International Business

1. WHAT IS INTERNATIONAL BUSINESS
?
 The exchange of goods & services, resources, knowledge,
& skills ,among individuals & businesses in multiple/two
or more countries.
 Transaction that are carried out across national borders to
satisfy the objectives of individuals and organization.

2. WHAT IS INTERNATIONAL BUSINESS
?(Cont.)
 All Commercial transactions that take place between two
or more countries. –
 Private & Government
 Sales
 Investments
 Logistics
 Transportation

3. NATURE OF IB
1. Accurate Information & timely
2. The Size of the international business
3. Market segmentation
4. International markets have more potential than
domestic markets

4. SCOPE OF IB
1. International Marketing
2. International Finance and Investments
3. Foreign Exchange
4. Global HR

5. FEATURES OF IB
1. Large scale operations
2. Integration of economies
3. Dominated by developed countries and MNCs
4. Benefits to participating countries
5. Keen competition
6. Special role of science and technology
7. International restrictions

6. IMPORTANCE OF IB
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

7. GOING INTERNATIONAL

8. MOTIVATION TO DO I B
1. Proactive:
 to increase profit
 to take advantage of product life cycle
 to achieve Economies of scale
2. Reactive:
 Competitive pressures
 Overproduction and excess capacity
 Declining domestic sales
 saturated domestic markets

9. NEED FOR I B
1. Achieve higher rate of profits
2. Expanding the production capacity beyond the demand
of the domestic country
3. Availability of technology and managerial competence
4. Cost of manpower, transportation & Nearness to R/M
5. LPG Implt.
6. Market share

10. PROBLEMS IN I B
1. Political factors
2. High foreign investments and high cost
3. Exchange instability
4. Entry requirements
5. Tariffs, quota etc.
6. Corruption and bureaucracy
7. Technological policy
8. Quality Management

11. ENTRY STRATEGY
1. Exporting
• Indirect & Direct
2. Licensing
• Agreement
• Patent, trademark, copy right, technology,
production processes, and product
• licensee’s fee

12. ENTRY STRATEGY
2. Franchising
– by franchisers to franchisee
– Usage
3. Foreign Assembly
– Subsidiary
– local assembly

13. ENTRY STRATEGY
4. Turnkey Operation
– Staff of an operating facility
– foreign buyer
5. Foreign production subsidiary
– Establishment
– Purpose

14. ENTRY STRATEGY
6. Foreign production subsidiary
– Purpose of production
7. International Firm
– Significant portion
– In foreign countries

15. ENTRY STRATEGY
8. Multinational Corporation
– Parent country
– host country
9. Joint Venture
– Property rights

16. 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

17. MAIN BARRIERS
1. Cultural and social barriers
2. Legal and political barriers
3. Economic barriers:

18. ADVANTAGES OF I B
1. Faster growth
2. Access to cheaper inputs
3. Increased quality and efficiency
4. New market opportunities
5. Diversification

19. DISADVANTAGES OF I B
1. Increased costs
2. Foreign regulations and standards
3. Delays in payments
4. Complex organizational structure

20. REASONS FOR RECENT GROWTH IN
I B
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
4. Lower Governmental barriers to the movement of
goods, services, and resources enable Companies to
take better advantage of international opportunities

21. INTERNATIONAL ORGANIZATION
• 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

22. INTERNATIONAL ORGANIZATION
• World Bank – an international financial organization
that lend money to underdeveloped and developing
countries for development
• Economic Communities – the creation of common
economic policies
– World Trade Organization (WTO)
– European Community (EC)
– North American Free Trade Agreement (NAFTA)
– Asian Free Trade Agreement (AFTA)