International Business basics

1. Globalisation

2. • Integration of societies and national
economies
• Erosion of national boundaries
• Intensification of cross national economic,
political, social, and technological interaction
• Cross border movement of goods, services,
capital, information, ideas and people

3. • Economic globalisation- internationalisation of
markets for goods and services, the financial
system, corporations and industries, technology
and competition
• Financial globalisation- movements and
deregulations, of financial services leading to
cross border capital flow
• Cultural globalisation- convergence of cultures
across the world
• Political globalisation – convergence of political
system and process- democratic system

4. Dimensions of Economic Globalisation
• Globalisation of production- mobility of factors of
production- raw material, people
• Globalisation of markets- movement of finished
products and access to markets
• Globalisation of competition- competition among
business enterprises on a global scale
• Globalisation of technology- rapid dissemination
of technology- production, information
• Globalisation of corporation and industries-
international strategic alliances, M&A

5. Is Globalisation Good or Bad

6. Support of Globalisation
• Maximisation of economic efficiencies-
efficient utilisation of resources
• Enhanced trade- rise in the intra-firm trade
• Increased cross-border capital movement- by
way of FDI
• Improved efficiency of local firms-
multinationals compel local firms
• Increase in consumer welfare

7. Criticism of Globalisation
• Unequal players in market
• Widening gap between rich and poor
• Wipe-out of domestic industry
• Unemployment and mass lay-off
• Increased volatility of markets
• Loss of cultural identity
• Shift of power to multinational

8. International Business

9. Concept of International Business
• International trade- export or import of goods or
services
• International marketing- firm level marketing
practices including STP and marketing mix
decisions to compete in international markets
• International investment- cross-border transfer of
resources
• International management- application of
management concepts in a cross-country
environment

10. International Business
• It consists of all commercial transactions
including sales, investments and
transportation that takes place between two
or more countries.
• Private companies undertake them for profit.
• Government may undertake for profit or
political reasons.

11. Reasons
• Expanding sales- consumer interest, and
willingness, market size, increase in profit
• Acquiring resources- lower cost, new or better
products, acquiring useful knowledge
• Minimizing risk- smoothening sales and profit,
preventing competition

12. • Market seeking motives- marketing
opportunities due to life cycle, uniqueness of
product or service
• Economic motives- profitability due to price
differential among various countries,
achieving economy of scale, spreading R&D
cost
• Strategic motives- growth opportunities in
different countries, risk spread

13. Modes of international operation
• Merchandise importing and exporting
• Service importing and exporting
Tourism and transportation
Licensing and franchising
Turnkey operations
Management contracts
Direct and portfolio investment including joint
venture

14. Types of international organisation

15. Domestic versus International Business
• Differences in
 Economic environment
 Socio-cultural environment
 Legal environment
 Political environment
 Competition
 Infrastructure
 Technology