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Introduction

International business consists of transactions across national borders to satisfy objectives of individuals, companies, and organizations. It combines business practices with other disciplines like geography and economics. Globalization has increased international business transactions and made the world more interconnected. Studying international business helps understand best practices, opportunities, and challenges of operating in different country environments and working with a diverse global workforce. It also prepares individuals for employment in multinational companies.

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Shefali Deepak Garg
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154 views

Introduction

International business consists of transactions across national borders to satisfy objectives of individuals, companies, and organizations. It combines business practices with other disciplines like geography and economics. Globalization has increased international business transactions and made the world more interconnected. Studying international business helps understand best practices, opportunities, and challenges of operating in different country environments and working with a diverse global workforce. It also prepares individuals for employment in multinational companies.

Uploaded by

Shefali Deepak Garg
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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International Business

Introduction

What is IB
International business consists of transactions carried across national borders to satisfy the objectives of individuals, companies and organisation. Combines art and science of business with other disciplines like demography, geography, economics, law etc Basic tasks remain the same Globalisation is synonymous with international business and is more commonly used term. Global village?

IB includes:
Product presence in different markets of world. Production bases across globe Human resource to contain high diversity Investment in international services like banking, advertising, tourism, retailing and construction. Transactions involving intellectual property such as copyrights, patents, trademarks, and process technology.

Emerging competitive environment


Foreign Players

Competition facing local/national/ international firms in a market


Local Players National Players

Peter Drucker in Management Challenges for 21st century All institutions have to make global competitiveness a strategic goal. No institution, whether a business, a university or a hospital, can hope to survive, let alone to succeed, unless it measures up to the standards set by leaders in its field, any place in the world.

Why study International Business


International business a large portion of total business and this portion is growing rapidly due to globalisation. Helps an individual take employment in a multinational by making them understand complexities, opportunities, and challenges Demographic dividend based on BRICs states that India shall be 3rd largest economy by 2050, behind US and China. International Business helps us understand not only best practices with respect to various fields of business but also list of Donts with examples like East India co and Enron Debacle.

Multinational/ Global/ Transnational/International


Different types of management orientation that Companies adopt towards International business 1. Ethnocentric:

Extension strategy is adopted for international marketing. Plans are made in home country and by its personnel and generally operate through agents. Export is viewed as a means of disposing the surplus in the domestic market. Believes home country practices to be superior and so can be successful everywhere. Only sees the similarities in the markets. Does not conduct any systematic International market research The approach does not allow a company to be a major player in International Business. Many call these types of companies International companies

2. Polycentric
Its characteristics are Opposite of Ethnocentrism assumes each country is unique. Only sees dissimilarities. Each subsidiary develops its own unique business and marketing strategies ( that is decentralized) Focus is on local conditions, laws, culture etc. Adaptation strategy is followed in marketing. These are called Multinational companies/ Multidomestic companies / Locally responsive companies.

3. Regiocentric and Geocentric


Its characteristics are: Pursues both extension and adaptation strategies in global markets. Lies between the extremes of polycentrism and ethnocentrism it is a hybrid approach. Views the entire world/global market to be a single market but sees both similarities and dissimilarities within it. Thinks globally, acts locally. These are called Transnational Companies ( TNC) or Multinational Enterprises (MNE).

Domestic Business
Approach: Ethnocentric Geographical Scope: national boundaries Operating Style: production, marketing, investment, R& D etc limited to domestic economy. Environment: analyses and scans domestic environment Quotas: do not directly and significantly impact Tariffs: not direct and significant influence Foreign Exchange rates: do not directly and significantly influence business Culture: domestic culture impacts operations and product design Export import procedures: not normally influenced

International Business
Polycentric, Regiocentric, geocentric Varies from minimum 2 countries to entire globe Spread to entire globe

Analyses and scans relevant international environment IB operates within various quotas imposed by various countries on their exports and imports Direct and significant influence Directly affected by FOREX rates and its fluctuations Affected by international culture Significant influence. Need to understand and follow

Human Resources:employs people from same Employs people from various countries, thus task country, therefore task of HRM is not complicated of HRM is much complicated Markets & Customers: meet needs of domestic markets and customer. IB should understand markets and customers of various countries.

Driving Forces of Globalisation:


Liberalisation: fostered borderless business world. Global trend of LPG. Technology: reduced transport and communication costs. Higher market scale required to break even. Technology monopoly exploit demand w/o competition Transportation & Communication revolutions Reduced disadvantage of distance and cost Emergence of global village Internet and www Air cargo transportation, containerisation and refrigeration Global sourcing Product Development costs and efforts Shorter payback period Helps reduce R&D cost by international alliances

Quality and Cost: most important determinant of demand Competition: Firms look for means to increase efficiency International production & FDI inflow to developing countries Rising aspirations and Wants: With media resulting in global exposure customers aspire products of world class quality World economic trend: Slow growth rate of developed economies or stagnation in their market Firms turn to emerging markets Resultant economic growth in domestic market reduce opposition to globalisation Regional Integration: Like EU, NAFTA create borderless world between members of trade bloc

Leverages: is the advantage a company enjoys by virtue of conducting business in more than one country. Four types of leverage are: experience transfer, scale economies, resource utilisation Global strategy: Built on an information system that scans the world business environment to identify opportunities, trends, threats and resources Global strategy creates a winning offering on a global scale

Restraining Factors of Globalisation


External factors:
government policies and controls, political social opposition against foreign business etc

Internal Factors:
Management myopia, organisational culture

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