2. Borderless world is a concept of
globalisation where the goods,
services, information and capital flow
from/through different nations.
The concept of borderless world may
include any product which is
produced in one country, assembled
in second country, marketed in third
country and financed from fourth
country.
3. Borderless world is not just buying and selling
products in different markets of the world but it
includes a lot of other business activities such as:-
1. Licensing
2. Contract manufacturing
3. Alliances
4. Outsourcing
5. Franchising
6. Joint Ventures
7. FDI
4. A trade agreement in which one company (the
licensor) allows another company (the licensee) to
use it’s brand name or manufacture it’s products in
exchange for fee or royalty.
for ex:- licensee company – Videocon
It’s licensed brand – Phillips TV , Sansui
5. It occurs when a company hires a
foreign company to produce a specified
volume of the firm’s product to
specification, the final product carries
the domestic firm’s name.
For ex:- pharmaceutical companies
like
1. MAKCUR LABORATORIES LTD
2. Kremoint Pharma Pvt. Ltd
6. A partnership formed to create
competitive advantage on a
worldwide basis.
For ex:- Starbucks and Barnes &
Noble
Starbucks has become
synonymous with coffee. Barnes
& Noble are bookstores in
different places and their
partnership has been a success
as the readers like taking a
coffee break and browse the
latest bestsellers at the same
time.
7. Transferring manufacturing or other tasks (such as
information technology operations) to companies in
countries where labour and supplies are less
expensive.
For ex:-
IBM-Bharti Airtel Deal
Bharti Airtel and IBM announced an agreement to
manage Airtel’s infrastructure and application services
in India over the next few years.
8. A form of licensing in which a company (the
franchiser) agrees to provide a franchisee the name
, logo ,methods of operations, advertising,
products, and other elements associated with the
franchiser’s business.
For ex:-
McDonalds Corporation- This international quick
service restaurant company has over 75% of its
worldwide restaurants independently owned.
Business owners can purchase a new or existing
restaurant.
9.
10. The sharing of costs and operations of a
business between a foreign company and a
local partner.
For ex:-
Maruti Suzuki India Limited, is an automobile
manufacturer in India. It is a 56.2% owned
subsidiary of Japanese automobile and
motorcycle manufacturer Suzuki Motor
Corporation.
11. Foreign-owned corporations that set up their
physical base in a foreign country through direct
investment.
For ex:-
British petroleum Plc is making one of the
biggest FDI in India, with a $7.2 billion tie-up with
Reliance Industries to explore for deepwater oil
and gas.
12. Free Trade Area (FTA)
Foreign Trade Policy (FTP)
Economic Union
Economic Condition
LPG
Balance of Payment
Special Economic Zones
13. Export processing Zones
Protectionism
Inflation rate
Exchange rate
International trade barriers
WTO
GATT
WORLD BANK
14. A FTA is a group of countries that have few or no
price controls in the form of tariffs or quotas
between each other.
There are around 420 regional trade agreements
already in force around the world, according to the
World Trade Organisation.
15. FTP are policies enacted by the government
sector of a domestic economy to discourage
imports from, and encourage exports to, the
foreign sector.
The three most common Foreign Trade
Policies are tariffs, import quotas and export
subsidies.
16. European Union (EU) is a union of European
nations established in 1958 to promote trade
among its members; one of the largest single
markets today.
The European Union (EU), also called the
European Community or Common Market, was
established in 1958 to promote trade among its
members, which initially included Belgium,
France, Italy ,West Germany, Luxembourg, and
The Netherlands.
To facilitate free trade among its members, the
EU is working toward the standardization of
business regulations and requirements, import
duties, and value added taxes;
17.
18. Economic conditions refer to the state of the
economy in a country or region. They change
over time in line with the economic
and business cycles, as an economy goes
through expansion and contraction.
Economic conditions are considered to be
sound or positive when an economy is
expanding and are considered to be adverse
or negative when an economy is contracting.
19. Liberalisation:- Trade liberalization is the
removal or reduction of restrictions or barriers
on the free exchange of goods between nations.
This includes the removal or reduction
of tariff obstacles, such as duties and surcharges,
and nontariff obstacles, such as licensing rules,
quotas and other requirements. The easing or
eradication of these restrictions is often referred
to as promoting "free trade."
20.
21. Privatisation:- Privatization can
refer to the act of transferring ownership
of specified property or business
operations from a government
organization to a privately owned entity,
as well as the transition of ownership
from a publicly traded, or owned,
company to a privately owned company.
For a company to be considered privately
owned, it cannot secure funding through
public trades on a stock exchange.
22. Globalisation:-
Globalization is the tendency of investment
funds and businesses to move beyond domestic
and national markets to other markets around the
globe, thereby increasing the interconnection of
the world. Globalization has had the effect of
marketly increasing international trade and cultural
exchange.
23. The balance of payments, also known as balance
of international payments, encompasses all
transactions between a country’s residents and
its non-residents involving goods, services and
income; financial claims on and liabilities to the
rest of the world; and transfers such as gifts. The
balance of payments classifies these transactions
in two accounts – the current account and the
capital account. The current account includes
transactions in goods, services, investment
income and current transfers , while the capital
account mainly includes transactions in financial
instruments.
24. A special economic zone (SEZ) refers to
designated areas in countries with special
economic regulations that differ from other
areas in the same country. These regulations
tend to contain measures that are conducive
to foreign direct investment. Conducting
business in a SEZ usually means a company
receives tax incentives and the opportunity to
pay-lower tariffs.
25. Export processing zones (EPZs) are areas within
developing countries that offer incentives and a
barrier-free environment to promote economic
growth by attracting foreign investment for
export-oriented production. The number of
zones internationally, countries hosting EPZs,
and firms operating in them, and the business
volume they handle, are all growing rapidly,
suggesting their importance. Yet, business
research on EPZs is virtually nonexistent, leading
to poor understanding of their role in
international marketing.
26.
27. Protectionism refers to government actions and
policies that restrict or restrain international
trade , often done with the intent of protecting
local businesses and jobs from foreign
competition. Typical methods of protectionism
are tariffs and quotas on imports
and subsidies or tax cuts granted to local
businesses. The primary objective of
protectionism is to make local businesses or
industries more competitive by increasing the
price or restricting the quantity of imports
entering the country.
28.
29. Inflation is the rate at which the general level of
prices for goods and services is rising and,
consequently, the purchasing power of currency
is falling. Central banks attempt to limit inflation,
and avoid deflation, in order to keep
the economy running smoothly.
As a result of inflation, the purchasing power of a
unit of currency falls. For example, if the inflation
rate is 2%, then a pack of gum that costs $1 in a
given year will cost $1.02 the next year. As goods
and services require more money to purchase, the
implicit value of that money falls.
30. The ratio at which one nation’s currency can be
exchanged for another nation’s currency or for
gold is the exchange rate. Exchange rates vary
daily and can be found in newspapers and
through many sites on the Internet.
Familiarity with exchange rates is important
because they affect the cost of imports and
exports. Current exchange rates provide an
opportunity for Canada to export cheaper
products to the US. Tourists find that the US
dollar goes a lot further in Canada, as the
advertisement for Canadian ski resorts shows.
31.
32. A barrier to trade is a government-imposed restraint on
the flow of international goods or services. The most
common barrier to trade is a tariff—a tax on imports.
Tariffs raise the price of imported goods relative to
domestic goods (goods produced at home).
Tariffs and other trade restrictions are part of a country’s
legal structure but may be established or removed for
political reasons . An import tariff is a tax levied by a
nation on goods imported into the country. A fixed tariff
is a specific amount of money levied on each unit of a
product brought into the country, while an ad valorem
tariff is based on the value of the item.
33. World Trade Organization (WTO) :- “Is the
only international organization dealing
with the global rules of trade between
nations. Its main function is to ensure that
trade flows as smoothly, predictably and
freely as possible.” It is the continuation of
GATT.
34.
35. General Agreement on Tariffs and
Trade (GATT) :-During the Great Depression of
the 1930s, nations established so many protective
tariffs covering so many products that international
trade became virtually impossible . By the end of
World War II, there was considerable international
momentum to liberalize trade and minimize the
effects of tariffs. The General Agreement on Tariffs
and Trade (GATT), originally signed by 23 nations in
1947, provides a forum for tariff negotiations and a
place where international trade problems can be
discussed and resolved. Currently, more than 140
nations abide by its rules, managed by the World
Trade Organization (WTO).
36. An organization established by the
industrialized nations in 1946 to loan money
to underdeveloped and developing countries;
formally known as the International Bank for
Reconstruction And Development The World
Bank, more formally known as the
International Bank for Reconstruction and
Development, was established by the
industrialized nations, including Canada, in
1946 to loan money to underdeveloped and
developing countries.
37.
38. FLEXIBLE STRATEGIES:
The companies need to make suitable strategies
keeping in mind the rapidly changing market.
CUSTOMER EXPECTATIONS:
With many options available in the market the
customers only expect and choose the quality
products.
COMPETITION:
As the MNCs and other global companies coming
in, the small and domestic companies may face a
lot of competition and struggle to survive.
