1.
Introduction to International
Business, Globalization and
Trading Environment of
International Trade
International Business Management
Mrs. Charu Rastogi, Asst. Prof.

2.
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.

3.
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.

4.
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.

5.
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.

6.
Mrs. Charu Rastogi, Asst. Prof.

7.
Mrs. Charu Rastogi, Asst. Prof.

8.
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.

9.
Stages of Globalization
Stages 1. Domestic 2. International 3. Multinational 4. Global
Strategic Domestically Export Oriented,
Multinational Global
Orientation Oriented Multi-domestic
Explosion of
Stage of Initial foreign Competitive Global
international
development investment positioning
operations
Cultural Of little Somewhat Critically
Very Important
Sensitivity importance important Important
Manager The least cost Many good
One best way Many good ways
Assumptions way ways
Mrs. Charu Rastogi, Asst. Prof.

10.
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.

11.
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.

12.
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.

13.
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.
 Today's 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.

14.
Globalization : Boon or Bane
 One man’s food is another man’s
poison.
Mrs. Charu Rastogi, Asst. Prof.

15.
Trading Environment of
International Trade
Mrs. Charu Rastogi, Asst. Prof.

16.
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
7
6. 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.

17.
Trading Environment of
International Trade
Mrs. Charu Rastogi, Asst. Prof.

18.
Mrs. Charu Rastogi, Asst. Prof.