intenational business theories

1. INTERNATIONAL BUSINESS
Prof Bharat Nadkarni

2. Business Excellence
(Getting the Big Picture of business )
Prof Bharat Nadkarni

3. International Business
From a very early age, we are taught to break apart problems,
to fragment the world. This apparently makes complex tasks
and subjects more manageable, but we pay a hidden,
enormous price. We can no longer see the consequences of
our actions; we lose our intrinsic sense of connection to a
larger whole. When we then try to “see the big picture”, we try
to reassemble the fragments in our minds, to list and organize
all the pieces. But the task is futile – similar to trying to
reassemble the fragments of a broken mirror to see a true
reflection. Thus, after a while we give up trying to see the
whole altogether.

4. International Business
Who are the Stakeholders of Business ?
• Shareholders and Promoters
• Customers
• Employees
• Suppliers and Partners (incl Contractors, Agents etc)
• Government
• Society

5. International Business
Most Admired Business
“Balancing and Exceeding the
Expectations of all it’s
Stakeholders.”

6. Reference Books : International Business By
• Subba Rao
• Francis Cherunilam
• Dr Chandran
• Sundaram and Black
• Daniels & Radebough
• Charles Hill & Jain
• Roebuck & Simon

7. International Business
International Business
1. Definition of IB, Domestic vs Int’I business, Adv & Disadv
2. International trade theories
3. Globalisation, Regional groups, Transnational economy.
4. Market entry strategies
5. International Trade Institutions, Policies
6. International finance & Foreign Direct Investments
7. International issues, G 20 issues, MFN status, Intellectual property
rights, purchase power parity etc
8. Ethical business, CSR, Millineum goals, HR policies etc
9. Logistics, Information technology, cultural and social issues,
Generalised topics etc
10.Case studies

8. International Business
Scope : “World is turning into a Global village”.
“SMOOTH”
1. Source raw materials wherever they are cheapest.
2. Manufacture anywhere in the world where it is most
cost effective.
3. Obtain and Sell in those global markets where
prices are highest.
4. Organize and Raise finances globally.
5. Try and Forge international strategic alliances.
6. Hire the best talent from all over the world. To
manage all the above points.
And you will have achieved the stature of a true Global
Organization

9. International Business
International Trade Policy
• Laissez-faire approach (Free trade)
Vs Interventionist approach
Independence, Dependence and Interdependence
Theories
• Mercantilism (ex Colonial rule)
• Absolute advantage and Comparative advantage (ex
India – tea, US- wheat)
• Theory of Country size (ex India, China, Brazil, USA)
• The Product Life Cycle Theory
• Factor Proportions Theory (ex India, Hong kong,
Singapore, Dubai)

10. International Business
International Business
International business can be defined as activities that buys
and sells goods and services across two or more national
boundaries, even if the management is located in a one
country. It includes any type of business activity that crosses
national borders. International business is related with
those enterprises which have operating units outside their
own country. There are institutional arrangements who
provide some managerial direction of economic activity
taking place abroad.
Conducting international business is really not like playing a
whole new ball game but it is like playing in a different ball
park, where the managers have to learn the factors unique to

11. International Business
the playing field. The guiding principles of a firm engaged in
international business activities should incorporate a global
perspective. Incorporating an international outlook into the
firm’s basic statement will help focus the attention of
management on the opportunities outside the domestic
economy.

12. International Business
Difference between Domestic and International business
1. Higher rate of profits (Absolute advantages, taxes,
concessions and incentives)
2. Expansion of production capacities
3. Competition (pull & push effects)
4. Wide market
5. Political stability
6. Technology
7. High cost of transportation

13. International Business
Growing importance of International Business
• Current trends are towards the increasing globalisation
and interdependence of firms, markets and countries.
• Intense competition at global level
• Exchange rate developments – shift from –ve to +ve
growth
• Global capital flows to LDCs
• Differences in Price and Cost
• Restructuring the economy to integrate with global
economy
• Increased importance of CSR
• The growing importance on enhancing standard of living
in LDCs

14. International Business
• Liberal trade policies and procedures
• Revolution in communication and transportation

15. International Business
International Business Corporate Approaches
1. Ethnocentric (Home country orientation)
2. Polycentric (Host country orientation)
3. Regiocentric (Regional orientation)
4. Geocentric (World orientation)

16. International Business
Types of International Organisation
• Built-in Export Department
• Separate Export Department
• Export Sales Subsidiary
• International Division
• Global Organisational Structure

17. International Business
Home Country Economic Environment
1. Domestic Markets & Size
2. Economic Policies
3. Promotional and Regulatory measures

18. International Business
Host Country Economic Environment
1. Size of the Markets
2. Gross Domestic Product
3. Industrialisation
4. Development of Banking Facilities
5. Purchasing Power and Standard of Living
6. Foreign Exchange Situation
7. Income levels
8. Economic diversity (urbanisation – Rural dev. Ex
Johannesburg, Sao Paolo

19. International Business
Global Economic Environment
1. International organisations
2. Trading Blocs
3. Strategic Locations
4. Global Political Environments and Issues

20. International Business
SAARC (7):
South Asian Association for Regional Cooperation
India, Pakistan, Sri Lanka, Nepal, Bhutan, Bangladesh,
Maldives
NAFTA (3) : North American Free Trade Agreement
USA, Canada, Mexico
LAFTA (9) : Latin American Free Trade Area
Argentina, Brazil, Mexico, Chile, Peru, Uruguay, Paraguay,
Columbia, Ecuador
ASEAN (5) : The Association of South East Asian Nations
was formed by the Bangkok Declaration, 1967, by five
countries, viz., Indonesia, Malaysia, Philippines, Singapore
and Thailand.

21. International Business
EU (15) : European Union
Austria, Belgium, Britain, Denmark, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Portugal, Spain, Sweden.
Euro : Common currency of the EU was launched by 11
members on 1.1.1999, Britain, Denmark, Sweden did’nt join. Greece joined
in 1.1.2001
Maastricht Treaty of 1991 set the stage for the monetory
union.
EU Additions
With effect from May 1, 2004 the total membership of EU
increased to 25. Following ten countries were inducted.
Estonia, Latvia, Lithuania, Poland, Czech Republic, Hungary,
Slovenia, Slovakia, Cyprus and Malta.
Two more members, Bulgaria and Romania, were inducted in
2007, taking the tally to 27 countries.

22. International Business
International Business Environment
1. Internal Environment
Org. Structure ( I P O)
Production
Marketing
Finance
HR
R&D
IT
Business Development

23. International Business
International Business Environment
2. External Environment
a. External Micro Environment
All Stakeholders and Competitors
b. External Macro Environment
STEPIN
(Social, Technical, Economical, Political, International,
and Natural)

24. Thank you

25. Foreign direct investment approvals will, however, be
subject to sectoral caps: (as on 31.03.2010)
• 20 percent (40'per cent for NRIs} in the banking sector;
•51 per cent in non-banking financial companies;
•100 per cent in power, roads, ports, tourism and venture capital funds;
•49 per cent in telecommunications;
•40 per cent (100 per cent for NRIs) in domestic air taxi operations/airlines;
•24 per cent in small-scale industries;
•51 per cent in drugs/pharma industry for bulk drugs;
•100 per cent in petroleum; and
• 50 per cent in mining ~ except for gold. silver, diamonds and precious
stones

26. The Millennium Development Goals
… as defined by UN
Eradicate extreme poverty and hunger
Achieve universal primary education
Promote gender equality and empower women
Reduce child mortality
Improve maternal health
Combat HIV/AIDS, malaria and other diseases
Ensure environmental sustainability
Develop a global partnership for development
Stop Child Labour