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7/31/2019 International Business Environment(1)
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International BusinessEnvironment
An Overview
Presented By:
Jatin Vaid
7/31/2019 International Business Environment(1)
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International Business
IB is all commercial transactions – privateand governmental, between two or morecountries.
These transactions include sales,investments and transportation.
The conditions within a Co.’s external
environment affect the way businessfunctions.
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OPERATIONS
OBJECTIVES
SALES EXPANSION
RESOURCE ACQUISITION
RISK MINIMIZATION
STRATEGY
EXTERNAL
INFLUENCES
1. PHYSICAL AND
SOCIETAL FACTORS
POL & LEGAL
POLICIES CULTURAL
FACTORS
ECONOMIC
FORCES
GEOGRAPHICAL
INFLUENCES
2. COMPETITIVE
ENVIRONMENT
ADVANTAGE IN
PRICE,
MARKETING NO. AND
COMPARATIVE
CAPABILITIES OF
COMPTITORS.
COMPETITIVE
DIFFERENCES BY
COUNTRY
MEANS
MODES FUNCTIONS OVERLAYING
ALTERNATIVES
IMPORT/EXPORT MARKETING CHOICE OF
COUNTRIES
TOURISM &TRANSPORTATION
GLOBALMFG
ORG & CTRLMECHANISMS
LICENCING FINANCE
MGT CONTRACTS
DIRECT &
PORTFOLIO
INVESTMENT
HR
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Objectives to engage inInternational Business
1. To expand sales
2. To acquire resources
3. To minimize risk
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1. To expand sales
Higher sales mean higher profits.
The Co.’s may increase the potential market
for their sales by pursuing internationalmarkets.
Increased sales – a major motive for Co.’s.
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2. To acquire resources
To reduce costs, manufacturers seek outproducts, services & components producedabroad.
They also seek foreign capital, technology &information.
Helps Co.’s to improve its product quality and
differentiate itself, thus inc market share andprofits.
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Reasons for recent internationalgrowth
1. Rapid increase in and expansion oftechnology.
2. Liberalization of Govt. policies on crossborder movement of trade & resources.
3. Dev. Of instt. That support & facilitateinternational trade.
4. Increased global competition.
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Modes of InternationalBusiness
1. Merchandise Exports and Imports.
2. Service Exports and Imports.
a) Tourism & Transportation
b) Performance of services
c) Use of assets (TM, patents, ©)
3. Investments
a) Direct investment (gives investor ctrl int)b) Portfolio investment (non-ctrlng int in co – stocks)
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1. Merchandise Exports & Imports
ME are tangible prdts – goods- send out of acountry.
MI are goods brought in to a country.
Called visible exports & imports.
Country’s most common international
economic transactions.
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2. Service Exports & Imports
Generate non-prdt internt’l earnings. Co. or individual receiving payment is making a service export & the
one paying is making a service import.Forms:1) Tourism & Transportation:
- airlines, shipping co., travel agencies & hotels.- Foreign tourism2) Performance of services:
- banking, insurance, rentals, engg., management : earnings in form offee.
- Management contracts – fee for spl contracts.
3) Use of assets : -co. allows others to use assets like TM, patents,under contracts called licensing agrmt rec royalities
- Franchising.
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3. Investments
1) Direct:
- gives investor controlling int. in a foreign co.
- FDI
2) Portfolio:
- non controlling int. in a co. or loans to a co.
- Co. use them for short term financial gain.
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External influences on IB
1. Understanding a Co.’s Physical & Societal
environments.
a) Political policies and legal practice.
b) Cultural factors.
c) Economic forcesd) Geographical influences.
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2. The competitive environment
a) Major advantage in price, marketing,
innovation, etc.b) Number of comparative capabilities of
competitors.
c) Competitive differences by country.
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USUAL PATTERN OFINTERNATIONALIZATION
HIGH
MEDIUM
LOW
DOMESTIC BUSINESS
A
B
CD
E
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