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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
7/14/2010 4Private & Confidential
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International BusinessInternational BusinessInternational BusinessInternational Business
---- 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
7/14/2010 5Private & Confidential
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Why StudyWhy StudyWhy StudyWhy Study
International BusinessInternational BusinessInternational BusinessInternational Business
KAY FACTORS
Finance
Human Resources
Technologies
Materials
7/14/2010 6Private & Confidential
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
7/14/2010 7Private & Confidential
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Domestic Business v/sDomestic Business v/sDomestic Business v/sDomestic Business v/s
International BusinessInternational BusinessInternational BusinessInternational Business
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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Domestic Business v/sDomestic Business v/sDomestic Business v/sDomestic Business v/s
International BusinessInternational BusinessInternational BusinessInternational Business
Dimension Domestic Business International Business
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
7/14/2010 9Private & Confidential
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Domestic Business v/sDomestic Business v/sDomestic Business v/sDomestic Business v/s
International BusinessInternational BusinessInternational BusinessInternational Business
Dimension Domestic Business International Business
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).
7/14/2010 10Private & Confidential
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Domestic Business v/sDomestic Business v/sDomestic Business v/sDomestic Business v/s
International BusinessInternational BusinessInternational BusinessInternational Business
Dimension Domestic Business International Business
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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Domestic Business v/sDomestic Business v/sDomestic Business v/sDomestic Business v/s
International BusinessInternational BusinessInternational BusinessInternational Business
Dimension Domestic Business International Business
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
International BusinessInternational BusinessInternational BusinessInternational Business
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
International BusinessInternational BusinessInternational BusinessInternational Business
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
International BusinessInternational BusinessInternational BusinessInternational Business
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
7/14/2010 15Private & Confidential
Knitting the World into aclosely Interactive Traditional
Village
Division of Labor &
Specialization
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Problems ofProblems ofProblems ofProblems of
International BusinessInternational BusinessInternational BusinessInternational Business
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.
7/14/2010 16Private & Confidential
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- Prof.Abhishek