introduction to international_business
Post on 20-May-2015
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Introduction to International
Business
Ms Kavita ShettyFaculty
DYPDBM
JUST PONDER OVER THIS !!!
There is a shortage of radiologists in the United States and demand for their services is growing twice as fast as the rate of graduation. What should be done?
Solution to the Problem: Send images over the Internet to be interpreted by radiologists in India
Outsourcing health care is not only limited to radiology; we are beginning to see patients travel internationally for treatments as well as surgery
In 2004 some 170,000 foreigners visited India for medical treatments; the number is expected to grow at 15% for the next several years
Question: Will demand for American health services soon collapse as work moves offshore to places like India?
THE FACT OF THE MATTER IS ….
THE ANSWER IS OBVIOUSLY NO BUT IT JUST MAKES ONE START THINKING ABOUT
THE I IMPLICATIONS OF SUCH EVENTS?
It only means that Economies across the world are getting more and more dependent on each
other. And this dependence is for the better for each
one will do things that they can do better.
This of course will have commercial implications and give rise to INTERNATIONAL BUSINESS in a
Globalized Market
What is Globalization?
The shift towards a more integrated and interdependent world economy
Two components:* The globalization of markets* The globalization of production
This is when International Business starts
Globalization of Markets
The merging of distinctly separate
national markets into a global marketplace implies:
Falling barriers to cross-border trade
Tastes and preferences converge onto a global norm
For Example; Every country today knows and relished Chicken Tandoori or Chinese Food for that matter.
Firms offer standardized products worldwide creating a world market
Globalization of Markets
Difficulties that arise from the globalization of markets
Significant differences still exist among national marketsFor Example: Differences in the purchases of Urban and Rural population
Country - specific marketing strategiesFor Example: Freebies may work in one market not necessarily in other markets
Varied product mix For Example: McDonald’s menu for American Market is very different from the one in India
What is International Business?
• International Business is all business transactions that involve two or more countries.
• International Business comprises a large and growing portion of the world’s total business.
• International Business usually takes place within a more diverse external environment.
• To Expand Sales• Acquire Resources• Diversify Sources of Sales and Supplies• Minimize Competitive Risk• Profit Advantage• Growth opportunities• Government policies and regulations
Why Companies Engage in International Business?
• Expansion of Technology, transportation, telecommunications
• Liberalization of Cross-Border Movements of Goods, Services, Labour, Capital
• Development of Supporting Institutional Arrangements For Example: World Bank, IMF
• Increase in Global Competition through Globalization of production
Reasons for Recent International Business Growth
Modes of International Business
A - Merchandise Exports and Imports: visibles
and invisibles
B - Performance of Services: fees; turnkey
operations; management Contracts
C - Use of Assets: licensing agreements; royalties; franchising
Contd….
D - Investments: Foreign Direct Investment: gives the investor acontrolling Interest in a foreign company. It gives access to: - foreign markets- foreign resources- higher profits than exporting- partial ownershipPortfolio Investment: stock in a company or loans to a company or country in the form of bonds, bills, or notes that the investor purchases.
E - Other Operational Definitions - Strategic Alliances
F – MNCs, MNEs, TNCs, Global Company, Multidomestic
CompanyExternal Influences on International BusinessUnderstanding a Company’s Physical and
Societal needs, Environment Managers need, knowledge
of business operations, Knowledge of political
sciences, law, anthropoly, sociology, economics, and
geography.
The Globalization Debate
Pro FactorsLower prices for goods
and servicesEconomic growth
stimulationIncrease in consumer
incomeCreates jobsCountries specialize in
production of goods and services that are produced most efficiently
Con FactorsDestroys
manufacturing jobs in wealthy, advanced countries
Wage rates of unskilled workers in advanced countries declines
Companies move to countries with fewer labor and environment regulations
Loss of sovereignty
Managing International Business
Managing an international business is different from managing a purely domestic business in four areas:
Countries are different
Range of problems confronted by a manager in an international business are wider and more complex
An international business has to work within the limits imposed by government
International transactions involve converting money into different currencies
The Emergence of Global Institutions
Globalization has created the need for institutions to help manage, regulate and police the global Marketplace:
GATTWTOIMFWorld bankUnited Nations
YOUR ????????????
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THANK YOU
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