This document discusses globalization and international business. It defines globalization as the broadening set of interdependent relationships among people from different parts of the world. International business consists of all commercial transactions between two or more countries. International business differs from domestic business due to physical factors like a country's geography, social factors like laws and culture, and competitive factors in foreign markets. Companies engage in international business to expand sales, acquire resources, and minimize risks.

1. Globalization and international business
•MADE BY:
•ASHNA MALIK 22/006
•KARAN KUKREJA
22/014
•POORVA
KHEMCHANDANI 22/020
•V.SRINIWAS 22/029

2. What is Globalization?
The broadening set of interdependent relationships
among people from different parts of a world that
happens to be divided into nations.
Examples :
•A restaurant calculation on the ingredients in just
one main course.
• Different parts installed in the vehicles.

3. What is International Business?
It consists of all commercial transactions between
two or more countries.
• The Goal of private business is to make profits.
• Government business may or may not be
motivated by profit.

4. Understanding the environment /
Operations Relationships
• First, when your company operates
internationally, it will engage in modes of
business.
• Second, the physical, social , and competitive
conditions which affects business in a country.

5. Factors in International Business
Operations
• Operating environment(Physical and social
Factors).
• Operations(Objectives/strategy).
• Competitive factors.

6. Why International Business is
Important?
• Most companies are international.
• Modes of operations may differ from those
used domestically.
• The best way of conducting business may
differ by country.
• An understanding helps you make better
career decisions.
• An understanding helps you to decide what
government policies to support.

7. Forces driving Globalization
• Degree of two countries interdependence must
be measured indirectly.
• When national boundaries shift domestic
business transactions can become international
transactions and vice-versa.
• One of the most comprehensive is the A.T.
Kearney / Foreign Policy Globalization Index.

8. This Index Ranks 62 countries across 4 dimensions :
1. Economic : International trade and investment.
2. Technological : Internet connectivity.
3. Personal contact : International travel and
tourism.
4. Political : Participation in international
government.

9. Factors in Increased globalization
• Increase in and expansion of technology.
• Liberalization of cross border trade and
resource movements.
• Development of service that support
international business.
• Growing consumer pressures.
• Increased global competition.
• Changing political situations.
• Expanded cross-national cooperation.

10. 1.INCREASE IN AND EXPANSION OF
TECHNOLOGY
• One of the reason is the population growth
and the other is economic growth.
• Today, total population are more involved in
developing product rather than producing
them.
• The advancement in communication and
transportation is also a major factor in
increase in and expansion in technology.

11. 2.LIBERALIZATION OF CROSS BORDER
TRADE AND RESOURCE MOVEMENTS
• To protect it’s own industries there is
restriction across borders for goods and
services.
• There is an restriction that set limits on IB
activities because regulations can change at
any time and also contribute to a climate of
uncertainty.

12. RESTRICTIONS IS FOR THREE MAIN REASONS:
• Citizens need greater variety if Goods and
services at lower rates.
• Competition spurs domestic producers to
become more efficient.
• They hope to induce other countries to lower
their barriers in turn.

13. 3.DEVELOPMENT OF SERVICE THAT
SUPPORT INTERNATIONAL BUSINESS.
• Countries have now developed a variety of
services that facilitate conduct of international
business. Some are :
• Bank credit agreements.
• Insurance that covers risks such as damages.
• Sending letters and packages using
international service companies like UPS or
DHL.

14. 4.GROWING CONSUMER PRESSURES
• Consumer now a days are more aware about the
products and services that are available within and
outside their domestic territory .
• Today consumers want new and better products
that are finely differentiated.
• The availability of higher income markets has also
spurred companies to spend more heavily on
research and development to search.

15. 5.INCREASED GLOBAL COMPETITION
• The pressures both present and potential of
increased foreign competition can persuade
companies to buy or sell abroad.
• Firms have to become more global to compete in
today’s business environment and failure of this
can be very harmful. For Instance-Procter &
Gamble took over 100 years to go global.

16. 6.CHANGING POLITICAL SITUATIONS
• Now a days Government is supporting
programs favorable to international trade.
• They are now providing an array of services to
help domestic companies sell abroad and vice
versa.

17. 7.EXPANDED CROSS NATIONAL
COOPERATION
Increasingly governments have come to realize that
their own interests can be addressed through
international cooperation by means of treaties,
agreements and consultation. The adoption of any
such policies are largely used to meet certain needs
such as-
• To gain reciprocal advantage.
• To attack problems jointly that one country alone
cannot solve.
• To deal with common areas of concern that lie
outside the territory of any nation.

18. LIMITATIONS OF GLOBALIZATION
• THREAT TO NATIONAL SOVEREIGNITY
• ECONOMIC GROWTH AND ENVIRONMENTAL
STRESS
• GROWING INCOME INEQUALITY

19. 1. THREATS TO NATIONAL
SOVEREIGNITY
• Local objectives and Policies :- Countries seek
to fulfill their own economic, political, and
social objectives to maintain well-being of
citizens.
• Local overdependence
• Cultural homogeneity

20. 2.Economic growth & Environmental
Stress
As Globalization brings growth ,it consumes
more nonrenewable natural resources and
increases environmental damage .
For eg ;- deforestation , vehicle emissions,
Air pollution, despoliation of toxic
chemicals runoff into rivers & oceans

21. 3.Growing Income Inequality
• The shift of job speeds up the process by
which India narrows its economic gap with US.
• The process of shifting production to a foreign
country is called off shoring.
• For example :- Case of sports industry where
globalization enabled European Teams to lure
Brazilian sports soccer, Brazilian gain nothing
economically .

22. Why Companies Engage in IB ?
• Expanding Sales
• Acquiring resources
• Minimizing risk

23. 1.Expanding Sales
Company sales depend on 2 factor Consumer
interest and consumer willingness.
For example :- Companies like IBM (US), Ericsson
( Sweden), Nestle (Switzerland ), Sony(Japan)
derive more than half of their sales outside
their home countries.

24. 2.ACQUIRING RESOURCES
• Producers seek out product ,m services,
resources, and components from foreign
countries .
• Firm gains competitive advantage by
improving product quality or by differentiating
products from competitors .

25. 3.MINIMIZING RISK
• International operation may reduce operating
risk by :-
1. Smoothing sales and profit
2. Preventing competitors from gaining
advantages.

26. Modes of Operations in International
Business
• Merchandise Exports and Imports
• Services Exports and Imports
Tourism and transportation
Service performance
Asset use
• Investments
Direct investments
Portfolio investments

27. Merchandise exports and imports
• Exports and imports are the most popular
modes of international business.
• Merchandise exports – tangible products –
goods
• Merchandise imports – goods brought into the
country.
• Also known as visible exports and imports.

28. Service exports and imports
• The company or individual that provides the
service and receives payment makes a service
export
• The company or individual that receives a service
and pays for it makes a service import.
• Service export and import take many forms:
Tourism and transportation
Service performance-banking , insurance , rental
etc.
Asset use

29. Investment
• Dividends and interest paid on foreign
investments are also – service exports and
imports.
• Foreign investment means ownership of
foreign property in exchange for a financial
return like dividends and interest.
• Foreign investments –
 direct investment
Portfolio investment

30. Direct investment
• In FDI (also known as direct investment) – the
investor takes a controlling interest in a
foreign company.
• If a foreign investor holds a minority stake and
the remaining ownership is widely dispersed ,
person no other person can counter the
decisions of the foreign investor.
• When two or more companies share
ownership of an FDI – joint venture.

31. Portfolio investment
• It’s a non controlling interest in a company or
ownership of a loan made to other party.
• Two forms –
Stock in a company
Loans to a company in the form of bonds, bills or
notes purchased by the investor.
• Important for companies with extensive
international operations – except stock – they are
used for short term financial gain.

32. • Relatively safe means of earning more money
on a firm’s investment.

33. Why International business differs
from domestic business
• Factors that differentiate international
business from domestic business:-
Physical factors – country’s geography
Social factors – law, culture and economy
Competitive factors – the number and
strength of the companies suppliers,
customers and rival firms.

34. Physical and social factors
• Geographic factors:
the uneven distribution of resources in the
world.
Geographic barriers – mountains, deserts ,
jungles – affect the communication and
distribution channels.
Natural disasters and adverse climatic
conditions make investment riskier.

35. • Political policies:
political policies influence the way in which
international business takes place within the
borders.
Political disputes- that result in military
confrontation can disrupt trade and
investment.

36. • Legal policies:
Domestic and international laws play a big role.
 domestic laws includes both – homes and host
country regulations on matters such as taxation,
employment and foreign exchange transaction.
International law – in the form of legal
agreements between two countries – determine
how earnings are taxed.

37. • Behavioral factors:
Principles of psychology , sociology,
anthropology help managers understand the
attitudes and values and beliefs in a foreign
environment.
Understanding helps managers to make
operational decisions in different countries.

38. • Economic forces:
Economics helps explain why one country can
produce goods and services less expensive
than another.

39. The competitive environment
• Competitive strategy for products:
Developing a favorable brand image
Developing unique characteristics through
R&D efforts

40. • Company resources and experience:
Company’s national market share and brand
recognition have a bearing on how it can
operate in a country.
Company’s long term standing dominant
market position uses operating tactics quite
different from those employed by a new
comer.

41. • Competitors faced in each market:
Success in a market depends on your
competition. Whether its local or
international.

42. THANKYOU