Skip to main content
UploadLanguage (EN)Support
BusinessMobileSocial MediaMarketingTechnologyArt & PhotosCareerDesignEducationPresentations & Public SpeakingGovernment & NonprofitHealthcareInternetLawLeadership & ManagementAutomotiveEngineeringSoftwareRecruiting & HRRetailSalesServicesScienceSmall Business & EntrepreneurshipFoodEnvironmentEconomy & FinanceData & AnalyticsInvestor RelationsSportsSpiritualNews & PoliticsTravelSelf ImprovementReal EstateEntertainment & HumorHealth & MedicineDevices & HardwareLifestyle
NP
Uploaded byNishant Pahad
PPTX, PDF3,294 views

International business 1

This document provides an overview of international business. It begins by defining international business as carrying out business activities across national borders, including trade of goods, services, capital, and foreign direct investment. It then discusses the objectives of international business such as sales expansion, resource acquisition, risk minimization, and diversification. Next, it compares international business to domestic business, noting greater complexities in international business from varying political, legal, and cultural environments across countries. It outlines several modes of entering international business, including direct/indirect exports, counter-trade, and contractual agreements. Finally, it lists advantages such as increased welfare, wider markets, reduced effects of business cycles, and opportunities provided to domestic firms.

Education◦
Downloaded 30 times
INTERNATIONAL BUSINESS  Introduction  Meaning  Objectives  Domestic business v/s International business  Modes  Advantages
DEFINE INTERNATIONAL BUSINESS Introduction : International business h as been playing a crucial role for centuries . In the present day world it h as become in dispensable for any country. Its role h as increased in significance, both at the macroeconomic and microeconomic levels . No country developed or developing produces all commodities to meet its requirements . It needs to import items that are not produced domestically. At the same time, it tries to export all items that are produced over and above its domes tic requirements .
MEANING OF INTERNATIONAL BUSINESS International business means carrying on business activities beyond national boundaries . These activities normally include trans action of economic resources such as :  Goods  Capital  Services (comprising technology killed labor and transportation , etc.)  International production. Production may either involve production of physical goods or provision of services like banking , finance ,insurance , Construction ,trading and so on. Thus international business includes not only international trade of goods and services but also foreign investment , especially foreign direct investment.
OBJECTIVES OF INTERNATIONAL BUSINESS  Sales Expansion : The main objective of International business is to increase the sale because in international business a firm can s ell its product in domes tic as well as in foreign market.  Resource Acquisition : It means getting the resources from other countries because there may be s o many resources of other country which may not be available in home country.  Minimize Competitive Risk : Many companies move internationally to minimize the risk of competitors . They want to go in international market for defensive reasons
 Diversification : Many companies want to diversify the sources of s ales and supplies , so they may s eek foreign market for this purpose.
DOMESTIC BUSINESS VERSUS INTERNATIONAL BUSINESS International business differs from domes tic business in that the former involves across the country trans actions or across the country production or provision of services,whereas,in case of domes tic business such activities are limited to the length and breadth of the country. International business is different from domes tic business . In international business : (1) Intra-firm trans actions using transfer pricing is common. (2) There are many complexities in international business that are not found in case of domes tic business . (3) Varying environment-political ,legal ,economic ,socio-cultural and ethical-in host countries , often not known to the firm. (4) Presence of political risk and also of exchange rate risk , sometimes leading to financial risk. (5) Varying strategies of business in different host countries .
MODES OF INTERNATIONAL BUSINESS A firm adopts various modes for its entry into business transaction across borders . Which particular mode a firm should adopt depends , at least, upon four factors .They are: (1) Subservience of the corporate objective (2) Corporate capability (3) Host country environment (4) Perceived risk
MODES OF INTERNATIONAL BUSINESS ARE : (1) Direct and Indirect Export : Trade mode presents the firs t step in international business . It includes export and import. Export may be either direct or indirect: (i) Direct Export : In case of direct export , a company takes full responsibility for making its goods available in the target market by selling directly to the end Users ,normally through its own agents . Direct export is feasible when the exporter desires to involves itself greatly in international business ; and at the same time possesses the capacity to do so. There are also some commodities where direct export is more convenient. They are ,for example , air crafts and similar industrial products . (ii) Indirect Export : When the exporting company does not possess the necessary infrastructure to involve its elf in direct exporting ,Indirect export takes place. It takes place when the exporting company s ells its products to Intermediaries ,who in turn sell the same products to the end users in the target market.
(2) Counter-Trade : Counter trade is a s ort of bilateral trade where one s et of goods is exchanged for another set of goods . In this type of external trade , a seller provides a buyer with delivers and contractually agrees to purchase goods from the buyer equal to the agreed percentage of the original sale contract value. (3) Contractual Entry Modes : Contractual entry modes are found in case of intangible products such as technology , patents and s o on. When a company develops a particular technology through its own research and development programmed , it likes to recover the cost of research and development. To this end ,it sells the technology either to a domes tic form or to a foreign firm. The contractual entry mode , often known as technical collaboration or technical joint-venture , is
ADVANTAGES OF INTERNATIONAL BUSINESS (1) Increased Socio Economic Welfare : International business enhances consumption level ,and economic welfare of th e people of th e trading countries . For example ,the people of China are now enjoying a variety of products of various countries th an before as China h as been actively involved in international business like Coca Cola , McDonald's range of products , electronic products of Japan and coffee from Brazil. Thus ,the Chinese consumption levels and socio-economic welfare are enhanced. (2) Wider Market : International business widens th e market and increases th e demand for th e product in a s ingle country or customer's tastes market size. Therefore , the companies need not depend on th e preferences of a s ingle country. Due to the enhanced market th e Air France , now mostly depends on th e demand for air travel of th e customers from countries other th an France. This is true in case of most of the MNCs like Toyota ,Honda , Xerox and Coca Cola.
 (3) Reduced Effects of Business Cycles : The stages of business cycles vary from country to country. Therefore ,MNCs shift from th e country , experiencing a recession to the country experiencing 'boom' conditions . Thus international business firms can escape from the recessionary conditions . (4) Reduced Risks : Both commercial and political risks are reduced for th e companies engaged in international business due to spread in different countries . Multinationals ,which were operating in to erst while USSR , were affected only partly due to their safer operations in other countries . But th e domes tic companies of th en U SSR collapsed completely. (5) Large Scale Economies : Multinational companies due to th e wider and larger markets produce larger quantities . Invariably , it provides th e benefit of large scale economies like reduced cost of production ,availability of expertise , quality etc
(6) Provides the Opportunity for and Challenge to Domestic Business : International business firms provide th e opportunities to th e domes tic companies . These opportunities include technology , management expertise , market intelligence, product developments etc. For example , Japanese firms operating in U S provide these opportunities to U S companies . This is more evident in the case of developing countries like India , African countries and Asian countries