amar kjr nayak/ib/ximb
DESCRIPTION
Amar KJR Nayak/IB/XIMB. International Business (IB). Commercial Activities that cross National Frontiers. International Movement of Goods, Capital, Technology, & Services …. Amar KJR Nayak/IB/XIMB. Growth Phase: 1880s - 1920. Ownership / Control of many of the world’s natural resources - IB. - PowerPoint PPT PresentationTRANSCRIPT
Amar KJR Nayak/IB/XIMB
International Business (IB)
Commercial Activities that cross National Frontiers
International Movement of Goods, Capital, Technology, & Services …
Amar KJR Nayak/IB/XIMB
Growth Phase: 1880s - 1920
Ownership / Control of many of the world’s natural resources - IB
Trading companies, banks and utilities had created a global infrastructure
Movement of the latest and the newest technological products
IB: Prominent in chemicals, machinery and branded consumer products.
Amar KJR Nayak/IB/XIMB
The Great Depression, 1920 - 1930
Collapse of primary commodity prices
World Political Uncertainties – Break of the Second World War
Halted the growth of international trade for nearly a decade.
IB could not retain its momentum as prior to the 1920s
Amar KJR Nayak/IB/XIMB
Limited Growth Phase, 1930 – 1950In 1930s, IB in the world economy haltedFrom 1930s IB expanded in the automobiles
FDI: dominated by USA, Britain and the Netherlands
International cartels: to restrict output, maintain prices, and to transfer technologies across borders
Limited flow of FDI to the less industrialized nations
Many host countries of FDI freed themselves from colonial rule
US MNEs: latest innovation in petrochemicals, computers and semi-conductors to other industrialized countries
The new independent nations sought to control of the nation’s strategic natural resources and utilities from the foreign companies
IB from the 1950s: numerous borders
Amar KJR Nayak/IB/XIMB
Growth Restricted, 1950 – 1970
Service MNEs were the worst affected by such policies
Foreign ownership of energy, communication and utilities – challenged and prohibited
Vertical integration strategies of MNEs started to get fragmented
Vertical integration strategies of MNEs started to get fragmented
Multinational investment in airlines was impossible
Trading firms found a firm role in these industrialized nations
The Sogo Shosha functioned as Japan’s leading MNEs
Significant growth in areas like advertising agencies, accounting, hotels, fast food restaurants in the industrialized nations
Amar KJR Nayak/IB/XIMB
New Growth Phase, 1970 -
Germany, France and Japan re-emerged as major outward investors
Newly industrialized countries in Asia emerged as new sources multinational investment.
IB entered a new environment and a new growth phase
Regained the level of importance that of period before the 1920s
China and Eastern Europe also were open for FDI
India
Amar KJR Nayak/IB/XIMB
Key Features
Multinational investment overtook trade as the driving force
Air transportation, Utilities, Natural Resources – opened up for FDI
New forms of international borders: Regulations and control
Contracts and Joint Ventures: Means to control
Amar KJR Nayak/IB/XIMB
Sectoral distribution (%) of IB
Sector 1914 1978 1992
Natural Resources 55 22 11
Manufacturing 15 52 39
Service 30 26 50
Amar KJR Nayak/IB/XIMB
International Business
A striking mixture of continuities and discontinuities
Change has been the most key feature of IB
The Why, How and Impact of International Business
Why - The Driving Force:
Is there a single driving force?
Nineteenth century – need for raw materials and foodstuffs in the industrialized world.
Maturing markets in the industrialized countries
High transaction costs in many markets and the capital intensity
Firms want to Become Multinational corporation?
Amar KJR Nayak/IB/XIMB
Amar KJR Nayak/IB/XIMB
How it happenedImprovement in transport and communications
•Reduced the problem of co-ordination of business in different countries
•It reduced the time and cost of traversing space
Strong and dynamic organizational structure were critical
Protection of proprietary technology, and brands
Complexity of written contracts for intricate technologies
Modes of investment (joint venture, equity and non-equity) International cartels (as in the 1930s)
Amar KJR Nayak/IB/XIMB
The Impact
Major facilitators of trade flows
Transferred technologies and organizational skills across borders
Raised problems for local industries
Draining of profits out of a country
Risk of resource transfer from home economies to other economies
Significance to Managers:
Business in most industries have crossed the national boundaries
Have to fight for the global market share to remain competitive
Understanding International Business
Developing capabilities to operate in the international market
Amar KJR Nayak/IB/XIMB
Corporate Managers and Business Managers need to know the dynamics of IB
Amar KJR Nayak/IB/XIMB
International Business & IndiaNature & Scope Investment of foreign companies
in India (1901-2000)
1900-1920: British Dominated Growth
1920-1940: Indian companies assert, British co. enter mfg.
1940-1960: American & other European companies rush in
1960-1980: Controlled Growth, Committed survived
1980-2000: Gates opened, Flooding of FDI
Amar KJR Nayak/IB/XIMB