International business involves focusing global resources and opportunities to produce, buy, sell, or exchange goods and services worldwide. There are five stages of internationalization for companies: domestic, international, multinational, global, and transnational. As companies progress through these stages, their approach shifts from ethnocentric to polycentric to geocentric. International business environments are complex with many political, economic, socio-cultural, technological, legal, and natural factors that companies must consider when operating globally. Globalization has increased integration between world economies through liberalized trade, investment, and technological changes.

1. International business is the process of
focusing on the resources of the globe
and objectives of the organization on
global business opportunities and
threats , in order to produce , buy , sell
or exchange of goods/services world
wide

3. There are five steps of internationalization which
are -:
1
• Domestic Company
2
• International company
3
• Multinational Company
4
• Global Company
5
• Transnational Company

4. Domestic company limits its operations , mission
,vision to the national political boundaries. The
company focuses its view on the domestic
market opportunities, supplier , financial
companies ,customers etc.
Domestic company never thinks of growing
globally.
These company follows ethnocentric approach.

5.  International Companies focus on Domestic
practices, but extends the wings to foreign
country.
 These companies extend the domestic product
,price promotion and other business practices
to the foreign markets.
 These companies adopt ethnocentric approach.

6.  MNC formulate different strategies for
different market.
 Stage of multinational company is also referred
to as multidomestic.
 The orientation shifts from ethnocentric to
polycentric.
 They operate like a domestic company of the
country concerned in each of their market.

7.  Global company either produces in one
country and market globally or produces
globally and market domestically.

8.  Transnational company
produces, markets, invests and operates across
the world
 It is an integrated global enterprise that links
global resources with global market at profits.
 Transnational company adopt geocentric
approach.

10. Douglas Wind and Pelmutter advocated four
approaches 0f I. B .
They are -:
 Ethnocentric
 Polycentric
 Regiocentric
 Geocentric

11.  Under this approach, the domestic companies
view foreign markets as an extension to
domestic market.

12. Company establishes a foreign subsidiary
company and decentralizes all the operations
and delegates decision making and policy
making authority to its executives.
C.E.O. reports directly to the M.D. of the
company.

13. MD
Manager
R&D
Manager
Mkt.
Manager
Finance
CEO
Foreign
Subsidiary

14. The company after operating successfully in a
foreign country, thinks of operating to the
neighboring countries of the host country. At
this stage, the foreign subsidiary consider the
regional environment (e.g .Asian env. Like
laws culture, policies etc.)for formulating
policies and strategies.

15. Managing Director
CEO sub.
Asia.
Mkt
China
Mkt.
Tibbat
Mkt
Nepal
Man.
Mkt.
Man.
R&D
Man.
Finance
Man.
HR
Man.
Producti
on

16. Under this approach the entire world is just like a
single country for the company. They select the
employees from the entire globe and operate
with a no. of subsidiary.

17. Basis of Difference Domestic Business International Business
1.Approach Ethnocentric May be Poly, regio or
geocentric
2.Geographic Scope Small (within the
national Boundaries)
Large (min. 2 countries, max.
entire globe)
3.Risk Low High
4.Return Low high
5.Environment Simple (scan only
domestic env.)
Complex (scan international
env.)
6.Operating style Limited to domestic
Country
Can be spread over the entire
globe
7.Quotas The quotas imposed by
various countries on
Affect (operate within the
quota)

18. 8 Tariffs Do not directly and
significantly influence
Directly influence
9.Foreign exchange rates Not affect the business Affect the business
10.culture simple Different
(complicated to
u/s)
11.HR Normall employs the people
from the same country
Much
complicated(emplo
y from various
country
12. Market &customer Limited(meet the needs of
domestic market and
customer)
Abroad(u/s
market and
customer globally)

19.  Political Factor
 Exchange instability
 Entry requirements
 Tariffs quotas and trade barriers
(import & export quotas in order to protect domestic
business)
 Corruption
 Bureaucratic practice of government(delay in projects)
 Technological pirating
 Quality maintenance
 Natural factor
(Environment,Weather,Water,Infrastructure etc.)

20.  War
 High cost
 Terrorism risk
 Strategic decisions

21.  We shall discuss the competitive advantages of I.B.
 High living standards
 Increased socio economic welfare
 Wider market
 Reduced effects of business cycle
 Reduced risks
 Large scale economies
 Potential untapped market
 Provides the opportunity for and challenge to
domestic

22.  Division of labor and specialization
 Economic growth of the world
 Optimum and proper utilization of world
resources
 Cultural transformation

23.  To achieve high rate of profits
 Expanding the production
 Severe competition in the home country
 Limited home market
 Availability of technology and skilled human
resource
 High cost of transportation
 Nearness to raw material

24.  Liberalization and globalization
 To increase market share
 To achieve higher rate of economic
development
 Tariffs and import quotas

25. The medieval proverb says “A merchant has no nation”
It means that a businessman can view the entire
world as one country for the operations.
Erasing national and political boundaries for the
purpose of business may be termed as
globalization. It implies integration of economy of
the country with the rest of the world economy
and opening up of the economy for FDI by
liberalizing the rules and regulations and by
creating favorable socio-economic political climate
for global business.

26. Charles U.L. Hill defines Globalization as
“The shift towards a more integrated and
interdependent world economy. Globalization has
two main components – the globalization of market
and the globalization of production.”

27.  Operating and planning to expand business
throughout the world
 Erasing the diff. b/w domestic market and
foreign market.
 Buying and selling goods & services from/to
any country in the world
 Establishing manufacturing and distribution
facilities in any part of the world
 Product planning & deveolpment are based on
market consideration of the entire world

28.  Sourcing of factors of production and inputs
from the entire globe
 Global orientation in strategies, organizational
structure, organizational culture and
managerial expertise
 Setting the mind and attitude to view the entire
globe as a single market.

29.  Acc. To Ohamae Globalizations has 5 stages. They are
1 Exports through dealers or distributors of the home country
2 Exports directly
3 Establish production and mkt. operations in various key foreign
countries
4The company replicates a foreign company in the foreign company
by having all the facilities including R&D full fledged human
resource etc.
5Company becomes a true foreign company by serving the needs of
foreign customers just like the host country’s company serve.

30. •Enabled the
global company
to develop into a
virtual global
company.
•Investment of
capital by a
global company
in any part of the
world.
•Locating the mfg
.facilities in a no.
of locations
around the globe
• integrating&
merging of the
distinct world
markets in to a
single market
Glob. of
market
Glob. Of
production
Glob. Of
Technology
Glob of
investment

31. i. Establishment of WTO
ii. Regional integration
iii. Declining trade barriers(tariffs )
iv. Declining investment barriers(fdi)
v. Growth in FDI
vi. Strides in technology
a) Microprocessors & telecommunications
b) Internet
c) Transportation Technology
vii) Growth of MNC

32. 1) EU
2) NAFTA(North American Free Trade
Agreement)
3) SAARC(South Asian Association for Region
Cooperation)
4) ASEAN Etc.

33.  Free flow of capital
 Free flow of technology
 Increase in industrialization
 Global Production
 Balanced development of world economy
 Increase in production and consumption
 Lower price with high Quality
 Cultural exchange & demand for a variety of
product

34.  Increase in Employment and income
 Higher standards of living
 Balanced human development
 Increase in welfare and prosperity

35.  Kills domestic business
 Exploits human Resources
 Violation of labor and environmental laws
 Leads to unemployment
 Decline in demand for domestic product
 Decline in income
 Widening gap b/w the rich & the poor
 Transfer of natural resources
 National sovereignity at stake

36. M.D.
Headquarter
India
Sub.
India
Sub.
Aus.
Sub.
U.S.A.
Sub.
S/A
Sub.
Japan

37.  Study of env. helps to the opp. & threats of the
I.B.
 Env. Means surroundings. I.B. env. Means the
factors/activities those surround/encircle the
I.B.
 In other words business environment means
the factors that affect or influence the MNC and
transnational companies.

38. Internal External
rganisational
Structure
Production
Marketing
Finance
R&D

39. Micro
(All Stake Holder)
Macro
Shareholder
s
Creditors
Banker &
Financial
institution
Competitor
supplier
Intermedia
ry
Customer

40. Socio-
Cultu
ral
Env.
Techn
ologica
l
Env.
Econo
mical
Env.
Politic
al
Env.
Intern
ationa
l
Natura
l
Env.

41. Culture is a set of traditional beliefs and values
which are transmitted and shared in a given
society.
It includes -
 Attitude of people to work
 Attitude to wealth
 Family
 Marriage
 Religion
 Education etc.

42. Technology is application of knowledge-
“A systematic application of scientific or other
organised knowledge to particular task”
Acc. To J.K. Galbraith
o Many inventions and discoveries do not
remain property for long period.
o Level of tech. is not same in all countries
o I.T. redefined business

43. The economic env. of various countries mostly
and directly influences .I.B. the change was
revolutionary after 1990
Economic system-
1. Capitalistic –Customer choice for
product/services. Decide what will be
produced by whom? (customer allocate
resources)
Ex. U.S.A. , Japan , U.K.

44. 2 Communism -
State owns all the factor of production and
distribution. It is also called Marxism.
Ex China, Poland , Russia , Most of the east
European countries
3. Mixed Economy-
Major factor of production and distribution are
owned , managed and controlled by state.
Ex. India

45.  Low income countries
 Lower middle countries
 Upper middle Countries
 Higher income countries