good One best way Many good waysAssumptions way ways Mrs. Charu Rastogi, Asst. Prof.

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Stage 1: Domestic Market potential is limited to the home country. Production and marketing facilities located at home Surplus may or may not be exported No overt efforts to develop foreign markets Mrs. Charu Rastogi, Asst. Prof.

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Stage 2: International Which markets to enter? Market entry strategies ◦ Off-shoring / global outsourcing (seeking cheaper source of raw material or labour) ◦ Exporting ◦ Licensing ◦ Franchising ◦ Joint Ventures / Acquisitions ◦ Direct Investments Mrs. Charu Rastogi, Asst. Prof.

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Stage 3: Multinational The domestic based company begins to carry out its own manufacturing, marketing and sales in the key foreign markets. The company moves to a full insider position in these markets, supported by a complete business system including R & D and engineering. This stage calls on the managers to replicate in a new environment the hardware, systems and operational approaches that have worked so well at home. It forces them to extend the reach of domestic headquarters, which now has to provide support functions such as personnel and finance, to all overseas activities. Mrs. Charu Rastogi, Asst. Prof.

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Stage 4: Global The company moves toward a genuinely global mode of operation. To make this organizational transition, a company must denationalize their operations and create a system of values shared by corporate managers around the globe to replace the glue a nation based orientation once provided. Todays global corporations are nationality-less because consumers have become less nationalistic. True global corporations serve the interests of customers, not Governments. They do not exploit local situations and then repatriate all the profits back home, leaving each local area poorer for their having been there. They invest, they train, they pay taxes, they build up infrastructure and they provide good value to customers in all the countries where they do business. IBM Japan, for instance, has provided employment to about 20,000 Japanese and over the past decade has provided three times more tax revenue to the Japanese Government than has the Japanese company Fujitsu Mrs. Charu Rastogi, Asst. Prof.

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Globalization : Boon or Bane One man’s food is another man’s poison. Mrs. Charu Rastogi, Asst. Prof.

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Trading Environment ofInternational Trade Mrs. Charu Rastogi, Asst. Prof.

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Trading Environment of International Trade Foreign Environment (Uncontrollables) 7. Structure of 1. Competition Distribution Domestic environment Environmental (Uncontrollables) uncontrollables country market A (Controllables) 1. Competition Price Product 2. Technology 5. Political- Target Environmental 76. Geography and Legal uncontrollables Market Infrastructure Promotion Place 2 .Technology country market B 4. Culture Environmental 3. Economy uncontrollables 5. Political- 3. ECONOMY country Legal market C 4. Culture Mrs. Charu Rastogi, Asst. Prof.

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Trading Environment ofInternational Trade Mrs. Charu Rastogi, Asst. Prof.

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Mrs. Charu Rastogi, Asst. Prof.