International Business Management

Chanderprabhu Jain College of Higher Studies & School of Law
Plot No. OCF, Sector A-8, Narela, New Delhi – 110040
(Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India)
International Business
Management
Prepared by: Ms.Shruti

International Business Meaning
• International business consists of trades and
transactions at a global level. These include
the trade of goods, services, technology,
capital and/or knowledge."International
business" is also defined as the study of the
internationalization process of multinational
enterprises.

Cont..
• To conduct business overseas, multinational
companies need to separate national markets
into one global marketplace. In essence there
are two macro factors that underline the trend
of greater globalization.
• The first macro-factor consists of eliminating
barriers to make cross-border trade easier,
such as the free flow of goods and services,
and capital

Cont..
• The second macro-factor is technological
change, particularly developments in
communication, information processing, and
transportation technologies
.

Management consists of:
1. International business law
2. International finance and banking
3. International marketing
4. International entrepreneurship and
innovation
5. Global business research and analysis
6. International business planning

Continued..
7. Corporate social responsibility and
international development
8. Business networking

The scope of
Major forms of business operations that
constitute international business are as
follows.
(i) Merchandise exports and imports
(ii) Service exports and imports
(iii)Licensing and franchising
(iv)Foreign investments

Need for International Business
1. To achieve higher rate of profits
2. Expanding the production capacity beyond
the demand of the domestic country
3. Severe competition in the home country
4. Limited home market
5. Political conditions
6. Availability of technology and managerial
competence

Cont..
• 7. Cost of manpower, transportation
8. Nearness to raw material
9. Liberalisation, Privatisation and
Globalisation (LPG)
10. To increase market share
11. Increase in cross border business is due to
falling trade barriers (WTO), decreasing costs
in telecommunications and transportation;
and freer capital markets

Problems in International Business
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

Major Trends in International
Business
• Growing Emerging Markets
• Demographic Shifts
• Speed of Innovation
• More Informed Buyers
• Increased Competition
• Slower Growth
• Clean Technology

International competitive
advantage
A superiority gained by an organization when
it can provide the same value as
its competitors but at a lower price, or can
charge higher prices by providing greater
value through differentiation. Competitive
advantage results from matching core
competencies to the opportunities.

Multidimensional view of
competitiveness
Competitiveness is considered as a key
criterion for appraising the success degree of
countries, industries and enterprises in the
political, economical and commercial
competition fields.

Research findings show that
competitiveness has been
discussed in three levels
• national,
• industry and
• Enterprise
Among all, the “enterprise level” seems to be
more considerable

enterprise competitiveness two
main perspectives:
1.construct and
2.behavioral.
According to construct perspective,
competitiveness includes two groups of
factors which are composing and affecting
factors

construct perspective
According to construct perspective,
competitiveness includes two groups of
factors which are composing and affecting
factors. Based on behavioral perspective an
enterprise faces two types of factors in its
decisions and actions which are strategic and
operational factors.

International monetary systems
International monetary systems are sets of
internationally agreed rules, conventions and
supporting institutions, that
facilitate international trade, cross border
investment and generally the reallocation of
capital between nation states.

Financial Markets
The term "market" is sometimes used for what
are more strictly exchanges, organizations that
facilitate the trade in financial securities, e.g.,
a stock exchange or commodity exchange.

Types of financial markets
Commodity Markets
Money Markets
Derivatives Markets
Futures Markets
Foreign Exchange Markets
Spot Market
Interbank Lending Market

Types of financial markets
Capital Markets which consist of:
1.Stock Market, which provide financing
through the issuance of shares or common
stock, and enable the subsequent trading
thereof.
2.Bond markets, which provide financing
through the issuance of bonds, and enable the
subsequent trading thereof.

International Monetary Fund
• The International Monetary Fund (IMF) is an
organization of 189 countries, working to
foster global monetary cooperation, secure
financial stability, facilitate international trade,
promote high employment and sustainable
economic growth, and reduce poverty around
the world.

Why the IMF was created and how
it works
• The IMF’s fundamental mission is to ensure
the stability of the international monetary
system. It does so in three ways:
1.keeping track of the global economy and the
economies of member countries;
2.lending to countries with balance of
payments difficulties; and
3.giving practical help to members.

IMF
Surveillance- The IMF oversees the international
monetary system and monitors the economic
and financial policies of its 189 member
countries.
Lending- A core responsibility of the IMF is to
provide loans to member countries
experiencing actual or potential balance of
payments problems.

IMF
• Capacity Development- IMF capacity
development—technical assistance and
training—helps member countries design and
implement economic policies that foster
stability and growth by strengthening their
institutional capacity and skills

The IMF's responsibilities:
The IMF's primary purpose is to ensure the
stability of the international monetary
system—the system of exchange rates and
international payments that enables countries
(and their citizens) to transact with each other.

World Bank
The World Bank Group is one of the world’s
largest sources of funding and knowledge for
developing countries. Its five institutions share
a commitment to reducing poverty, increasing
shared prosperity, and promoting sustainable
development.

Mission
To end extreme poverty:
By reducing the share of the global population
that lives in extreme poverty to 3 percent by
2030.
To promote shared prosperity:
By increasing the incomes of the poorest 40
percent of people in every country.

WHAT THEY DO
The World Bank Group works in every major
area of development. We provide a wide array
of financial products and technical assistance,
and we help countries share and apply
innovative knowledge and solutions to the
challenges they face.

Working of WTO
Three priorities guide their work with
countries to end poverty and boost prosperity
for the poorest people.
Development Projects
Since 1947, the World Bank has funded over
12,000 development projects, via traditional
loans, interest-free credits, and grants

Products & Services
We offer support to developing countries
through policy advice, research and analysis,
and technical assistance
Knowledge & Innovation
Their Access to Information policy was the
catalyst for initiatives such as Open Data and
the Open Knowledge Repository.

The World Bank Group has
several parts
World Bank
Group
World Bank
International Bank for
Reconstruction and Development
International Development
Association
International
Finance
Corporation
Multilateral
Investment
Guarantee
Agency

The World Bank offers clients
an array of instruments
Financing
• Investment lending
• Development policy
lending
• Grants, trust funds,
global programs
Advisory and
Analytical Activities
• Economic and sector
analytic work
• Technical assistance
(non-lending)
• Research
• Donor Coordination

UNIT-2

Globalization
The process by which businesses or other
organizations develop international influence
or start operating on an international scale.

Impact of Globalisation
Globalization of product and financial markets
refers to an increased economic integration in
specialization and economies of scale, which
will result in greater trade in financial services
through both capital flows and cross-border
entry activity.

Impact of Globalisation on India
Greater Number of Jobs
More choice to consumers
Higher Disposable Incomes
Access to education
Growth of cities

Effects of Technological
Developments on Globalization
Process:
Technology improves our capacity to produce.
Today technology is developed through research
and development institutions as integral parts
of the universities.

Technology transfer
The transfer of new technology from the
originator to a secondary user, especially from
developed to developing countries in an
attempt to boost their economies. Technology
transfer is the process of transferring scientific
findings, knowledge, manufacturing process,
technologies, processes etc.

Technology transfer
• Identifying and assignment of new
technologies
• Technology evaluation
• Protecting technologies
• Value addition
• Marketing and licensing

Technology transfer
• Technology transfer is the process of
transferring scientific findings, knowledge,
manufacturing process, technologies,
processes etc. from one organization to
another for the purpose of further
development and commercialization. The
process typically includes:

Technology transfer
• Generally TOT consists of knowledge or IP rights that
are:
• licensed in the form of intellectual property,
• the subject of formal consulting or training agreements,
• communicated in the work place or research settings
• diffused by publication or other means.

Diffusion
Diffusion is the process by which a
new idea or new product is accepted by
the market. The rate of diffusion is the speed
with which the new idea spreads from
one consumer to the next.

Dissemination in International
Business
Broadcast of an idea or message on a large
scale to make it reach a wide audience.

Cont..
Dissemination risk refers to the extent to
which a firm’s know-how will be expropriated
by a contractual partner. Resource
commitment refers to the financial, physical
and human resources that firms commit to a
host market.

liberalization and unification of
world economies
When a nation becomes liberalized,
the economic effects can be profound for the
country and for investors. Economic
liberalization refers to a country "opening up"
to the rest of the world with regards to trade,
regulations, taxation and other areas that
generally affect business in the country.

Economic liberalization
Economic liberalization (or economic
liberalisation) is the lessening of government
regulations and restrictions in an economy in
exchange for greater participation by private
entities; the doctrine is associated with
classical liberalism.

Trade barriers in international
business
• Tariffs.
• Non-tariff barriers to trade.
• Import licenses.
• Export licenses.
• Import quotas.
• Subsidies.
• Voluntary Export Restraints.

Unit-3
Strategy making and International Business

Structure of Global Organizations
• Organization is defined by the formal
structure, coordination and control systems,
and the organization culture.
• It’s the formal arrangement of roles,
responsibilities and relationships within an
organization.
• It’s a powerful tool with which to implement
strategy.

Types of Organizational Structures
Functional Structure
International Division Structure
Product Division Structure
Geographic (Area) Division Structure
Matrix Division Structure

Functional Structure
Specialized jobs are grouped according to
traditional business functions. CEO
Ideal for Co. having a narrow product line,
Production Marketing sharing similar
technology. India USA India USA
Helps maximize economies of scale

International division structure.
• Grouping each international business activity
into its own division
• Creates a critical mass of international
expertise
• Creates quick response to environmental
changes enabling them to deal with different
CEO markets
•

Cont..
• Prevents duplication of activities. Industrial
Division Automotive Division Aerospace
Electronics International Division Often
struggles to get resources Division from
domestic divisions. Diesel Electronics Brake.
• This structure is suited for Company (France)
Company (France) Company (Mexico) multi-
domestic strategies that demand little

Cont..
• Frustrates its ability to exploit economies of
scale.

Product Division Structure
• These are popular among international
companies with diverse products.
• Similar products are grouped under one
product head e.g. Perfumes and Cosmetics,
each CEO focusing on a single product
segment for its global market

Global strategy structure
Suited for a global strategy Power Systems
Group Industry And Defense Group
There may be duplicate functions and
activities among divisions.

global strategy cont..
No formal means by which one product
divison can learn from another international
expertise.

Geographic (Area) Division
Structure
• These are used when foreign operations are large and not
dominated by a single country or region
•Useful when managers can gain economies of scale on a CEO
regional rather than on global basis. Europe and Latin America
North America and Pacific Division Division
•Drawback is the potential of duplication of work among U.K.
Venezuela Italy U.S. Japan Canada areas as the company locates
similar value activities in several places rather than consolidating
them in the most efficient plac

Matrix Division Structure
• This tries simultaneously to deal with
competing pressures for global integration
and local responsiveness.
• Institutes overlaps among functional and
divisional forms
• Gives functional, product, and geographic
groups a common focus

Cont..
• It makes each group share responsibility for
foreign operations Textile Agricultural Europe-
Latin and enables each group exchange
Groups Products Africa Group America Group
information and resources more Group
willingly.

• Competitive advantages are conditions that
allow a company or country to produce a good
or service of equal value at a lower price or in
a more desirable fashion. These conditions
allow the productive entity to generate more
sales or superior margins compared to its
market rivals.

UNIT-4
SOCIO CULTURAL ENVIRONMENT

Global Competitive Advantage
• To gain competitive advantage, a global company has to
leverage its competencies from all the locations where it has
operations.
Competitive advantages are attributed to a variety of
factors including cost structure, branding, the quality of
product offerings, the distribution network, intellectual
property and customer service.

Financial Integration
Financial integration is a phenomenon in
which financial markets in neighboring,
regional and/or global economies are closely
linked together.

Benefits of Financial Integration
Benefits of financial integration include
efficient capital allocation, better governance,
higher investment and growth, and risk-
sharing. Financial integration helps to
strengthen domestic financial sector allowing
for more efficient capital allocation and
greater investment and growth opportunities.

Cross border merger and
acquisitions
Cross border Mergers and Acquisitions or
M&A are deals between foreign companies
and domestic firms in the target country.

Factors to be considered in Cross
Border Mergers and Acquisitions
cross border M&A’s actualize only when there
are incentives to do so.
In other words, both the foreign company and
the domestic partner must gain from the deal
as otherwise; eventually the deal would turn
sour.

Factors to be considered in Cross
Border Mergers and Acquisitions
• due diligence when considering an M&A deal
with a domestic firm
• consider the risk factors associated with cross
border M&A
• regulatory approvals

7 Essentials of Workplace Cultural
Competence:
1. Communication
2. Team-Building
3. Time
4. Schedules

COUNTRY RISK ANALYSIS
In particular, country risk denotes
the risk that a foreign government will default
on its bonds or other financial commitments.
In a broader sense, country risk is the degree
to which political and economic unrest affect
the securities of issuers doing business in a
particular country.

macro environment.
• The major external and uncontrollable factors
that influence an organization's decision
making, and affect its performance and
strategies.
• These factors include the economic factors;
demographics; legal, political, and social
conditions; technological changes; and natural
forces.

RISK FACTORS

Corporate governance
Corporate governance is the system of rules,
practices and processes by which a firm is
directed and controlled.
Corporate governance essentially involves
balancing the interests of a company's many
stakeholders, such as shareholders,
management, customers, suppliers, financiers,
government and the community.

WHY CSR?
• Multinational Companies today have become
extremely powerful, and are not like any of
the private enterprises that existed, say, two
decades ago;
• To put it mildly, the future of humanity is very
much at their mercy.

RECENT DEVELOPMENTS IN CSR
global solutions around issues such as climate
change, education, poverty, and equal and
human rights.

Global human resource management,
sometimes referred to as global HRM, is an
umbrella term that includes all aspects of an
organization's HR, payroll, and
talent management processes operating on a
global scale.
Global human resource
management

GHRM involves
• Recruitment Process.
• On-the-Job Training.
• Professional Development.
• Benefits and Compensation.
• Ensuring Legal Compliance.

WHY CSR?
• Corporate social responsibility (CSR) is a
broad term used to describe a company's
efforts to improve society in some way. These
efforts can range from donating money to
nonprofits to implementing environmentally-
friendly policies in the workplace.

THANK YOU

International Business Management

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