001- globalisationl- notes.ppt
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INTRODUCTION TO
INTERNATIONAL BUSINESS
UNIT - 1
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Learning Objectives:
Meaning of International Business
Importance of International Business
Problems in IB Need for IB
Theories of IB
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It cover--------
Export and Import of goods and Services
InvestmentsFDI, FII
Human resources IPR- Intellectual Property Rights-
Licensing, Franchising.
Manufacturing Commercial Borrowings
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IB is the whole gamut of business
activities that crosses national
borders:
IB can effect people in many broad wayssuch as,
People's economic well being,
Political status Skill level or knowledge
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Definition:
IB is a field of study and practice that
encompasses public and private business
activity affecting the persons or institutions
of more than one national state, territory orcolony
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Problems or Challenges in
International Business:
Language, law, customs and regulations
Country information may be difficult toobtain
Foreign Exchange transactions
Cultural differences
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Broader range of managerial skills
required
Need to take help from intermediaries
Monitoring trends in foreign market may
be difficult.
Control & communication systems Market risks
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Why Firms engage in IB ?
To expand sales/ marketPLC
To acquire resources
To diversify sources of sales and supplies
To minimise competitive risk
Rapid increase in and expansion of technology
Development of the institutions needed to
support and facilitate international trade Increased global competition
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What is globalization?
The shift towards a more integrated and
interdependent world economy
Two components: The globalization of markets
The globalization of production
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Globalization of markets
The merging of distinctly separate national
markets into a global marketplace
Tastes and preferences converge onto a global
norm
Firms offer standardized products worldwide
creating a world market
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Globalization of markets
Significant differences still exist between
national markets on many relevant dimensions
These differences require that marketing and
operating strategies and product features be
customized to best match conditions in a
country.
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Globalization of markets
Countries are different
Range of problems are wider and more
complex Government intervention in trade and
investment creates problems
International investment is impacted bydifferent currencies
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Globalization of production
Refers to sourcing of goods and services fromlocations around the world to take advantage
of Differences in cost or quality of the factors of
production
Labor
LandCapital
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Emergence of global institutions
Globalization has created the need forinstitutions to help manage, regulate and
police the global marketplace GATT
WTO
IMF World bank
United Nations
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Global drivers
Macro factors that underlie trend towards
greater globalization
Decline in trade barriers
Technological change
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WORLD TRADE ORGANISATION
Successor to GATT in 1995
GATT established in 1947
Headquartered in Geneva.
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IMFs objectives :
Promote exchange rate stability
Maintain orderly exchange arrangements
Avoid competitive currency devaluations Establish multilateral system of payments
Eliminate exchange restrictions
Create standby resources
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UNITED NATIONS CONFERENCE
ON TRADE AND DEVELOPMENT
Formed in 1964 as a permanent body
attached to UNO
To bridge the gap between developing and
developed nations.
Conferences held once in 4 years.
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Functions of UNCTAD
Promote international trade
Speed up economic development of
developing nations
Negotiate multilateral trade agreements.
Co-ordinate the activities of other
insitutions.
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Declining barriers to trade
Globalization of markets and production has
been facilitated by
Reduction in trade barriers
Removal of restrictions to foreign direct
investment
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Globalization debate-Pro
Lower prices for goods and services
Economic growth stimulation
Increase in consumer income
Creates jobs
Countries specialize in production of goodsand services that are produced most efficiently
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Globalization debate-Con
Destroys manufacturing jobs in wealthy,
advanced countries
Wage rates of unskilled workers in advancedcountries declines
Companies move to countries with fewer
labor and environment regulations Loss of sovereignty
Th d i f l b li ti
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The drivers of globalisationMarket drivers
Per capita income converging among industrialisednations
Convergence of lifestyles and tastes
Organisations beginning to behave as global customers
Increasing travel creating global consumers
Growth of global and regional channels
Establishment of world brands
Push to develop global advertising
Cost drivers
Continuing push for economies of scale
Accelerating technological innovation
Advances in transportationEmergence of newly industrialised countries with
productive capability and low labour costs.
Increasing cost of product development relative tomarket life
Government driversReduction of tariff barriers
Reduction of non-tariff barriers
Creation of blocs
Decline in role of governments as producers andcustomers
Privatisation in previously state-dominated economiesShift to open market economies from closed communist
systems in eastern Europe
Increasing participation of China and India in the globaleconomy
Competitive driversContinuing increases in the level of world trade
Increased ownership of corporations by foreignacquirors
Rise of new competitors intent upon becoming globalcompetitors
Growth of global networks making countriesinterdependent in particular industries
More companies becoming globally centred rather thannationally centred
Increased formation of global strategic alliances
Other drivers
Revolution in information and communication
Globalisation of financial markets
Improvements in business travel
Th d i f l b li ti
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Market drivers
Per capita income converging among industrialisednations
Convergence of lifestyles and tastes
Organisations beginning to behave as global customers
Increasing travel creating global consumers
Growth of global and regional channels
Establishment of world brands
Push to develop global advertising
Cost drivers
Continuing push for economies of scale
Accelerating technological innovation
Advances in transportationEmergence of newly industrialised countries with
productive capability and low labour costs.
Increasing cost of product development relative tomarket life
Government driversReduction of tariff barriers
Reduction of non-tariff barriers
Creation of blocs
Decline in role of governments as producers andcustomers
Privatisation in previously state-dominated economiesShift to open market economies from closed communist
systems in eastern Europe
Increasing participation of China and India in the globaleconomy
Competitive driversContinuing increases in the level of world trade
Increased ownership of corporations by foreignacquirors
Rise of new competitors intent upon becoming globalcompetitors
Growth of global networks making countriesinterdependent in particular industries
More companies becoming globally centred rather thannationally centred
Increased formation of global strategic alliances
Other drivers
Revolution in information and communication
Globalisation of financial markets
Improvements in business travel
The drivers of globalisation
The dri ers of globalisation
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Market drivers
Per capita income converging among industrialisednations
Convergence of lifestyles and tastes
Organisations beginning to behave as global customers
Increasing travel creating global consumers
Growth of global and regional channels
Establishment of world brands
Push to develop global advertising
Cost drivers
Continuing push for economies of scale
Accelerating technological innovation
Advances in transportationEmergence of newly industrialised countries with
productive capability and low labour costs.
Increasing cost of product development relative tomarket life
Government driversReduction of tariff barriers
Reduction of non-tariff barriers
Creation of blocs
Decline in role of governments as producers andcustomers
Privatisation in previously state-dominated economiesShift to open market economies from closed communist
systems in eastern Europe
Increasing participation of China and India in the globaleconomy
Competitive driversContinuing increases in the level of world trade
Increased ownership of corporations by foreignacquirors
Rise of new competitors intent upon becoming globalcompetitors
Growth of global networks making countriesinterdependent in particular industries
More companies becoming globally centred rather thannationally centred
Increased formation of global strategic alliances
Other drivers
Revolution in information and communication
Globalisation of financial markets
Improvements in business travel
The drivers of globalisation
The drivers of globalisation
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Market drivers
Per capita income converging among industrialisednations
Convergence of lifestyles and tastes
Organisations beginning to behave as global customers
Increasing travel creating global consumers
Growth of global and regional channels
Establishment of world brands
Push to develop global advertising
Cost drivers
Continuing push for economies of scale
Accelerating technological innovation
Advances in transportationEmergence of newly industrialised countries with
productive capability and low labour costs.
Increasing cost of product development relative tomarket life
Government driversReduction of tariff barriers
Reduction of non-tariff barriers
Creation of blocs
Decline in role of governments as producers andcustomers
Privatisation in previously state-dominated economiesShift to open market economies from closed communist
systems in eastern Europe
Increasing participation of China and India in the globaleconomy
Competitive driversContinuing increases in the level of world trade
Increased ownership of corporations by foreignacquirors
Rise of new competitors intent upon becoming globalcompetitors
Growth of global networks making countriesinterdependent in particular industries
More companies becoming globally centred rather thannationally centred
Increased formation of global strategic alliances
Other drivers
Revolution in information and communication
Globalisation of financial markets
Improvements in business travel
The drivers of globalisation
The drivers of globalisation
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Market drivers
Per capita income converging among industrialisednations
Convergence of lifestyles and tastes
Organisations beginning to behave as global customers
Increasing travel creating global consumers
Growth of global and regional channels
Establishment of world brands
Push to develop global advertising
Cost drivers
Continuing push for economies of scale
Accelerating technological innovation
Advances in transportationEmergence of newly industrialised countries with
productive capability and low labour costs.
Increasing cost of product development relative tomarket life
Government driversReduction of tariff barriers
Reduction of non-tariff barriers
Creation of blocs
Decline in role of governments as producers andcustomers
Privatisation in previously state-dominated economiesShift to open market economies from closed communist
systems in eastern Europe
Increasing participation of China and India in the globaleconomy
Competitive driversContinuing increases in the level of world trade
Increased ownership of corporations by foreignacquirors
Rise of new competitors intent upon becoming globalcompetitors
Growth of global networks making countriesinterdependent in particular industries
More companies becoming globally centred rather thannationally centred
Increased formation of global strategic alliances
Other drivers
Revolution in information and communication
Globalisation of financial markets
Improvements in business travel
The drivers of globalisation
The drivers of globalisation
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Market drivers
Per capita income converging among industrialisednations
Convergence of lifestyles and tastes
Organisations beginning to behave as global customers
Increasing travel creating global consumers
Growth of global and regional channels
Establishment of world brands
Push to develop global advertising
Cost drivers
Continuing push for economies of scale
Accelerating technological innovation
Advances in transportationEmergence of newly industrialised countries with
productive capability and low labour costs.
Increasing cost of product development relative tomarket life
Government driversReduction of tariff barriers
Reduction of non-tariff barriers
Creation of blocs
Decline in role of governments as producers andcustomers
Privatisation in previously state-dominated economiesShift to open market economies from closed communist
systems in eastern Europe
Increasing participation of China and India in the globaleconomy
Competitive driversContinuing increases in the level of world trade
Increased ownership of corporations by foreignacquirors
Rise of new competitors intent upon becoming globalcompetitors
Growth of global networks making countriesinterdependent in particular industries
More companies becoming globally centred rather thannationally centred
Increased formation of global strategic alliances
Other drivers
Revolution in information and communication
Globalisation of financial markets
Improvements in business travel
The drivers of globalisation
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