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International Business
- International business involves commercial transactions between two or more countries, including trade in goods and services, investments, and transportation. It can involve private companies or governments. - There are several approaches that companies take when entering international business - from an ethnocentric view focusing only on the home country market, to a geocentric view developing a standardized approach across all foreign markets. - International business offers both advantages like access to new markets and resources, as well as disadvantages such as additional costs and risks of operating in foreign environments. Liberalization of trade and improvements in transportation and communication have contributed to recent growth in international business.
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International Business
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- 2. CONTENTS • Introduction toInternational Business • Nature & Scope & Feature of International Business • Importance of International Business • Approaches of International Business • Problems in International Business • Entry Strategy • Advantages & Disadvantages of International Business • Reasons for recent International Business Growth • International organisations
- 3. • The exchangeof Goods & Services, Resources, Knowledge, & Skills, among individuals & businesses in two or more countries. • Transaction that are carried out across national borders to satisfy the objectives of individuals and organization • All Commercial transactions that take place between two or more countries. 1. Private & Government 2. Sales 3. Investments 4. Logistics 5. Transportation What is International Business ?
- 4. • Accurate Information& timely • The size of the international business • Market segmentation • International markets have more potential than domestic markets Nature
- 5. • International Marketing •International Finance and Investments • Foreign Exchange • Global HR Scope
- 6. • Large scaleoperations • Integration of economies • Dominated by developed countries and MNCs • Benefits to participating countries • Keen competition • Special role of science and technology • International restrictions Features
- 7. 1. Earn foreignexchange 2. Optimum utilization of resources 3. Achieve its objectives 4. To spread business risks 5. Improve organization's efficiency 6. Get benefits from Government 7. Expand and diversify 8. Increase competitive capacity Importance
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- 9. Ethnocentric approach • Underthis approach, target market is own country , Excessive production will export due to change in customer taste, preferences IB Approaches
- 10. Polycentric approach • Underthis approach, the companies customizes the marketing mix to meet the taste, performance and needs of the customers of each international market. IB Approaches
- 11. Regiocentric approach • Underthis approach, the company operating successfully in a foreign country thinks of exporting other neighboring countries of the host country. • At this stage, the concerned subsidiary considers the regional environment ( such as laws, culture, policies etc.) for formulating the policies & strategies. IB Approaches
- 12. Geocentric approach • Underthis approach, the company analyses the tastes, preference and needs of the customers in all foreign markets and then adopts a standardized marketing mix for all the foreign markets. IB Approaches
- 13. • Political factors •High foreign investments and high cost • Exchange instability • Entry requirements • Tariffs, quota etc. • Corruption and bureaucracy • Technological policy • Quality Management Problems
- 14. Entry Strategy • Indirect& Direct 1. Exporting • Agreement • Patent, trademark, copy right, technology, production processes, and product • licensee’s fee 2. Licensing • by franchisers to franchisee • Usage 3. Franchising
- 15. Entry Strategy • Subsidiary •local assembly 4. Foreign Assembly • Staff of an operating facility • foreign buyer 5. Turnkey Operation • Establishment • Purpose 6. Foreign production subsidiary
- 16. Entry Strategy • Significantportion • In foreign countries 7. International Firm • Parent country • host country 8. Multinational Corporation • Property rights 9. Joint Venture
- 17. Entry Strategy • Arrangementin which a firm buys or establishes tangible assets • In another country • Through direct investment • By buying a company stock in capital markets 10. Foreign Direct Investment
- 18. • Faster growth •Access to cheaper inputs • Increased quality and efficiency • New market opportunities • Diversification Advantages
- 19. • Increased costs •Foreign regulations and standards • Delays in payments • Complex organizational structure Disadvantages
- 20. 1. Expansion oftechnology 2. Business is becoming more global because • Transportation is quicker • Communications enable control from afar • Transportation and communications costs are more conducive for international operations 3. Liberalization of cross-border movements • Lower Governmental barriers to the movement of goods, services, and resources enable Companies to take better advantage of international opportunities Reason for recent growth in IB
- 21. Reason for recentgrowth in IB • An international organization formed to reduce or eliminate tariff and other barrier to international trade General agreement on Tariff and trade (GATT) • An international financial organization that lend money to countries in conducting international trade International Monetary Fund (IMF)
- 22. Reason for recentgrowth in IB • An international financial organization that lend money to underdeveloped and developing countries for development World Bank • World Trade Organization (WTO) • European Community (EC) • North American Free Trade Agreement (NAFTA) • Asian Free Trade Agreement (AFTA) Economic Communities
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