International Business Concepts

• International business involves the exchange of goods, services, resources, knowledge, and skills between individuals and businesses in two or more countries.
• It includes transactions across national borders to meet individual and organizational objectives.
• All commercial transactions that take place between two or more nations fall under international business.
• These transactions can be private, governmental, involve sales, investments, logistics, and transportation.

Nature of IB

• Accurate and timely information is crucial.
• The size of international business operations is a key consideration.
• Market segmentation is important.
• International markets offer greater potential compared to domestic markets.

Scope of IB

• International marketing is a key aspect.
• It includes international finance and investments.
• Foreign exchange is a part of the scope.
• Global HR practices are included.

Features of IB

• Characterized by large-scale operations
• It involves the integration of economies.
• Often dominated by developed countries and multinational corporations (MNCs)
• Provides benefits to participating countries
• Encounters keen competition
• Science and technology play a special role
• Subject to international restrictions

Importance of IB

• Enables earning foreign exchange
• Promotes optimum utilization of resources
• Helps businesses achieve their objectives
• Aids in spreading business risks
• Improves organizational efficiency
• Allows businesses to get government benefits
• Facilitates expansion and diversification
• Increases competitive capacity

Approaches of IB

• Ethnocentric: Targeting the company's own country, exporting excess production due to changes in customer tastes.
• Polycentric: Customizing the marketing mix to meet the tastes, performance, and needs of customers in each international market.
• Regiocentric: Successfully operating in a foreign country and then considering exporting to neighboring countries of the host country, while considering the regional environment.
• Geocentric: Analyzing the tastes, preferences, and needs of customers in all foreign markets and then adopting a standardized marketing mix for all foreign markets.

Problems in IB

• Political factors
• High foreign investments and high costs
• Exchange instability
• Entry requirements
• Tariffs and quotas
• Corruption and red tape
• Technological policy issues
• Quality management

Entry Strategies

• Exporting which can be done by using indirect or direct methods
• Licensing: involves agreements, patents, trademarks, copyrights, technology, production processes, product licensing and licensee's fee
• Franchising: arrangements between franchisers and franchisees that involve usage agreements
• Foreign Assembly: Setting up a subsidary or local assembly plant
• Turnkey Operation: involves staffing of an operating facility and foreign buyer arrangements
• Foreign Production Subsidiary: Establishment for specific purposes
• International Firm: characterized by a significant portion of operations and resources based in foreign countries
• Multinational Corporation: operates with a parent country and host country structure
• Joint Venture: sharing of property rights
• Foreign Direct Investment: Arrangement where firm buys are establishes tangible assets in another country through direct investment or by buying stocks in capital markets

Advantages of IB

• Facilitates faster growth
• Provides access to cheaper inputs
• Increases quality and efficiency
• Creates new market opportunities
• Enables diversification

Disadvantages of IB

• Increases costs
• Navigating foreign regulations and standards can be challenging
• Delays in payments may occur
• Complex organizational structure

Reasons for Recent Growth

• Expansion of technology
• Business is becoming more global, with quicker transportation.
• Communication that enables control from afar.
• Transportation and communication costs are more conducive for international operations.
• Liberalization of cross-border movements since lower governmental barriers on goods, services, and resources enable better advantages of international opportunities.

International Organizations

• General Agreement on Tariffs and Trade (GATT): An international organization formed to reduce or eliminate tariffs and other barriers to international trade.
• International Monetary Fund (IMF): An international financial organization that lends money to countries in conducting international trade.
• World Bank: An international financial organization that lends money to underdeveloped and developing countries for development.
• Economic Communities: Involves the World Trade Organization (WTO), European Community (EC), North American Free Trade Agreement (NAFTA), and Asian Free Trade Agreement (AFTA).

Explore fundamental concepts in international business, including entry strategies like franchising and investment approaches. Understand the scope, characteristics, and goals of global transactions and resource management. Delve into ethnocentric and regiocentric perspectives.