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INTERNATIONAL BUSINESS MANAGEMENT UNIT 1

IMPORTANCE-EVOLUTION-ROUTES-WORLD IN GENERAL

INTERNATIONAL BUSINESS- AN OVERVIEW

International Business is all transactions that involve two countries.

business or more

International Business comprises a large and growing portion of the worlds total business. International Business usually takes place within a more diverse external environment.

NEED FOR INTERNATIONAL BUSINESS


causes the flow of ideas, services, and capital across the world offers consumers new choices permits the acquisition of a wider variety of products facilitates the mobility of labour, capital, and technology provides challenging employment opportunities reallocates resources, makes preferential choices, and shifts activities to a global level
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SCOPE OF INTERNATIONAL BUSINESS MANAGEMENT How will an idea, good, or service fit
into the international market? Should trade or investment be used to enter a foreign market? Should supplies be obtained domestically or abroad? What product adjustments are necessary to be responsive to local conditions? What are the threats from global competitors, and how can these threats be counteracted?
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WHY COMPANIES ENGAGE IN INTERNATIONAL BUSINESS

Commercial risk spread across several countries Experience curve effect (more often a task is performed the lower will be the cost of doing it). Economics of scope (suitable combination of product line and mix) Preempt competition Enhancing profit zone

UNDERSTANDING THE GLOBAL CONTEXT OF BUSINESS


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

Demand Adaptation

UNDESTANDING THE GLOBAL CONTEXT OF BUSINESS

Types of international barriers - How to proceed with the following barriers


Social,

Culture, Legal, Political, Economic

How important is comparative advantage when competing internationally? What are the primary differences between domestic and international business?

REASONS FOR RECENT INTERNATIONAL BUSINESS GROWTH


Expansion of Technology: transportation, telecommunications; Transportation and telecommunications costs are more conducive for international operations. Liberalization of Cross-Border Movements: goods, services, labour, Capital Development of Supporting Institutional Arrangements: development by business and governments of institutions that enable us to effectively apply that technology. Increase in Global Competition: new products become global; Globalization of production

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 controlling Interest in a foreign company. It gives access to:
- foreign markets - foreign resources - higher profits than exporting - partial ownership

MODES OF INTERNATIONAL BUSINESS - contd


2) Portfolio 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 Multinational Corporations, Multinational enterprises, Transnational Companies, Global Company, Multidomestic Company

EXTERNAL INFLUENCES ON INTERNATIONAL BUSINESS Understanding a Companys Physical and Societal Environment Managers need a working knowledge of business operations, a working Knowledge of political sciences, law, anthropology, sociology, economics, and geography.

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 union Communism has collapsed

CHALLENGES IN INTERNATIONAL OPERATIONS


Deal with foreign languages, foreign laws and regulations, customs etc Sourcing of special information Handle Foreign currency, metrics and transactions Coping up with Cultural differences Monitoring Controls and communication systems Levels of risks- higher and volatile Broader bandwidth of management practices Observe and adjust to international trends

02/06/09

BIG EMERGING MARKETS


Asia

- ASEAN, CEA, India, South Korea. Latin America - Mexico, Argentina, Brazil. Africa - South Africa. Europe - Poland, Turkey

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