03-International Business

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03-International Business

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03-International Business

  1. 2. International business <ul><li>International Business </li></ul><ul><li>  The exchange of products and services among countries </li></ul><ul><li>Transaction that are carried out across national borders to satisfy the objectives of individuals and organization </li></ul>
  2. 3. Motivation to do international Business
  3. 4. Motivation to do international Business <ul><li>Proactive: </li></ul><ul><ul><li>to increase profit </li></ul></ul><ul><ul><li>to take advantage of product life cycle </li></ul></ul><ul><ul><li>to achieve Economies of scale </li></ul></ul><ul><li>Reactive: </li></ul><ul><ul><li>Competitive pressures </li></ul></ul><ul><ul><li>Overproduction and excess capacity </li></ul></ul><ul><ul><li>Declining domestic sales </li></ul></ul><ul><ul><li>saturated domestic markets </li></ul></ul>
  4. 5. Considering International Expansion <ul><li>Gauging international demand </li></ul><ul><ul><li>Is there any demand for the company’s products abroad? </li></ul></ul><ul><li>Adapting to customer needs </li></ul><ul><ul><li>If so, must those products be adapted for international consumptions? </li></ul></ul><ul><li>Entry strategies </li></ul><ul><ul><li>How to entry into foreign markets? </li></ul></ul>
  5. 6. Going international
  6. 7. Gauging international demand <ul><li>Preliminary screening for attractive country markets </li></ul><ul><li>Assessment of industry market potential </li></ul><ul><li>Identify the potential demand for the company products and services </li></ul><ul><li>Forecasting the company selling </li></ul><ul><li>Assessment of the company market share </li></ul>
  7. 8. Adapting to customer needs <ul><li>Products and Services should meet to foreign market </li></ul><ul><li>Price adjustments by considering the cost of foreign trade, such as transportation, taxes, exchange rate </li></ul><ul><li>Distribution system through existing transportation system, suppliers and stores </li></ul><ul><li>Promotion should be modified based on different languages, law, and culture from country to country </li></ul>
  8. 9. Barriers to International Business <ul><li>Cultural and social barriers </li></ul><ul><li>Legal and political barriers </li></ul><ul><li>Economic barriers: </li></ul><ul><ul><li>Tariff and trade restrictions </li></ul></ul><ul><ul><li>Quotas and embargo </li></ul></ul><ul><ul><li>Exchange control </li></ul></ul><ul><ul><li>Subsidy </li></ul></ul>
  9. 10. Entry strategies <ul><li>Exporting – firms that distributes and sells products to foreign countries </li></ul><ul><ul><li>indirect - through an intermediary </li></ul></ul><ul><ul><li>direct - deal with foreign customer and firms </li></ul></ul><ul><li>Licensing </li></ul><ul><ul><li>an agreement in which a licensor gives to a licensee the right </li></ul></ul><ul><ul><li>in using the licensor’s patent, trademark, copy right, technology, production processes, and product </li></ul></ul><ul><ul><li>in return for licensee’s fee </li></ul></ul>
  10. 11. Entry strategies <ul><li>2. Franchising </li></ul><ul><ul><li>the granting of the right by franchisers to franchisee </li></ul></ul><ul><ul><li>in prescribed manner; selling its products </li></ul></ul><ul><ul><li>using its name, production, brand, marketing approaches </li></ul></ul><ul><li>3. Foreign Assembly </li></ul><ul><ul><li>a firm exports components parts to subsidiary </li></ul></ul><ul><ul><li>for local assembly into finished products </li></ul></ul>
  11. 12. Entry strategies <ul><li>4. Turnkey Operation </li></ul><ul><ul><li>an arrangement in which a supplier designs, builds, and trains the staff of an operating facility </li></ul></ul><ul><ul><li>for foreign buyer </li></ul></ul><ul><li>5. Foreign production subsidiary </li></ul><ul><ul><li>a subordinate company established in another country by parents company </li></ul></ul><ul><ul><li>for the purpose of production </li></ul></ul>
  12. 13. Entry strategies <ul><li>6. Foreign production subsidiary </li></ul><ul><ul><li>a subordinate company established in another country by parents company </li></ul></ul><ul><ul><li>for the purpose of production </li></ul></ul><ul><li>7. International Firm </li></ul><ul><ul><li>Conduct a significant portion of its business </li></ul></ul><ul><ul><li>In foreign countries </li></ul></ul>
  13. 14. Entry strategies <ul><li>8. Multinational Corporation </li></ul><ul><ul><li>a firm that is based in one country (parent country) </li></ul></ul><ul><ul><li>has production and marketing activities spread in one or more foreign country (host country) </li></ul></ul><ul><li>9. Joint Venture </li></ul><ul><ul><li>a partnership of two or more parties who share ownership and control </li></ul></ul><ul><ul><li>for the venture’s operations and property rights </li></ul></ul>
  14. 15. Entry strategies <ul><li>10. Foreign Direct Investment </li></ul><ul><ul><li>Arrangement in which a firm buys or establishes tangible assets </li></ul></ul><ul><ul><li>In another country </li></ul></ul><ul><ul><li>Through direct investment </li></ul></ul><ul><ul><li>By buying a company stock in capital markets </li></ul></ul>
  15. 16. International Organization <ul><li>General agreement on Tariff and trade (GATT) – an international organization formed to reduce or eliminate tariff and other barrier to international trade </li></ul><ul><li>International Monetary Fund (IMF) – an international financial organization that lend money to countries in conducting international trade </li></ul>
  16. 17. International Organization <ul><li>World Bank – an international financial organization that lend money to underdeveloped and developing countries for development </li></ul><ul><li>Economic Communities – the creation of common economic policies </li></ul><ul><ul><li>World Trade Organization (WTO) </li></ul></ul><ul><ul><li>European Community (EC) </li></ul></ul><ul><ul><li>North American Free Trade Agreement (NAFTA) </li></ul></ul><ul><ul><li>Asian Free Trade Agreement (AFTA) </li></ul></ul>

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