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People are able to recall

People are able to recall. 20% of what they read 30% of what they hear 40% of what they see 50% of what they say 60% of what they do 90% of what they see, hear, say, do. International Business Management. Unit 1 - Session 1. Reading. Daniels John D, Radebaugh Lee H & Sullivan Daniel P ,

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People are able to recall

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  1. People are able to recall • 20% of what they read • 30% of what they hear • 40% of what they see • 50% of what they say • 60% of what they do • 90% of what they see, hear, say, do

  2. International Business Management Unit 1 - Session 1

  3. Reading • Daniels John D, Radebaugh Lee H & Sullivan Daniel P , International Business:Environment and Operations, 10th Edition, Pearson • P. Subba Rao, International Business: Text and cases, 2nd Edition, Himalaya Publishing house • Doing Business in 2006- World Bank • World Development Indicator-World Bank

  4. What is International Business? • Commercial Transaction • Buying, Selling or providing services (value addition) • Movement of goods or services across sovereign borders • Reverse movement of consideration- Money • Motive- Profit ( short term or long term) • Governments may do business without profit motives

  5. International Business • Sales & Service • Purchase or consumption • Investment • Transport

  6. Why International Business? • Competition in Domestic Market • Limitation of domestic market- size, product acceptance • Availability of resources at cheaper prices • Sales at higher prices compared to domestic market • Too much profit variation in domestic market ( seasonality, Business cycle) • No market for your product in domestic market-Statutory and environment restriction

  7. Why companies engage in International Business?? • To expand market for Sales & services • To acquire resources • To minimize Risk

  8. Increase Sales ? • Utilization of capacity • Leads to lower allocated cost • Market expansion • Higher profit

  9. Acquire Resources • Products and services • Domestically not available • Cheaper overseas • Better quality which could give market edge • Investment, technology, service, & information • Not available in the domestic market • Cheaper and abundant • Technologically superior

  10. Minimize Risk • Domestic business cycles • Seasonality • Government hostility • Competition targeting

  11. Why study International Business? • India moving fast from Developing economy to Developed economy • We will soon overtake most countries in the world in terms of size of economy • By 2020- we will be # 3 • By 2050- We will be # 1 ???? • The growth will come through expanding Indian business across the globe • India has opened its gate for International business in sales& services as well as Investment

  12. Reasons for Growth • Expansion of Technology • Liberalization of government policies relating to movement of goods and services. • Development of institution to support International trade ( Support services) • Increased global competition • Consumer pressure

  13. Modes of International Business • Merchandise Import and Export • Services Import and Export • Tourism & Transportation • Performance of services • Use of assets • Investment • Direct (FDI) -Controlling interest • Portfolio- Investment without controlling

  14. International Companies • Multi domestic companies • Treats each market separately and has country-specific strategies • Multinational Companies • Global approach to foreign markets and production; will consider marketing and locate production facility anywhere in the world • Must have operations in more than one country • Transnational Companies • Company owned and managed by nationals in different countries. • An organisation in which capabilities and contribution may differ by country but are integrated in worldwide operations • Global Companies • Company which will integrate its operations that are located in different company

  15. Strategic Orientation • Domestic Market Extension • Multi Domestic Market Concept • Global Concept

  16. External Influences on International Business • Physical and Societal Factors • Political • India and Pakistan; USA and Cuba • Legal • Domestic laws- Host and Home countries • Taxation, Forex, Distribution, IP • Cultural • Interpersonal, social behavior, mental attitude • Economic • Income Level, Distribution, Growth rate ,Economic status • Geographical • Mountain, Deserts, Frequency of Natural disasters, climate etc. • Historical • Affects Culture, behavior • Competition

  17. Competition • Strategy depends on the competition in the local market as well as in other countries where they face each other • Marketing innovation • Companies surprise their competitors by marketing innovations • Number of competitors, capability of competitors • Competitive difference in the individual countries

  18. Patterns of Expansion • Passive to Active Expansion • Passive response to proposal • Active search for opportunities • External to internal handling of operation • Use of intermediary • Handling the operations by themselves • Deepening mode of commitment • Export Import-Marketing with no production • Marketing & Production in one country • Marketing & Production in many countries with centralized control • Production and marketing in individual country with local decision making • Geographic Diversification • One- many- several • Leapfrogging of expansion

  19. Competitive Strategies • Globally standardized vs. Nationally responsive • Country vs. Company competitive • Sovereign vs.Cross National Relationship

  20. Goals of IB • To achieve higher rate of profits • Expanding the production capacities beyond the demand of the domestic country • Severe competition in the home country • Limited home market • Political stability Vs. Political Instability • Availability of technology and competent human resources • High cost of transportation • Nearness to raw materials • Availability of quality human resources at less cost • Liberalization and globalization • To increase market share • To achieve higher rate of economic development • Tariffs and import quotas

  21. Advantages of IB • High living standards • Increased socio-economic welfare • Wider market • Reduced effects of business cycles • Reduced risks • Large-scale economies • Potential untapped markets • Provides the opportunity for and challenge to domestic business • Division of labour and specialization • Economic growth of the world • Optimum and proper utilization of world resources • Cultural transformation • Knitting the word into a closely interactive traditional village

  22. Problems of IB • Political factors • Huge foreign indebtedness • Exchange instability • Entry requirements • Tariffs, Quotas and trade barriers • Corruption • Bureaucratic practices of government • Technological pirating • Quality maintenance • High cost

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