i b vs domestic
TRANSCRIPT
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INTERNATIONALINTERNATIONAL
BUSINESSBUSINESS
Vs.Vs.
DOMESTIC BUSINESSDOMESTIC BUSINESS
Presented By:-
Prashant Pandia
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International Business (IB) is all about commercialtransactions-private and governmental-between two or more
countries. These transactions include sales, investments, and
transportation.
Why to study IB?
Continuously increasing portion of international
trade and investments
Wider impact of global events and competition
Globalization is a process of interaction and integrationamong the people, companies, and governments of different
nations, a process driven by international trade and investment
and aided by information technology. This process has effects onthe environment, on culture, on political systems, on economic
development.
IT IS EXTENSION OF DOMESTIC BUSINESS
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Why Companies Engage in IB
To expand sales:A countrys market size always have a limit and
reduction ofAFC (average fixed cost) require increased production volume
To acquire resources: Natural resources and locations, products,
services, components, technologies, information from another country can
not be usable without IBTo minimize risk: Taking the advantage of business cycle situations-
recessions to expansions-in different countries
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Reasons for recent international growth
Expansion of technology
Liberalization of cross-border movements
Development of institutions that support
and facilitate international trade
Consumer pressures
Increase in global competition
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General Influences
Physical and Social
Factors
Political policies and legal
practices
Cultural factors
Economic factors
Geographical Influences
Competitive Environments
Major advantages in price,
marketing, innovation, orother factors
Number and comparative
capabilities of competitors
Competitive differences by
country
Operations
Objectives
Sales Expansion
Resource acquisition
Risk minimization
Strategy
ModesModes
Importing and Exporting
Tourism and
transportation
Licensing and
Franchising
Turnkey operations
Management contracts
Direct and portfolioinvestment
FunctionsFunctions
Marketing
Global
manufacturing
and supply-chain
management
Accounting
Finance
Human resources
OverlayingOverlaying
AlternativesAlternatives
Choice of
countries
Organization
and control
mechanisms
MeansMeans
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Terms to Describe International Companies
Multinational Enterprise (MNE) and Multinational
Corporation (MNC) are used synonymously to express their
international involvement, all the internationally involved
companies are not organized as corporations. Thus MNE is more
preferred term.
Another interchangeable term Transnational Company (TNC),
mostly used by UN, can be explained as, an organization in
which capabilities and contributions are may differ by country
but are developed and integrated into its worldwide operations
Companies international operations can be globally
integrated or multidomestic/ locally responsive.
International operations through joint venture, licensing
agreements, management contracts, minority ownership in
each others company, long term contractual agreements are
been followed by MNEs as collaborative arrangements, in
addition to wholly owned subsidiaries.
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PPolitical and Societal Factorsolitical and Societal Factors
Political policies and legal practices: Decisions related to
IB are taken by politicians. Domestic and international lawsare shaping up the dos and donts for businesses.
Cultural factors: Culture explains peoples social and
mental development, behavior and interpersonal activities.
Economic forces:
Economics explains the need forexchanging goods & services, economic opportunity and
capital flow, changes in currency value, cost of production
etc.
Geographical influences: Geographical attributes affect
on communication and distribution channels. Probability ofnatural disasters and reserves of minerals have international
considerations for trade and investment.
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TThe Usual Pattern of Internationalizationhe Usual Pattern of Internationalization
Domestic
business
Low
Medium
HighActive search
foropportunities
Passive
response to
proposals
Degree of
similarity
Number of foreigncountries to operate
Mode of
operations
Internal Vs
external
handling of
foreign
operations
AB
C
D
E
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