Introduction To International Business PDF

INTRODUCTION TO INTERNATIONAL BUSINESS CONTENTS Introduction to International Business Nature & Scope & Feature of International Business Importance of International Business Approaches of International Business Problems in International Business Entry Strategy Adva...

INTRODUCTION TO INTERNATIONAL BUSINESS CONTENTS Introduction to International Business Nature & Scope & Feature of International Business Importance of International Business Approaches of International Business Problems in International Business Entry Strategy Advantages & Disadvantages of International Business Reasons for recent International Business Growth International organisations What is International Business ? The exchange of Goods & Services, Resources, Knowledge, & Skills, among individuals & businesses in two or more countries. Transaction that are carried out across national borders to satisfy the objectives of individuals and organization All Commercial transactions that take place between two or more countries. 1. Private & Government 2. Sales 3. Investments 4. Logistics 5. Transportation Nature Accurate Information & timely The size of the international business Market segmentation International markets have more potential than domestic markets Scope International Marketing International Finance and Investments Foreign Exchange Global HR Features Large scale operations Integration of economies Dominated by developed countries and MNCs Benefits to participating countries Keen competition Special role of science and technology International restrictions Importance 1. Earn foreign exchange 2. Optimum utilization of resources 3. Achieve its objectives 4. To spread business risks 5. Improve organization's efficiency 6. Get benefits from Government 7. Expand and diversify 8. Increase competitive capacity Approaches of IB Ethnocentric Polycentric Regiocentric Geocentric IB Approaches Ethnocentric approach Under this approach, target market is own country , Excessive production will export due to change in customer taste, preferences IB Approaches Polycentric approach Under this approach, the companies customizes the marketing mix to meet the taste, performance and needs of the customers of each international market. IB Approaches Regiocentric approach Under this approach, the company operating successfully in a foreign country thinks of exporting other neighboring countries of the host country. At this stage, the concerned subsidiary considers the regional environment ( such as laws, culture, policies etc.) for formulating the policies & strategies. IB Approaches Geocentric approach Under this approach, the company analyses the tastes, preference and needs of the customers in all foreign markets and then adopts a standardized marketing mix for all the foreign markets. Problems Political factors High foreign investments and high cost Exchange instability Entry requirements Tariffs, quota etc. Corruption and bureaucracy Technological policy Quality Management Entry Strategy 1. Exporting Indirect & Direct 2. Licensing Agreement Patent, trademark, copy right, technology, production processes, and product licensee’s fee 3. Franchising by franchisers to franchisee Usage Entry Strategy 4. Foreign Assembly Subsidiary local assembly 5. Turnkey Operation Staff of an operating facility foreign buyer 6. Foreign production subsidiary Establishment Purpose Entry Strategy 7. International Firm Significant portion In foreign countries 8. Multinational Corporation Parent country host country 9. Joint Venture Property rights Entry Strategy 10. Foreign Direct Investment Arrangement in which a firm buys or establishes tangible assets In another country Through direct investment By buying a company stock in capital markets Advantages Faster growth Access to cheaper inputs Increased quality and efficiency New market opportunities Diversification Disadvantages Increased costs Foreign regulations and standards Delays in payments Complex organizational structure Reason for recent growth in IB 1. Expansion of technology 2. Business is becoming more global because Transportation is quicker Communications enable control from afar Transportation and communications costs are more conducive for international operations 3. Liberalization of cross-border movements Lower Governmental barriers to the movement of goods, services, and resources enable Companies to take better advantage of international opportunities Reason for recent growth in IB General agreement on Tariff and trade (GATT) An international organization formed to reduce or eliminate tariff and other barrier to international trade International Monetary Fund (IMF) An international financial organization that lend money to countries in conducting international trade Reason for recent growth in IB World Bank An international financial organization that lend money to underdeveloped and developing countries for development Economic Communities World Trade Organization (WTO) European Community (EC) North American Free Trade Agreement (NAFTA) Asian Free Trade Agreement (AFTA) Thank You!