Lecture 3

FACTORS EFFECTING INTERNATIONAL BUSINESS

Environment of international business

INTERNAL ENVIRONMENT

EXTERNAL ENVIRONMENT

INTERNATIONAL BUSINESS

INTERNATIONAL BUSINESS

INTERNAL ENVIRONMENT

Promoters /Shareholders ValueMissions /objectivesPhysical assets/facilities

Co. image/brand equityHuman resourcesFinancial capabilitiesTechnological capabilitiesMarketing capabilities

EXTERNAL ENVIRONMENT

ECONOMIC

LEGAL/GOVT.

CULTUREPOLITICAL

INTERNAL FACTORS

• VALUE SYSTEM• MISSIONS AND OBJECTIVES• MANAGEMENT STRUCTURE• HUMAN RESOURCES• COMPANY IMAGE AND BRAND EQUITY• PHYSICAL ASSETS AND FACILITIES• R&D AND TECHNOLOGIAL

CAPABILITIES• FINANCIAL FACTORS

Value system • A value system refers to how an

individual or a group of individuals organize their ethical or ideological values. A well-defined value system is a moral code.

• A personal value system is held by and applied to one individual only.

• A communal value system is held by and applied to a community/group/society. Some communal value systems can take the form of legal codes or law.

Corporate value systems

• Fred Wenstøp and Arild Myrmel have proposed a structure for corporate value systems that consists of three value categories:

• The first value category is Core Values, which prescribe

the attitude and character of an organization, and are often found in sections on Code of conduct on its web page.

• Protected Values are protected through rules, standards and certifications. They are often concerned with areas such as health, environment and safety.

• Created Values, is the values that stakeholders, including the shareholders expect in return for their contributions to the firm. These values are subject to trade-off by decision-makers or bargaining processes.

Core values of Tata group

• Five core valuesThe Tata Group has always sought to be a value-driven organisation. These values continue to direct the Group's growth and businesses. The five core Tata values underpinning the way we do business are:

• Integrity: We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny.

• Understanding: We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve.

• Excellence: We must constantly strive to achieve the highest possible standards in our day-to-day work and in the quality of the goods and services we provide.

• Unity: We must work cohesively with our colleagues across the Group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.

• Responsibility: We must continue to be responsible, sensitive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.

Wipro • In the 1970’s Wipro defined a core of values and which its

success is built:• HUMAN VALUES (concerning employees and customers)

• Wipro won’t go into businesses that harm people (like tobacco and liquor)

• There should be no shouting at each other .• THE LACK OF HIERARCHY

• There are no designed parking spaces, so whoever comes first gets the best parking space .

• No one is called “Sir” by someone else .• The chairman stands as a model all employees, it means

“do what I do” instead of “do what I say” • INNOVATIONS

– Wipro always tries to improve their products and to develop new products and better solutions

• VALUE FOR MONEY – i.e. good quality of every product and service

MISSIONS AND OBJECTIVES

• Common Operating Objectives of Organizations

» Profitability » Market share » High-quality workforce » Cost efficiency » Product and service quality » Innovativeness » Social responsibility

Infosys Mission • Infosys International Inc. is dedicated

to providing the people, services and solutions our clients need to meet their information technology challenges and business goals .To do this, we:

• Work to understand the needs and requirements of our clients before proposing a solution

  • Develop responsive proposals that

provide cost-effective solutions to our clients needs

  • Deploy the right mix of people and

products to deliver value-added services and solutions to our clients

  • Follow-up on the quality of our

services and solutions to our clients  • Appreciate the trust that our clients put

in us as we work with them to improve their business and information technology.

• The process of identifying and attracting a qualified pool of applicants for vacant positions.

– Current Employees

– Recent College Graduates

– Local Managerial Talent

• Process of screening and hiring the best-qualified applicants with the greatest performance potential.

Human Resources

Ethnocen

tric

Polycentric

Geocen

tric

Staffing PolicyThe customary means by which a company

staffs its offices.

International Staffing Policy

Regiocentric

COMPANY IMAGE AND BRAND EQUITY

• COMPANY IMAGE MATTERS WHILE-1)RAISING FINANCE

2)FORMING JOINT VENTURES/ALLIANCES

3)LAUNCHING NEW PRODUCT

TATAS GLOBAL FOOTPRINT

ACQURING COMPANY

ACQUIRED COMPANY

DEAL SIZE

TATA STEEL CORUS $12.1 bn

TATA TEA TETLEY $407 mn

TATA MOTORS

DAEWOO COM.VECI.

$102 mn

TATA CHEMICALS

BRUNNER MOND

$177 mn

SOURCE-Business World,14,JAN,2008

Tata NANO

Building Global Brands