2. 2
International Business
Environment
What is Business Environment?
All the forces surrounding and
influencing the life and development
of the firm.
Sum total of the factors external to
and beyond the control of the
management of an enterprise.
5. 5
Environment of LPG
Liberalization (L) –
Liberalizing policies and procedures
governing business.
Simplifying procedures relating to
business.
De-licensing
Privatization (P) –
Encouraging privatization of ownership of
business.
6. 6
Minimizing the role of the Government.
De-reservation
Disinvestment
Globalization (G) –
Integrating the economy into the world
economy- removing all sorts of barriers.
A world without walls.
Must have a global vision.
7. 7
Basic Functions
Principles
Domestic Business International Business
Same
Difference
Environment within which these functions are
performed and processes are carried out.
8. 8
Relevance of International
Business Environment
Central Issues in entering into
international business -
Which market (s) to select?
How to enter into those markets?
- Decisions are strategic in nature and
influenced by the environmental forces.
- Target markets should have enough
market potential.
9. 9
Understanding International
Business
Any sort of business activity that crosses
national boundaries or borders.
Activities relating to industry and
commerce performed on an international
level.
International Business includes:
Import and Export of commodities,
manufactured goods and services.
10. 10
Investment of capital in several
manufacturing and other related activities.
Investment of capital in international
services like banking, insurance, advertising,
tourism, etc.
Transactions involving copyrights, patents,
trademarks, etc.
(Levels of risks involved in international
business are higher than those in domestic
transactions.)
11. 11
What we mean?
IB: Business whose activities involve
crossing national/ domestic borders.
MNC: A firm having operations in more
than one country, international sales and a
nationality mix of managers and owners.
A firm with multi-country affiliates, each of
which formulates its own business
strategy based on perceived market
differences.
12. 12
Foreign Business: Domestic operations
within a foreign country.
Used interchangably with international
business.
Global Company: A firm attempts to
standardize operations worldwide in all
functional areas.
International company: Both global and
multinational companies.
13. 13
Multicultural Multinational: Firm attempts
to achieve economies of scale through
global integration and highly responsive to
different local environments.
Global Localization: Think globally but act
locally.
Balance between standardized and
localized approaches.
14. 14
Environmental Issues
Why watches, chocolate, cheese, precision
machinery, pharmaceuticals are produced
in Switzerland?
What do they have in common?
Why Cambodia earns a good amount of
foreign exchange from tourism services?
Why India is a major exporter of software
and also primary products?
Why many US multinationals were
interested to venture Vietnam during the
late 1990s?
15. 15
Why some foreign investors desire to come
out from making any further investment in
Philippines during mid 2005?
Why foreign investors consider China and
India as their right destinations?
What is common in both the countries?
Why the Share of Asia in world merchandise
exports had fallen during 1997 - 1998?
Why many developed and developing
countries had faced fall in their growth, out
put and volume of trade in 2008 and 2009?
16. 16
International Business
Environment – The Trend
Intense competition among industries,
firms and countries on a global level is a
recent development.
The present trends are towards the
increasing globalization and
interdependence of firms, markets and
countries.
In a bid to meet commitments to
institutions like WTO, IMF and WB,
country after country is pulling down
barriers to foreign trade and investment.
17. 17
There is a growth of organization and
administrative structures to manage
resources and risks across national
boundaries.
Quantitative restrictions on foreign trade
are being dismantled speedily and tariff
barriers are on the decline.
New opportunities to foreign investors and
entrepreneurs are being provided to
operate in the countries.
The MNCs are expanding their operations
by aggressively adopting marketing
strategies to local conditions.
18. 18
In the coming years there may be
extinction of many business and
considerable realignments in many others
by M & A, etc.
In future MNCs will gear up their activities
due to the presence of huge potential
market.
Many firms having indigenous technology
in less developed economies will fail to
compete with the MNCs.
Number of small units may close up their
activities or may merged with the big
companies.
