The document discusses various modes of international business collaboration such as outsourcing, turnkey contracts, franchising, licensing, and joint ventures. It also examines factors that influence collaboration between international firms like costs, core competencies, risks, capacities, and government policies. Finally, it provides examples of management contracting, technological alliances, and commodity agreements between countries.

2.  Computers- Produced in USA
 Television- Produced in Japan
 Electronic Items- From Japan
 Beverages (Coca-Cola, Amul Cool, Etc.)
 Bikes & Cars- From Other Countries
 Perfumes- Manufactured in France.
 Buying products from internet.
 Clothing's-
Footwear, Casuals, Capri, Bermuda, etc.

3.  First began in the year 1870 and ended in
1919 (end of World War-I).
 Main objective was to import raw materials
and export finished goods. GDP was 22.1.
 Drawbacks: Imposition of trade barriers by
the government, to protect domestic
producers. GDP fell to 9.1.
 This phase has been described as
“BEGGAR-MY-NEIGHBOUR”.

4.  Growth Strategy- Leads to geographical
expansion.
 Managing Product life-cycle- Shifting of the
market.
 Technology Advantages- Core competencies.
 New business opportunity- entering new
market.
 Proper use of resources- proper utilization of
natural resources of countries
(material, labor, etc.)
 Conti.

5.  Availability of quality product- Foreign
companies market latest products at reasonable
price.
 Earning foreign exchange- Foreign exchange
may be required for importing many products
(crude oil, equipments, etc.)
 Helps in Mutual growth- India depends on
gulf countries for its crude oil supplies.
 Investment in infrastructure- Investment in
roads, etc.

6.  Advanced countries felt a severe set back.
 Production increased more than Demand.
 Decline in International Trade.
 Breakdown of Gold Standard (Bretton Woods
System).
 Decline in trade/investment barriers.
 Increase in FDI.
 Technology changes and growth of MNC’s.

7.  Due to the above limitations, a need for the international
co-operation was felt.
 It led to the establishment of institutions such as:
IMF, IBRD, ITO,GATT/ WTO, etc.
 Establishment of these institutions led to
globalization, and many new trends took place.
 Shifting from exporting & importing to international
marketing.
 Shifting from international marketing to international
business.

8.  Establishment of WTO, IMF and IBRD.
 Regional integration
(NAFTA, SAARC, ASEAN, APEC, EFTA, etc.
)
 Decline in trade/investment barriers.
 Increase in FDI/FII/QDII.
 Technology changes and growth of MNC’s.

9. Stage 1-
Domestic
Company
Stage 5- Stage 2-
Transnational International
Company Company
Stage 4- Stage 3-
Global Multinational
Company Company

10.  Focus on domestic market/suppliers/financial
companies/customers/etc.
 Motto- if it is not happening in home
country, it is not happening.
 Selects diversification strategy for domestic
market.
 Does not select the strategy of
expansion/penetrating into international
market.

11.  Growth of domestic company leads to
internationalization.
 Exploits the opportunities outside the
domestic country.
 These are Ethnocentric- domestic country
oriented.
 Extends the domestic
product/price/promotion/practice to the
foreign market.

12.  International company turn MNC when they
start responding to the needs of the different
country.
 They shift from ethnocentric to polycentric
(i.e. company establishes foreign
subsidiary).
 They manufacture product as per the
demand of the specific country.
 Example: Toyota’s Toyopet car’s in USA.

13.  Produces in a home/single country.
 Markets the same product globally.
 They have global marketing strategy.
 Produces for the global market but focuses
domestically.
 Example: Harley Davidson- Produced in
USA, Focused globally.
 Dr. Reddy’s Lab- Produces in India but
market globally.

14.  Produces in almost all countries.
 Markets the product in all countries.
 Operates across world.
 Example: Coca-cola.

15. • Analysis of existing mission and goal.
Step 1 • Example- GE: Attracting & Developing people.
• Organizational analysis of a global business firm
Step 2 • Example: Org’n structure; Marketing; Finance; HR.
• Analysis of International Environment
Step 3 • Political; Economic; Technological; Social; etc.

16. • Formulation of alternative corporate level strategy
• Stability; Growth; Retrenchment; Combination;
Step 4 Turnaround
• Formulation of alternative business level strategy
• Low cost leadership; Niche strategy; Differentiation.
Step 5
• Selection of best among the alternative strategies
• BCG matrix; Directional policy; 9 cell matrix.
Step 6

17. • Strategy Implementation
• Partner selection, Behavioral
Step 7 implementation, market, finance.
• Strategy evaluation and control
Step 8

18.  International business firms either perform
their business operations on their own or
collaborate with other countries/companies.
 Sometimes, companies collaborate with their
competitors also.
 Factors affecting collaboration:
physical, economical, scale of
operation, make or buy, or competitive
environment.

19.  Spread and reduced cost- reducing the start up cost
and reducing the time by outsourcing.
 Specialize in core competency: companies perform
the activities concerning core competencies most
efficiently compared to other activities.
 Avoid or counter competencies: Some market are not
large enough to accommodate competitors.
 Minimize exposure in risky environment:
Political/economic and security factors create risky
business environment in different countries.

20.  Vertical or horizontal integration: Linkage or integration
allow companies to concentrate on the core-
competencies, operate on small scale and emphasize on a
portion of supply chain.
 Sharing capacities: Companies can jointly share their
production/service/HR and other capacities in order to
operate on optimum scale.
 Gain location: Sometimes it is difficult for MNC’s to conduct
business in some countries on their own.
 Overcome governmental constraint: Imposing limit on
foreign ownership or prohibit exclusive foreign companies.
 Diversify globally: Diverse culture and geographical
location temp companies to collaborate.

21. FRANCHISING LICENSING
JOINT
OUTSOURCING
VENTURE

22. Management contracting
Turnkey contracts
Strategic Alliance
Joint Venture
Merger & Acquisition

23.  Firm providing management know-how may not have
any equity stake in the enterprise.
 Low-risk, and starts yielding income from the very
beginning.
 Helps in commercializing he existing know-how built up
with significant investment.
 Supports in reducing fluctuations in business volume.
 Brings additional benefit for managing company.
 Example: Tata tea, Harrison malayalam and AVT have
contract to manage the number of plantations in Sri
Lanka.

24.  Mostly fund in supply, erection and
commissioning of plants.
 Example: Oil refinery, steel mills, cement and
fertilizer plant, etc.
 Agreement by the seller to supply a buyer with
a facility fully equipped and ready to be
operated by the buyer’s personnel.
 Fast-food franchising- when a franchiser agrees
to select a store site, build the store, equip
it, train the franchisee and employees and
sometimes arrange the finance.

25.  Also known as “entete & coalition”.
 Enhances the long term competitive advantage by
forming alliance with its competitors (existing or
potential).
 Example: A firm may enter the foreign market by
forming alliance with a firm in te foreign market for
marketing or distributing the former’s products.
 A US pharmaceutical company may use the
promotion and distribution infrastructure of
Japanese pharmaceuticals to sell its product in
Japan.
 It is a type of competitive strategy rather than an
entry strategy.

26.  Technological development alliance:
research consortia, simultaneous
engineering agreement, liasioning or joint
venture.
 Marketing, sales and service alliance.
 Multiple activity alliance.
 Cross-Border alliance
 Examples:
 Tata & TFR, Tata & Tetley,

29.  Tariff Barriers- Specific Tariffs and Valorem
Tariffs.
 Non-Tariff Barriers-
Quotas, Licensing, Voluntary Export
Restraint (VER), Subsidies, Local Content
Requirement.

30.  Tariff is the tax imposed on imports.
 Specific tariff- it refers to a fixed charge
levied on the units of the product imported.
 Example: Rs. 1000/- levied on each T.V.
imported.
 Ad-Valorem tariff- Tariff levied as a
proportion of the value of the imported goods
(30% on the Total value).

31.  Protect domestic industries.
 Increasing cost of imported goods.
 Automobile/sugar/cement industry.

32.  Govt. of importing country (revenue in the
form of import duty).
 Industries of importing country (Market
share).
 Jobs are saved of domestic country.
 Protection of business- ancillary
industry, servicing, market
intermediaries, etc.

33.  Consumer pay higher price (due to the
inefficiency of domestic producers).
 Exporting country looses the demand, sales
and profit for its product.

34.  Motive is to encourage domestic production
and to protect domestic producers from
foreign competitors.
 Govt. pays to domestic producers by
reducing their operation cost.
 Forms of subsidies- cash grants, loan and
advances, tax holidays, govt. procurement of
output at a higher rate, equity participation
and supply of input at lower prices.

35. Merits:
 International competitiveness of domestic
industry.
 Provide large scale economies.
 Low cost production.
 Early entry to foreign market.
 First mover advantage.
Demerits:
 Protect inefficiency & lethargy of the domestic
firms
 Do not enhance international competitiveness.

36.  Direct restriction on quantity of goods
imported.
 License are issued to certain firms and
individuals.
 License are issued for importing certain
quantity of goods.
 Example: Car, Bikes, Milk, etc.
Merits
 Protect domestic produces from foreign
competition.

37.  Opposite form of import quotas.
 It is a quota on exports of the domestic
firms, imposed by the exporting country.
 Imposed on the request of the imorting
country.
Merits:
 Its violation leads to imposition of tariff.
 Protect from foreign competitors.
 Makes domestic goods cheap.

38.  Some specific portion/fraction of a product
imported to be produced domestically.
 Requirements can be (50% of the
component should be from the domestic
country).
 In value terms (50% of the value of the
product should be produced domestically).
Merits:
 Employment opportunities
 Utilization of local resources and economic
activities

39.  It is a type of inter-governmental
arrangement.
 Concerned with the production of , and trade
in, certain primary products.
 Objective was to stabilizing the prices.
It takes place in three forms:
 Quota
 Buffer stock and
 Bilateral or Multilateral contract.

40.  Objective is to prevent a fall in commodity
prices by regulating the supply.
 Countries undertake to restrict export or
production by a certain percentage of the
basic quota decided by the central
committee or council.
 Example:
 Coffee agreement among the major
producers of Latin America and
Africa, limited the amount that could be
exported by each country.

41.  Seeks to stabilize commodity prices by
maintaining accurate demand and supply.
 Stabilizes the prices by increasing the
market supply.
 When the price tends to rise and absorbing
the excess supply to prevent a fall in the
prices.

42. Bilateral-
 Purchase & sale certain quantities of a
commodity at agreed prices (between major
importer & exporter).
 Upper & lower prices are specified.
 If the market price remain within this
limit, agreement becomes inoperative.