INTERNATIONAL BUSINESS

Atif Ghayas

INTRODUCTION TO

CONTENTS

• Introduction to International Business

• Nature & Scope & Feature of International Business

• Importance of International Business

• Approaches of International Business

• Problems in International Business

• Entry Strategy

• Advantages & Disadvantages of International Business

• Reasons for recent International Business Growth

• International organisations

• The exchange of Goods & Services, Resources, Knowledge, & Skills, among individuals & businesses in two or more countries.

• Transaction that are carried out across national borders to satisfy the objectives of individuals and organization

• All Commercial transactions that take place between two or more countries.

1. Private & Government

2. Sales

3. Investments

4. Logistics

5. Transportation

What is International Business ?

• Accurate Information & timely

• The size of the international business

• Market segmentation

• International markets have more potential than domestic markets

Nature

• International Marketing

• International Finance and Investments

• Foreign Exchange

• Global HR

Scope

• Large scale operations 

• Integration of economies 

• Dominated by developed countries and MNCs 

• Benefits to participating countries 

• Keen competition 

• Special role of science and technology 

• International restrictions

Features

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

Importance

Ethnocentric

Polycentric

Regiocentric

Geocentric

Approaches of IB

Ethnocentric approach

• Under this approach, target market is own country , Excessive production will export due to change in customer taste, preferences

IB Approaches

Polycentric approach

• Under this approach, the companies customizes the marketing mix to meet the taste, performance and needs of the customers of each international market.

IB Approaches

Regiocentric approach

• Under this approach, the company operating successfully in a foreign country thinks of exporting other neighboring countries of the host country.

• At this stage, the concerned subsidiary considers the regional environment ( such as laws, culture, policies etc.) for formulating the policies & strategies.

IB Approaches

Geocentric approach

• Under this approach, the company analyses the tastes, preference and needs of the customers in all foreign markets and then adopts a standardized marketing mix for all the foreign markets.

IB Approaches

• Political factors

• High foreign investments and high cost

• Exchange instability

• Entry requirements

• Tariffs, quota etc.

• Corruption and bureaucracy

• Technological policy

• Quality Management

Problems

Entry Strategy

• Indirect & Direct

1. Exporting

• Agreement• Patent, trademark, copy right, technology, production

processes, and product• licensee’s fee

2. Licensing

• by franchisers to franchisee• Usage

3. Franchising

Entry Strategy

• Subsidiary• local assembly

4. Foreign Assembly

• Staff of an operating facility • foreign buyer

5. Turnkey Operation

• Establishment• Purpose

6. Foreign production subsidiary

Entry Strategy

• Significant portion• In foreign countries

7. International Firm

• Parent country• host country

8. Multinational Corporation

• Property rights

9. Joint Venture

Entry Strategy

• Arrangement in which a firm buys or establishes tangible assets

• In another country• Through direct investment• By buying a company stock in capital markets

10. Foreign Direct Investment

• Faster growth

• Access to cheaper inputs

• Increased quality and efficiency

• New market opportunities

• Diversification

Advantages

• Increased costs

• Foreign regulations and standards

• Delays in payments

• Complex organizational structure

Disadvantages

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

• Lower Governmental barriers to the movement of goods, services, and resources enable Companies to take better advantage of international opportunities

Reason for recent growth in IB

Reason for recent growth in IB

• An international organization formed to reduce or eliminate tariff and other barrier to international trade

General agreement on Tariff and trade (GATT)

• An international financial organization that lend money to countries in conducting international trade

International Monetary Fund (IMF)

Reason for recent growth in IB

• An international financial organization that lend money to underdeveloped and developing countries for development

World Bank

• World Trade Organization (WTO)• European Community (EC)• North American Free Trade Agreement (NAFTA)• Asian Free Trade Agreement (AFTA)

Economic Communities

Thank You!