01 IntBiz.theories Session 1, 2 & 3

7/30/2019 01 IntBiz.theories Session 1, 2 & 3

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INTERNATIONAL BUSINESS

Prof Bharat Nadkarni


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Business Excellence

(Getting the Big Picture of business)

Prof Bharat Nadkarni


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International Business

From a very early age, we are taught to break apart problems,

to fragment the world. This apparently makes complex tasksand subjects more manageable, but we pay a hidden,

enormous price. We can no longer see the consequences of

our actions; we lose our intrinsic sense of connection to a

larger whole. When we then try to see the big picture, we try

to reassemble the fragments in our minds, to list and organize

all the pieces. But the task is futile similar to trying to

reassemble the fragments of a broken mirror to see a true

reflection. Thus, after a while we give up trying to see the

whole altogether.


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Who are the Stakeholders of Business ?

Shareholders and Promoters

Customers

Employees

Suppliers and Partners (incl Contractors, Agents etc)

Government

Society


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Most Admired Business

Balancing and Exceeding the Expectations of all its

Stakeholders.

Effectiveness of Business

Achievement of Objectives.

Efficiency in Business

Achievement of Results with the least amount of

Resources.

Innovation

N D B


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Emerging Waves

Factor Yesterday TodayMarket Sellers Buyers

Players Few Several

Kind of Players National Global

Price Level High Dropping

Consumer No choice Multiple ChoiceTechnology Low High

Quality Average High

Delivery Weeks/Months/Years Off the shelf

Needs Limited Enhanced

Response Sluggish QuickRelation Curt Respect

Approach Mass Personalised


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Thank You


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Scope : World is turning into a Global village.

SMOOTH

1. Source raw materials wherever they are cheapest.

2. Manufacture anywhere in the world where it is mostcost effective.

3. Obtain and Sell in those global markets whereprices are highest.

4. Organize and Raise finances globally.

5. Try and Forge international strategic alliances.6. Hire the best talent from all over the world. To

manage all the above points.

And you will have achieved the stature of a true Global

Organization


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Reference Books

International Business By Subba Rao

Francis Cherunilam

Sundaram and Black

Daniels & Radebough

Charles Hill & Jain

Roebuck & Simon


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1. Definition of IB, Domestic vs IntI business, Adv & Disadv

2. International trade theories3. Globalisation, Regional groups, Transnational economy.

4. Market entry strategies

5. International Trade Institutions, Policies

6. International finance & Foreign Direct Investments

7. International issues, G 20 issues, MFN status, Intellectual property

rights, purchase power parity etc

8. Ethical business, CSR, Millineum goals, HR policies etc

9. Logistics, Information technology, cultural and social issues,

Generalised topics etc10.Case studies


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International Trade Policy

Laissez-faire approach (Free trade)

Vs Interventionist approach

Independence, Dependence and Interdependence

Theories

Mercantilism (ex Colonial rule)

Absolute advantage and Comparative advantage (ex

India tea, US- wheat) Theory of Country size (ex India, China, Brazil)

The Product Life Cycle Theory

Factor Proportions Theory (ex India, Hong kong,

Singapore, Dubai)


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International business can be defined as activities that buysand sells goods and services across two or more national

boundaries, even if the management is located in a one

country. It includes any type of business activity that crosses

national borders. International business is related with

those enterprises which have operating units outside their

own country. There are institutional arrangements who

provide some managerial direction of economic activity

taking place abroad.

Conducting international business is really not like playing a

whole new ball game but it is like playing in a different ball

park, where the managers have to learn the factors unique to


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the playing field. The guiding principles of a firm engaged in

international business activities should incorporate a globalperspective. Incorporating an international outlook into the

firms basic statement will help focus the attention of

management on the opportunities outside the domestic

economy.


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Difference between Domestic and International business

1. Higher rate of profits (Absolute advantages, taxes,

concessions and incentives)2. Expansion of production capacities

3. Competition (pull & push effects)

4. Wide market

5. Political stability

6. Technology

7. High cost of transportation


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Growing importance of International Business

Current trends are towards the increasing globalisation

and interdependence of firms, markets and countries. Intense competition at global level

Exchange rate developments shift fromve to +ve

growth

Global capital flows to LDCs

Differences in Price and Cost

Restructuring the economy to integrate with global

economy

Increased importance of CSR

The growing importance on enhancing standard of living

in LDCs


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Liberal trade policies and procedures

Revolution in communication and transportation


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International Business Corporate Approaches

1. Ethnocentric

2. Polycentric

3. Regiocentric

4. Geocentric

I t ti l B i


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SAARC (7):

South Asian Association for Regional Cooperation

India, Pakistan, Sri Lanka, Nepal, Bhutan, Bangladesh,Maldives

NAFTA (3) : North American Free Trade Agreement

USA, Canada, Mexico

LAFTA (9) : Latin American Free Trade Area

Argentina, Brazil, Mexico, Chile, Peru, Uruguay, Paraguay,Columbia, Ecuador

ASEAN (5) : The Association of South East Asian Nationswas formed by the Bangkok Declaration, 1967, by fivecountries, viz., Indonesia, Malaysia, Philippines, Singapore

and Thailand.


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EU (15) : European Union

Austria, Belgium, Britain, Denmark, Finland, France,Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,Portugal, Spain, Sweden.

Euro : Common currency of the EU was launched by 11members on 1.1.1999, Britain, Denmark, Sweden didnt join. Greece joinedin 1.1.2001

Maastricht Treaty of 1991 set the stage for the monetoryunion.

EU Additions

With effect from May 1, 2004 the total membership of EUincreased to 25. Following ten countries were inducted.

Estonia, Latvia, Lithuania, Poland, Czech Republic, Hungary,Slovenia, Slovakia, Cyprus and Malta.

Two more members, Bulgaria and Romania, were inducted in2007, taking the tally to 27 countries.


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International Business Environment

1. Internal Environment

Org. Structure ( I P O )

Production

Marketing

Finance

H R

R & D

I T

Business Development


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International Business Environment

2. External Environment

a. External Micro Environment

All Stakeholders and Competitors

b. External Macro Environment

S T E P I N

(Social, Technical, Economical, Political, International,

and Natural)


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Thank you


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The Millennium Development Goals

as defined by UN

Eradicate extreme poverty and hunger

Achieve universal primary education

Promote gender equality and empower women

Reduce child mortality

Improve maternal health

Combat HIV/AIDS, malaria and other diseases

Ensure environmental sustainabilityDevelop a global partnership for development

Stop Child Labour

Documents

01 IntBiz.theories Session 1, 2 & 3