Why companies engage in International Business


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Why companies engage in international business;

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  • International business means business that is in multiple different countries. Many companies who are doing very well in their original country will start to market and sell their product or service to other countries. There are many factors to take into account when marketing to another country, such as language barriers and cultural differences. For example, most of India does not eat beef, so a company that sells beef products would not want to engage business in India.
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Why companies engage in International Business

  1. 1. International Business Presented By: Uttam k Sarkar BBA LM 1
  2. 2. Extending 6,437 kilometers, the Silk Road gets its name from the lucrative Chinese silk trade which was carried out along its length. It started to operate at around 110BC, under the rule of HanDynasty. Trade on the Silk Road was a significant factor in the development of the civilizations of China, the Indian Sub-continent, Persia,Europe and Arabia. 2
  3. 3. International Business and the Roman Empire  Pax Romana, or Roman Peace ensured that merchants were able to travel safely and rapidly.  Common coinage simplified business transactions.  Rome developed a systematic law, central market locations, and an effective communication system; all of which enabled international business to flourish in the Roman Empire.  The growth of the Roman Empire occurred mainly through the linkages of business 3
  4. 4. United States: A Global Leader  The United States has developed a world leadership position due to:  its use of market-based transactions in the Western world  a broad flow of ideas, goods, and services across national borders  an encouragement of international communication and transportation  Pax Americana, an American sponsored and enforced peace 4
  5. 5. Types of International Business Export-import trade Foreign direct investment Licensing Franchising Management contracts 5
  6. 6.  More and more firms around the world are going global, including:  Manufacturing firms-Ex: Coca-cola  Service companies i.e. (banks-Ex: HSBC, insurance-Ex: MetLife, Aviva, consulting firms-Ex: Accenture,IBM)  Art, film, and music companies-Ex: Sony Music 6
  7. 7. Why companies engage in International business ? 7
  8. 8.  International business:  causes the flow of ideas, services, and capital across the world  permits the acquisition of a wider variety of inputs  Generates Economies of Scale  Insulates seasonal domestic sales by finding new foreign markets  Reduces dependence on existing markets 8
  9. 9.         Tax advantages facilitates the mobility of labor, capital, and technology provides challenging business opportunities reallocates resources, makes preferential choices, and shifts activities to a global level High sales-Global market Diversify sources of sales & supplies Minimize competitive risk Led to Globalization 9
  10. 10. 10
  11. 11. List of Indian Companies going Global, & Growing 1. Indian car “TATA INDICA” is penetrating into European market, by establishing strategic marketing arrangement with ROVER. 2. TATA’s have purchased the Korean company "Daewoo motors" and consolidating its position in Korea and China . 3. Tata Iron & Steel has become 5th largest steel company of the world by acquiring the European major "Corus" for a premium prize. 4. Lakshmi Mittal, world's fourth richest person and NRI had acquired a 11
  12. 12. Indian companies ..contd.. 5. Ranbaxy Labs, India's top pharmaceutical company, earns 76% of its revenues from outside India. It is rated the ninth biggest generic company of the world with manufacturing locations situated across the globe. 7. Videocon, the TV manufacturing company of India, had bought the world famous TV company Thompson in the countries of China, Italy, Poland, Mexico etc. 10. ONGC & IOC have purchased oil wells in the countries of Africa & Dubai. 11. Asian Paints have manufacturing plants in 24 countries. Asian Paints is considered as the leader in segment of selling paints. 12
  13. 13. JAGUAR and LAND ROVER thrives under TATA. 13
  14. 14. Expansion of International Trade  In the past 30 years, the volume of international trade has expanded from $200 billion to over $7.5 trillion.  The sales of foreign affiliates of multinational corporations are now twice as high as global exports. 14
  15. 15. Global Links Today  International business has created a network of global links that bind countries, institutions, and individuals with trade, financial markets, technology, and living standards.  For example, a reduction in coffee production in Brazil would affect individuals and economies worldwide. 15
  16. 16. Recent Changes in International Business  Total world trade declined dramatically after 2000, but is again on the rise.  The rate of globalization is accelerating.  Regionalization is taking place, resulting in trading blocs.  The participation of countries in world trade is shifting. 16
  17. 17. The Composition of Trade  Between the 1960’s and the 1990’s the importance of manufactured goods increased while the role of primary commodities (i.e. rubber or mining) had decreased.  More recently, there has been a shift of manufacturing industries to countries with emerging economies.  There has been an increase in the area of service trades in recent years. 17
  18. 18. Conclusion  With only domestic resources being available , each country could produce only limited no. of Products.  Shortages would be prevalent  Global trades allows for enormous variety of resources-from Persian Gulf oil, Brazilian Coffee to Asian Labours.  Unemployment would have been more common. 18
  19. 19. Sources: WEBSITES: BOOKS: www.wikipedia.org International Business, by czinkota,Ronkeinen,Moffett www.ibusinessarticles.blogspot.in Global Business Today, by Charles W.L. Hill www.economictimes.indiatimes.com www.icmab.net www.managementstudyguide.com 19
  20. 20. Thank You 20