importance,evolution,need,scope of ib

8/13/2019 Importance,Evolution,Need,Scope of IB

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IMPORTANCE-EVOLUTION-ROUTES-WORLD

IN GENERAL

INTERNATIONAL BUSINESS MANAGEMENT UNIT 1


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INTERNATIONAL BUSINESS- AN OVERVIEW

International Business is all businesstransactions that involve two or morecountries.

International Business comprises a large andgrowing portion of the worlds total business.

International Business usually takes placewithin a more diverse external environment.


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3

NEED FOR INTERN TION L BUSINESS

causes the flow of ideas, services, andcapital across the worldoffers consumers new choicespermits the acquisition of a wider

variety of productsfacilitates the mobility of labour,capital, and technologyprovides challenging employment

opportunitiesreallocates resources, makespreferential choices, and shiftsactivities to a global level


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SCOPE OF INTERN TION L BUSINESS

M N GEMENT

How will an idea, good, or service fitinto the international market?Should trade or investment be used toenter a foreign market?Should supplies be obtaineddomestically or abroad?What product adjustments arenecessary to be responsive to localconditions?What are the threats from globalcompetitors, and how can these threats

be counteracted?


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WHY COMPANIES ENGAGE IN INTERNATIONAL BUSINESS

Commercial risk spread across severalcountriesExperience curve effect ( more often a task isperformed the lower will be the cost of doing it ).Economics of scope ( suitable combination of productline and mix )Preempt competitionEnhancing profit zone


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UNDERSTANDING THE GLOBAL CONTEXT OF

BUSINESS

World as a major market place- whats hot Import-export balances - How does thisaffect business?Exchange rates - How does this affectbusiness?International Business

DemandAdaptation


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Types of international barriers - How toproceed with the following barriers

Social, Culture, Legal, Political, Economic

How important is comparative advantagewhen competing internationally?

What are the primary differences betweendomestic and international business?

UNDESTANDING THE GLOBAL CONTEXTOF BUSINESS


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REASONS FOR RECENT INTERNATIONALBUSINESS GROWTH

Expansion of Technology:transportation, telecommunications;Transportation and telecommunications costs are moreconducive for international operations.

Liberalization of Cross-Border Movements:goods, services, labour, Capital

Development of Supporting Institutional Arrangements:development by business and governments of institutionsthat enable us to effectively apply that technology.

Increase in Global Competition:new products become global; Globalization of production


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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

D - Investments:

1) Foreign Direct Investment: gives the investor a controllingInterest in a foreign company. It gives access to:

- foreign markets- foreign resources- higher profits than exporting- partial ownership


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MODES OF INTERNATIONAL BUSINESS - contd

2) Portfolio Investment: stock in a company or loans to acompany or country in the form of bonds, bills, or notesthat the investor purchases.

E - Other Operational Definitions- Strategic Alliances

F Multinational Corporations, Multinational enterprises,Transnational Companies, Global Company, Multi-

domestic Company


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EXTERNAL INFLUENCES ONINTERNATIONAL BUSINESS

Understanding a Companys Physicaland Societal Environment Managers

need a working knowledge of businessoperations, a working Knowledge ofpolitical sciences, law, anthropology,sociology, economics, and geography.


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EVOLUTION AND GROWTH OF INTERNATIONAL

BUSINESS

Global capitalism (free market economy)has been pushed by

Technology The failures of socialism East Asias success Economic freedom is on the rise Formation of international economic unionCommunism has collapsed


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CHALLENGES IN INTERNATIONAL OPERATIONS

Deal with foreign languages, foreign laws andregulations, customs etcSourcing of special informationHandle Foreign currency, metrics andtransactionsCoping up with Cultural differencesMonitoring Controls and communication

systemsLevels of risks- higher and volatileBroader bandwidth of management practices

Observe and adjust to international trends


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02/06/09

BIG EMERGING MARKETS

Asia - ASEAN, CEA, India, SouthKorea.Latin America - Mexico, Argentina,Brazil.

Africa - South Africa.Europe - Poland, Turkey

importance,evolution,need,scope of ib

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