The document defines international business as global trade of goods and services across country borders. It discusses benefits to nations and firms, including foreign exchange, employment, and increased profits. The scope includes foreign investment, exports/imports, franchising, and limiting domestic market constraints. International business is important for market expansion, risk spreading, economies of scale, and cost advantages. Challenges include language barriers, cultural differences, global team management, and foreign policies/politics. Competitive advantages allow lower costs or superior products. The international business environment encompasses political, economic, technological, and cultural factors companies must consider.
2. Definition:
International business refers to the global trade of goods/services
outside the boundaries of a country.
International business conducts business transactions all over the
world, it is also known as Global Business.
It includes transaction between the parties in different global
location.
Business activities done across national borders is International
Business. The International business is the purchasing and selling
of the goods, commodities and services outside its national
borders. Such trade modes might be owned by the state or
privately owned organization.
3. Benefits of International Business
Benefits to nation:
It encourages a nation to obtain foreign exchange that can be
utilized to import merchandise from the global market.
Also, it helps a country in enhancing its development
prospects and furthermore make opportunity for employment.
International business makes it comfortable for individuals to
utilize commodities and services produced in other nations
which help in improving their standard of life.
4. Benefits to firm:
It helps in improving profits of the organizations by selling
products in the nations where costs are high.
It helps the organization in utilizing their surplus resources and
increasing profitability of their activities.
Also, it helps firms in enhancing their development prospects.
International business also goes as one of the methods for
accomplishing development in the firms confronting extreme
market conditions in the local market.
5. Scope of International Business:
Foreign Investments
Exports and imports of goods and services
Franchising
Growth opportunities
Limitations of the domestic market
6. Importance of International Business
Market expansion
Foreign exchange
Spreading business risk
Economies of scale
Cost advantage
Improves international relations
Provides employment opportunities
8. Challenges of International Business:
Language barrier
Cultural differences
Managing global teams
Currency exchange and inflation rate
Deciding company structure
Foreign politics and policies
9. Competitive Advantage:
Competitive advantage refers to factors that allow a
company to produce goods or services better or more
cheaply than its rivals.
These factors allow the productive entity to generate
more sales or superior margins compared to its market
rivals.
Competitive advantages are attributed to a variety of
factors including cost structure, branding, the quality of
product offerings, the distribution network, intellectual
property, and customer service.
10. Methods of Competitive Advantage:
Same product, lower price
Different products with different attributes
Defensive strategies
Strategic alliances
12. International Business Environment
Political Environment in International Business
Economic Environment in International Business
Technological Environment in International Business
Cultural Environment in International Business
13. Political Environment:
The political environment means the political risk, the government’s
relationship with a business, and the type of government in the
country. Conducting business internationally implies dealing with
different kinds of governments, levels of risk and relationships.
Political system of the business
Approach of the government towards business, i.e. facilitating or
restrictive
Incentives and facilities offered by the government
Legal restrictions for licensing requirements and reservations to a
specific sector like the private, public or small-scale sector
Restrictions on exporting services and products
Restrictions on distribution and pricing of goods
14. Economical Environment:
The economic environment refers to the factors contributing to the
country’s attractiveness to foreign businesses. It can differ from one
nation to another.
Economic system to enter the business sector
Stage and pace of economic growth
Level of national GDP and per capita income
Available infrastructure facilities and the difficulties
Availability of components, raw materials and their cost
Sources of financial resources and their costs
Availability of workforce, managerial and technical workers, their
salary and wage structures
15. Technological Environment:
The technological environment includes factors related to the
machines and materials used in manufacturing services and goods.
As organizations do not have control over the external environment,
their success depends on how they will adapt to the external
environment.
Level of technological developments in the country as a whole and
specific business sector
Pace of technological changes
Sources of technology
Facilities and restrictions for technology adaption
Time taken for the absorption of technology
16. Cultural Environment:
It has been described as a commonly held and shared body of
general values and beliefs that determine what is right for one group
Influence of cultural, social, and religious factors on the
acceptability of the product
Lifestyle of people and the products used by them
Level of acceptance and resistance to change
Demand for a specific product for a specific occasion
Values attached to particular products
Consumption pattern of the buyers
17. Cross-Cultural Management:
Cross culture is a concept that recognizes the differences
among business people of different nations, backgrounds. and
ethnicities, and the importance of bridging them. With
globalization, cross culture education has become critically
important to businesses
Techniques for managing Diversity:
Create a comprehensive and broad environment
Respect different values, beliefs, attitudes and behaviors held
and shown by a diverse work force
Communicate commitment to all staff
Value differences
18. Levels of culture:
Level 1-The Artefacts
The visible manifestations of culture for example dress code and
décor.
Level 2-Espoused Values
How an organisation explains its culture, for example official policy
and accepted beliefs. Discover through ‘why’ questions.
Level 3- Shared Tacit Assumptions
The hidden assumptions, values and beliefs. The understood,
traditional and unofficial ways of being, doing and feeling.