md. ashrafur rashid 1 email: [email protected]

Md. Ashrafur Rashid www.studyandjobs24.com 1

Email: [email protected]


Q. What is I. Entrepreneurship?

• IE is the process of an entrepreneur conducting business activities across national boundaries. It may consist of exporting, licensing, opening a sales office in another country.

• The activities necessary for ascertaining and satisfying the needs and wants of target consumers often take place in more than one country . When an entrepreneur executes his or her business in more than one country, international entrepreneurship is occurring.


Q. Importance of IB to the firm?

• International business has become increasingly important to firms of all sizes not only for the largest firms. Every firm is now competing in a hypercompetitive global economy.

• There can be little doubt that today’s entrepreneur must be able to move in the world of international business. The successful entrepreneur will be someone who fully understands how international business differs from purely domestic business and is able to respond accordingly.

Cont

• To expand sales

• To acquire resources

• To minimize risk

• To maximize profit

• Scarcity of resources


Q. An entrepreneur entering the international market should be able to answer the following question;

1. Is managing international business different from managing domestic business?

2. What are the strategic issues to be resolved in international business management?

3. What are the options available for engaging in international business?

4. How should one assess the decision to enter into an international market?

Cont:


Q. International VS Domestic entrepreneurship?

• Although international and domestic entrepreneurs alike are concerned with sales, costs, and profits what differentiates domestic from international entrepreneurship is the variation in the relative importance of the factors involved in each decision.

1. International activities2. Boundaries3. Country involvement4. Currency5. Authority and responsibility6. International rules-regulations7. International pressure group Cont:


Q. International entrepreneurial decisions are more complex due to such uncontrollable factors as

1. Economics

2. Politics

3. Culture and

4. Technology.

Cont:


Factors are : ECONOMICS..

1.ECONOMICS: Creating a business strategy for a multi country area means dealing with differences in the following areas: levels of economic development; currency valuations; government regulations and banking, economic , marketing and distribution systems.

•1.A Stages of economic development

Fundamental structures as roads, electricity, communication systems, banking facilities and systems, adequate educational systems, a well developed legal system, and established business ethics and norms. These factors Vary from country to country.

•1.B Balance of payments (currency valuations)

With the present system of flexible exchange rates a country’s balance of payments (the difference between the value of a country’s imports and exports over time) affects the valuation of its currency

Cont:


2. Political-Legal environment

• The multiplicity of political and legal environments in the international market creates vastly different business problems opening some market opportunities for entrepreneurs and eliminating others.


3. Cultural environment

• The impact of culture on entrepreneurs and strategies is also significant. Entrepreneurs must make sure that each element in the business plan has some degree of congruence with the local culture.

• For an example : In some countries point of purchase displays are not allowed in retail stores as they are in the united states.

Cont:


4. Technological environment.

• Technology like culture, varies significantly across countries. The variations and availability of technology are often surprising, particularly to an entrepreneur from a developed country like the united states.

• For an example: New products in a country are created based on the conditions and infrastructure operant in that country US car designers can assume wider roads and less expensive gasoline than European designers.


Q. Strategic issues of an entrepreneur thinking about going international .

For strategic issues are of paramount importance to the international entrepreneur or an entrepreneur thinking about going international:

1. The allocation of responsibility and foreign operations

2. The nature of the planning , reporting and control systems to be used throughout the international operations

3. The appropriate organizational structure for conducting international operations

4. The degree of standardization possibleCont


Q. Entrepreneurial entry (Modes) into international business?

• There are various ways an entrepreneur can become a player in international business and market products internationally. The method of entry into a market and the mode of operating overseas are dependent on the goals of the entrepreneur and the company’s strengths and weaknesses.

• The modes of entering or engaging in internationals business can be divided into three categories,

• 1. Exporting

• 2. Nonequity arrangements

• 3. Direct foreign investment.Cont:


Exporting:

• As a general rule an entrepreneur starts doing international business through exporting normally involves the sale and shipping of products manufactured in one country to a customer located in another country. There are two general classifications of exporting

• 1. Indirect exporting: Selling goods to another country through a person in the entrepreneur’s home country.

• 2. Direct exporting: Selling goods to another country through a person in the entrepreneur’s home country.

Cont:


2. Non equity Arrangements

• Doing international business through an arrangement that does not involve any investment.

• When market and financial conditions warrant the change an entrepreneur can enter into international business by one of three types of non equity arrangements

1. Licensing

2. Turn-Key projects

3. Management contracts

Cont:


1. Licensing

• Licensing involves an entrepreneur who is a manufacturer (Licensee) giving a foreign manufacturer (Licensor) the right to use a patent, trademark, technology, production process or product in return for the payment of a royalty.


2. Turnkey projects

• Developing and operationalizing something in a foreign country,. The undeveloped or lesser developed countries of the world have recognized their need for manufacturing technology and infrastructure and yet do not want to turn over substantial portions of their economy to foreign ownership.


3. Management contracts

• A method for doing a specific international task. The management contract allows the purchasing country to gain foreign expertise without giving ownership of its resources to a foreigner.

• Several entrepreneurs have successfully entered international business by contracting their management techniques and managerial skills. These contracts sometimes follow a turn key project where the foreign owner wants to use the management of the turn key supplier.


4. Direct foreign investment

• The wholly owned foreign subsidiary has been the preferred mode of ownership for entrepreneurs using a direct foreign investment for doing business in international markets.

• Joint ventures and minority and majority equity positions are also methods for making direct foreign investments.. The percentage of ownership obtained in the foreign venture by the entrepreneur is related to nationality the amount of overseas experience, the nature of the industry, and the rules of the host government. Cont:


5. Minority interests

• Having less than 50 percent ownership position. A minority interest can provide3 a firm with a source of raw materials or a relatively captive market for is products.


6. Joint venture

• Two companies forming a third company.


7. Majority interest

• Having more than 50 percent ownership position. The majority interest allows the entrepreneur to obtain managerial control while maintaining the acquired firm’s local identity.


8. 100 Percent ownership

• An entrepreneur using 100 percent ownership to engage in international business ensure complete control.

• Horizontal merger• Vertical merger• Product extension• Market extension• Diversified activity.


Q. Barriers of I Trade?

• There are varying attitudes throughout the world concerning free trade. Generally, a positive attitude started around 1947 with the development of general trade agreements and the reduction of tariffs and other trade barriers.

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The Barriers are

• General Agreement on Tariffs and Trade (GATT).

• Increasing Protectionist Attitudes.

• Trade Blocs and Free Trade Areas.

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md. ashrafur rashid 1 email: [email protected]

Documents

international market

international entrepreneurship

domestic business

business activities

business strategy

different business problems

established business

todays entrepreneur