IB_Session_I_IBSAR_Abhi

8/7/2019 IB_Session_I_IBSAR_Abhi

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- Prof.Abhishek

InternationalInternationalInternationalInternational

BusinessBusinessBusinessBusiness


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Marks DistributionMarks DistributionMarks DistributionMarks Distribution

Break-up of Internal Assessment

Attendance/ClassParticipation

Case StudyAnalysis

Projects Total

10 20 10 40

Break-up of University Question Paper Pattern-(3 hrs)

Total Questions &

Marks

Questions to be

answered

Marks

7 @ 10 Marks each 4 @ 10 Marks each 401 Case Study @ 20

Marks (Compulsory)

Case Study

Compulsory

20

Total 60

7/14/2010 2Private & Confidential


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Chapter I:Chapter I:Chapter I:Chapter I:

Introduction to IBIntroduction to IBIntroduction to IBIntroduction to IB

Objective, Scope, Importance & Current Trends

Domestic Business v/s International Business

Modes of Entry & Operation



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International BusinessInternational BusinessInternational BusinessInternational Business

---- Meaning & ScopeMeaning & ScopeMeaning & ScopeMeaning & Scope

Any commercial transaction taking place across the boundary lines

of a sovereign entity

Either between countries, companies or both

Private companies gets involved in IB for revenue, profit and

prosperity

Governments are involved in these transactions to maintain theirimage, dependency and economic growth

Transactions include investment, physical movement of goods and

services and transfer of technology and manufacturing

The slogan Export or Perish has been changed into

Internationalize or Perish



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---- Meaning & ScopeMeaning & ScopeMeaning & ScopeMeaning & Scope

The future success of a company will depend on its operations in

many other countries through investment, manufacturing and

marketing Not solely on revenues generated indigenously

The success of a Nation will depend on businessmen operating

successfully in other countries and establishing their credentials

there In the 1950s and 1960s, companies from the United States build

business operations throughout the world and brought pride to

their Nation

In the 1970s and 1980s, Japanese Electronics & Automobilecompanies revolutionized the way world functions



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Why StudyWhy StudyWhy StudyWhy Study


KAY FACTORS

Finance

Human Resources

Technologies

Materials


Overseas OperationsCOMPANY

Country of Origin


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Current TrendsCurrent TrendsCurrent TrendsCurrent Trends

(Reform Process)(Reform Process)(Reform Process)(Reform Process)

Almost all countries are reforming their economy through

Liberalization, Privatization & Globalization

Many South-East Asian Nations, China, South Korea and a few Latin

American Countries were quick to introduce Reforms Process

India too, injected new vigor into its economy and industry by

introducing an open-door policy, eliminating licenses, replacingforeign restrictions by other models and liberalizing procedures in

general

Through the reforms process, manufacturers in India are required

to increase the production capacity and divert products to variousdestinations



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Domestic Business v/sDomestic Business v/sDomestic Business v/sDomestic Business v/s


Dimension Domestic Business International Business

Environment PEST environments are known PEST environments are not fullyknown. Innumerable hidden

factors may pose problems

Plan & Strategy Can be worked out for short-term and carried forward to the

long-term

Only long-term strategy willwork. Strategic inputs are

required in multiples

Competitive

Forces & TheirIntensity

The maximum domestic

competitive forces operate andone can understand their

movements as they are visible

International competitive

forces play a vital role and it isdifficult to understand their

motives and movement



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Currencies &

their

Movements

Local currency is used for

transactions. Volatility may

have a minimum impact on

business in the short term

Transactions are carried out in various

currencies. Fluctuations is the cross-

currency movement and associated

risks are common.

BusinessRisks

Comparatively, one canpredict future risks and

shocks. This wont have

major impact on strong

businesses

Very difficult to predict and risks maycrop up at any time due to political

situations, the society itself as well as

several other unknown factors

Research Reasonable, easy to conduct

& Reliable

Very expensive, difficult to conduct.

Reliability depends on individual

countries and there is no uniformity in

the output and findings



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Human

Resources

Due to past laurels and

established systems,

organizations can succeed even

if the Human Resources have

the minimum skills & Knowledge

Multilingual, multi-strategic and

multi-cultural human resources

which should be able to withstand

larger risks. Every individual is a Profit

Centre and hence, Accountable

Organizational

Vision &

Objective

Narrowed down to work in a

single country with a steady

growth objective

Broadened to cover many countries.

Geographic & cultural diversity may

influence the vision and objectives

Product &Usage Adapted to the localenvironment acc. To Domestic

customers affordability, beliefs,

values, cultural elements &

Buying Behavior

Varies from country to country,subject to regulations (esp. true for

consumer and medicinal items).



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Legal Aspects Only local regulations are

applicable. Minimum

adherence to International

rules related to IPR

International and the host

country regulations are

applicable

Sourcing business, one can start with aminimum investment.

Individual ability and

repayment terms determine

the funds

Export, calls for huge investment.Special regulatory bodies are

involved since foreign currency is

transacted

Pricing Strategy Majority of companies use

cost-plus margin pricing or

competitive pricing

Companies may use marginal

cost pricing, transfer pricing or

competitive pricing to succeed



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Distribution

Channels

The business house can use its

discretion to select any

channel to reach the customer.

No restriction exists here

Govt. or Market practice governs the

distribution channel. Cash and carry,

shopping malls & mail-order services

are becoming popular in IB

Promotion Advertising, Personal sellingand other promotional

methods are not restricted

through a strict legal

framework (if they are not

socially objectionable)

Different countries have differentrestrictions. Ex. Advertisements for

liquor & cigarettes are not permitted in

some countries and campaigns using

Female models are banned in some

countries

Logistics Domestic players are involved

in all activities. The cost of

logistics is very high locally

International players with advanced

technology & systems are involved. The

cost is proportionately low



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Reasons forReasons forReasons forReasons for


I. From an Individual Companys Point of View

i. Managing the Product Life Cycleii. Geographic Expansion as a Growth Strategy

iii. The Adventurous Spirit of the Younger Generation

.

v. Technological Advantage

vi. Building a Corporate Image

vii. Incentives & Business Impact

viii. Labor Advantage

ix. New Business Opportunities

x. Emergence of SEZs, Agrizones & Technology Parks etc.



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Reasons forReasons forReasons forReasons for


II. From the Governments Point of View

i. Earning Valuable Foreign Exchangeii. Interdependency of Nations

iii. Trade Theories & Their Impact

.

v. Core Competency of Nations

vi. Investment for Infrastructure

vii. National Image

viii. Foreign Trade Policies & Targets

ix. National Targets

x. WTO & International Agencies



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Advantages ofAdvantages ofAdvantages ofAdvantages of


High Living Standard

Increased Socio-Economic Welfare Wider Market

Reduced Effects of Business Cycles

Economic Growth of the

World

Optimum & Proper Utilization

of World Resources

Cultural Transformation

Large-scale Economies

Potential Untapped Markets

Provides the Opportunity for &

Challenge to Domestic Business


Knitting the World into aclosely Interactive Traditional

Village

Division of Labor &

Specialization


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Problems ofProblems ofProblems ofProblems of


Political Factors

Huge Foreign Indebtness Exchange Instability

Entry Requirements

,

Corruption

Bureaucratic Practices of Government

Technological Pirating

Quality Maintenance

High Cost

Borderless Global Economy Enlarges International Business.



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- Prof.Abhishek

IB_Session_I_IBSAR_Abhi

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