Dr. H.

Rajeshwari

MEANING AND DEFINITION

INTERNATIONAL TRADE Vs INTERNATIONAL
BUSINESS

Similarities

CUSTOMER SATISFACTION IS THE PRIME GOAL

CREATION OF GOODWILL

RESEARCH & DESIGN

MARKETING MIX
• SOVEREIGN POLITICAL ENTITIES
– TARIFF
– QUANTITATIVE RESTRICTION
– EXCHANGE CONTROL
• DIFFERENT LEGAL SYSTEM
• DIFFERENT MONITORY SYSTEM
• LOWER MOBILITY OF FACTOR PRODUCTION
• DIFFERENCE IN MARKET CHARACTERISTICS
• DIFFERENCE IN PROCEDURE AND
DOCUMENTATION

ESTABLISHING A BRANCH

JV AND COLLABORATION

LICENSING ARRANGEMENT

CONSULTANCY

TECHNICAL AND MANAGERIAL KNOW HOW
• TO MEET IMPORT
• DEBT SERVICING
• ECONOMIC GROWTH
• PROFITABLE USE OF NATURAL RESOURCES
• FACING COMPETITION
• INCREASED PROFIT
• EMPLOYMENT OPPORTUNITIES
• INCREASED STANDARD OF LIVING
• INCREASE IN GNP
• INSUFFICIENT DOMESTIC DEMAND
• FULL UTILIZATION OF CAPACITY
• LEGAL RESTRICTION
• SOCIAL RESPONSIBILITY
• COUNTRY IMAGE

Ethnocentric

Polycentric

Regiocentric

Geocentric

Trade Mode
 Counter Trade
 Barter
 Buy Back
 Compensation Deal
 Counter purchase

Contractual Entre Mode
 Licensing
 Franchising
 Contract Manufacturing
 Management contract
 Turnkey Projects
 JV
 Wholly owned manufacturing
 Strategic alliance

Investment Mode
 Portfolio investment
 FDI
 Mergers and Acquisitions

Meaning and definition

Features

Stages

Pre requisites

Market entry strategy

Impact of globalization on economy

Factors favouring globalization

Not avouring globalization

Exporting:
 Indirect: working through independent
international marketing intermediaries.
 Direct: company handles its own exports.

Joint Venturing:
 Joining with foreign companies to produce or market
products or services.

Approaches:
 Licensing
 Contract manufacturing
 Management contracting
 Joint ownership
International business presents a more complex task than
domestic business because of the uncontrollable international
business environment and their heterogeneity. Hence, though
the basic marketing decisions to be made are similar in
international and domestic marketing, making international
business decision is generally more challenging.
In international business, a company has to make, broadly
five strategic decisions
.

International business decision: The first decision
a company has to make, is whether to take up
international marketing or not. This decision is
based on a serious consideration of a number of
important factors, such as the present and
future overseas opportunities, present and
future domestic market opportunities, the
resources of the company in terms of skills,
experience, production and marketing
capabilities and finance, company objectives etc.

2. Market Selection Decision: Once it has been decided
to do international marketing, the next important step
is the selection of the most appropriate market. For
this purpose, a thorough study of potentials of the
various overseas markets and their respective marketing
environment is essential. Company resources and
objectives may not permit a company to do business in
all the overseas markets. Further, some markets are not
potentially good, and it may be suicidal to waste
company resources in such markets. A proper selection
of the overseas markets therefore is very important.
.

3.Entry and Operating Decisions: Once the
market selection decision has been made,
the next important task is to determine the
appropriate mode of entering the foreign
market such as export, contract
manufacturing, direct manufacturing plant
etc. on the basis of this decision, proper
arrangements must be made to continue the
activities of marketing.

Direct Investment
 It is the most profitable and risk way of doing business