Appasaba.L.VSYLLABUS The nature of international
entrepreneurshipImportance of international business to the firm,
International versus domestic
entrepreneurshipStagesofeconomicdevelopment,Entrepreneurship entry
into international business,
Exporting,Directforeigninvestment,barriersto international
trade.MEANING Internationalentrepreneurshipistheprocessofan
entrepreneurconductingbusinessactivityacross
thenationalboundaries.Itmayconsistof
exporting,licensing,openingsalesofficeinanother country
etc.Internationalentrepreneurshipisdefinedas development o
international ne! ventures or start ups that from their inception
engage in international business,thusviewingtheiroperationdomainas
internationalfromtheinitialstagesofinternational operations.
IM"#$%AN&E #' IN%E$NA%I#NAL EN%$E"$ENEU$S(I" International
entrepreneurship is beneficial as if sales of company is declining
in domestic market, they can sell
productsininternationalmarketconsideringdemand or product in other
country market customers.
Entrepreneurcanselltheirproductsinforeignmarket
whichhavereachedthematuritystageoftheirlife cycle in domestic
markets and earn profit by their sales.
Entrepreneurcanimprovetheirentrepreneurial competitiveness and
enhance reputation. Entrepreneur in process of satisfying foreign
customers have to produce product as per their uality expectation
bywhichentrepreneurwillnotonlyproduce)uality
productininternationalmarketbutalsoinnational
mar*et.Internationali!ation of business will teach entrepreneurs
howtocultivatehabitofcustomerrelation management ( CRM ) "eing
global will make the entrepreneur sensitive towards
theircustomersdomestic,adoptmorerespectfulattitude towards foreign
habits and customers. Entrepreneurs can hire motivated, multi
lingual employees, learn constantly about the foreign markets. They
will think globallyandstartdevelopinganoutlookfromaglobal
prospective. IM"#$%AN&E #' IN%E$NA%I#NAL EN%$E"$ENEU$S(I" %#
'I$M Increasedsalesandproit+#hentheentrepreneursare
notabletoearnprofitordemandfortheirproduct
decreasesinlocalmarkettheycanselltheirproductsin foreign market
where life cycle of product is in favourable condition.
Lo!ermanuacturingcost+Ifthecompany manufacturing cost increases by
manufacturingproduct in
homecountry,thancompanycanoptinforproduction processinhost
country,on the contrary ifthe company is
innoprofitornolosssituationthancompanycanchoose in any option.
Advantageocheaplabour$%uantityandualityoflabouris
oneofthema&orchallengeforeverybusiness,ifthelabouris
cheapinforeigncountriesthancompanycanoutsourcereuired labour if
organi!ation is into foreign operations.
Utili,ationotalentandmanagerialcompetence$#hen
businessarenotabletogetreuiredtalentedworkforcein country, they can
get the activity outsourced or hire host country employee which has
given birth to concept of expatriation.
Gro!thopportunity$Entrepreneurswhosecorebusiness strategy is
expansion and diversification of business, international
businessisoneoftheprimaryplatformtoachievethese
ob&ectives.E-pansionodomesticmar*et$Internationalbusiness
causesdomesticmarkettoexpandbeyondnational
boundaries.#henthedomesticmarkethasbeefullytapped than company can
go in for expansion of business to market their products in
international market. Globali,ation o customers $ It refers to when
customers in countrypreferpurchasingforeignbrandproductsthan
domesticcompanieshave to go in for internationali!ation of
businesstokeepinpacewithcompetitiontoattract
customers.Tatainternationalegintooperatein
internationalmarketafterentryofforeigncompetitorsin !ndian market
like ford. Globali,ationo&ompetitors$Internationalbusiness
increasestheopportunitynotonlyforthesurvivalandgrowth
butalsomotivatescompaniestofacecompetitionfromglobal
entrantsinmarket,"hichinturnleadstogro"thofmarket, pursuing gloal
scale efficiencies
etc."ayosointernationalbusiness$Internationalbusiness
improvesimageofthecompanyindomesticmarketand
attractsmorecustomersindomesticmarketdueto internationali!ation of
business. E.g $anba-y /I''E$EN&E BE%0EEN IN%E$NA%I#NAL AN/
/#MES%I&
EN%$E"$ENEU$S(I"Economicsystem$#henanentrepreneurisoperatingin
nationallevelheisrequiredtounderstandeconomic conditions with in
country, but at international level he should e having information
aout economic system of countries he
runningbusinesswhichincludescurrencyrate,phaseof business cycle
etc.Stageoeconomicdevelopment+#henentrepreneuris
operatingatdomesticlevelheshouldfocusondevelopment state of
domestic country, on the contrary when he is operating
oninternationalscalehehastoviewcountryfromdeveloped,
developingandunderdevelopedperspectiveandaccordingly plan in
business strategies in economy.&ultural Sensitivity+
Entrepreneur operating at national level
shouldunderstandculturalissuespersistinginhomecountry
andatinternationallevelhehastounderstandandmanage
culturaldiversityofcustomersaswellasemployeesin company.
%echnologicalEnvironment+Eventhoughtechnologyis
advancedatlargerscale,stilltherearetechnological
variationspersistinginvariouscountriesdependingontime of
implementation, updation of technology etc which has to be
analy!edbyentrepreneurandaccordinglyplaninbusiness operations.
Government"olicy$Entrepreneurgoinginfor internationali!ation of
business have to study domestic as "ell as international policy, as
restriction laid in home country for export
ofgoodsaffecttradeofentrepreneurandrestrictioninhost country on
entering of new entrepreneurs in their
company."oliticalandlegalenvironment$#oliticsandla"splaya
criticalroleininternationalusinessas"ellasdomestic
usiness.Entrepreneurshouldbeawareaboutpoliticalandlegal environment
in the domestic as well as international market. S%AGES #'
EN#MI& /E1EL#"MEN%
2.%$A/I%I#NALS#&IE%Y$Everyeconomybeginswith
traditionalsocietywhichischaracterisedwithlowpercapita income and
low degree of technical know how 'eatures
+'ountryismoreorlessdependentoagriculturefor development in
country.(eopleincountrybelievemoreinfamilyandcastesystem
whichleadstoproblemoflackofmobilityoflabourwhich hinders employee
growth in country.
(oliticalpowerinsocietyremainsconcentratedwithdominant social
groups in society. Science and technology develop at very slow
phase in economy.3. "$E N/I%I#NS #' %A4E #'' $ in this stage of
economy conditionsarecreatedconductiveofgrowth.Inthisstage
entrepreneursstartthinkingintermsofmoderni!ation,capital formation,
and profit oriented ventures. )eatures*ess dependence on
agriculture(eoplestartgivingimportancetonationalandinternational
developments then merely confining them to social
issues.(artofgovernmentrevenueisimpartedtowardsinfrastructure
development in country.Decline in birth rate'iti!ens of country
give more importance on developing personal skills in order to face
competition in country. )ocus towards foreign trade
5.%A4E#''S%AGE$inthisstageeconomyisnomore
dependentonothercountriesandisselfsustaininginthis
stage.Economycanprogresswithoutanyexternalsupport from other
countries. 'eatures
Developmentofvarioussectorslikeprimary,secondaryand tertiary sector
takes place in the country. Social framework improves as citi!ens
than being bonded with
familyfocusonmovingtoplacesforcareergrowthand
development.(oliticalstabilityincountryindirectlyleadstogrowthin
industrialsectorincountrycreatingfavourableconditionfor trade in
country. +einvestment of profitIncrease in demand for products by
consumers in market. Technical development 6. SEL' SUS%AINE/ S%AGE
$ this stage can be defined as stage in which an economy
demonstrates the capacity to move beyond
theoriginalindustrieswhichprovidesthetakeoffandtoapply efficiency
over its worldwide range of resources.'eatures +ise in the rate of
investment in the
country'onditionsofemploymentimproveandreducesdependencyon
agriculture.,oderntechniuesareusedduringtheprocessofproductionin
country.-ewpoliticalaswellassocialinstitutionareestablishedin
country.Dependency on other countries are considerably reduced.7.
S%AGE #' EN#MI& A''LUEN&E $ in this stage there is
considerable increase in production andincome. 'onsumption of
comforts and luxuries become a common feature.'eatures
,orepower$countryinthisstagestartsspendingmoreon military
forces.#elfare state $ standard of living in country increases as
result of development of facilities in
country.Increaseinconsumption$consumptionlevelincreasesinthis stage
as consumers other then daily consumption products prefers
purchasing durable products.EN%$E"$ENEU$IAL EN%$Y IN%# NE0
BUSINESSE-porting + ,eans selling goods made in one country
toanothercountry.Exportingnormallyinvolvesthe
saleandshippingofproductsmanufacturedinone country to the customer
located in another country.
/irecte-porting+Implieswherecompanytakesfull
responsibilityformakingitsgoodsavailableinthe
targetmarketbysellingdirectlytoendusersnormally through its own
agents. Indirect e-porting $ when the exporting company does not
posses thenecessaryinfrastructuretoinvolveitselfindirectexporting,
indirectexportingtakesplace.Ittakesplacewhentheexport
companysellsitstointermediarieswhointurnsellthesame products to the
end users in foreign
markets.Licensing+involvesanentrepreneurwhoisamanufacturer
.license/givingaforeignmanufacturer.licensor/therightto use patent,
trade mark, technology, production process, or product in return
for the payment of loyalty. %urn *ey pro8ects $ Turnkey refers to
something that is ready for immediate use, generally used in the
sale or supply of goods or services.It is a contract under
whichafirmagreestofullydesign,constructand
euipamanufacturing0business0servicefacilityand turn the pro&ect
over to the purchaser when it is ready for operation for a
remuneration.Managementcontract isanarrangementunderwhich
operationalcontrolofan enterprise isvestedbycontractin
aseparateenterprisewhichperformsthenecessary
managerialfunctionsinreturnforafee.,anagement
contractsinvolvenot&ustsellingamethodofdoingthings .aswith
franchising or licensing/butalsodoingthem.1
managementcontractinvolvesawiderangeoffunctions,
suchastechnicaloperationofaproductionfacility,
managementofpersonnel,accounting,marketingservices and
training.'oreigndirectinvestment .'/I/isdirectinvestmentinto one
country by a company in production located in another
countryeitherbybuyingacompanyinthecountryorby expanding operations
of an existing business in the countryMinority interest +a company
having interest or ownership of less then23percentin anothercompany
is knownasminorityinterest0 1significantbutnon4controllingownership
oflessthan235of a company6s voting shares by either an investor or
another company.
Ma8orityinterest+ma&orityinterestisanownershipinterest greater
than fifty percent .235/ of the voting interest in a business
enterprise.7ointventure .78/isabusinessagreementinwhichpartiesagree
todevelop,forafinitetime,anewentityandnew assets by contributing
euity.Theyexercisecontroloverthe enterprise and
conseuentlysharerevenues,expensesandassets.1&ointventure takes
place when two parties come together to take on one pro&ect. In
a &oint venture, both parties are eually invested in the
pro&ect in terms of money, time, and effort to build on the
original
concept.Mergers$Thecombiningoftwoormorecompanies,generallyby
offeringthestockholdersofonecompanysecuritiesintheacuiring
companyinexchangeforthesurrenderoftheirstock0Mergersand
ac)uisitions referstotheaspectofcorporatestrategy,corporate finance
and management dealing with the buying, selling, dividing and
combiningofdifferent companies andsimilar entities thatcanhelpan
enterprise grow rapidly in its sector.
(ori,ontalmerger$9ori!ontalmergeroccurswhenafirmisbeing
takenoverby,ormergedwith,anotherfirmwhichisinthesame industry and
in the same stage of production as the merged firm, e.g. a car
manufacturer merging with another car manufacturer 0 1 hori!ontal
merger is when two companies competing in the same market merge or
&oin together. E.: amalgamation of Daimler4"en! and
'hrysler1erticalmerger$isthecombinationoftwoormore
firmsinsuccessivestagesofproductionthatoften
involvebuyerandsellerrelationship.Thisformof merger stabili!e
supply and production and offer more
controlofthesecriticalareas..mergerbetween,c Donald6s and (hilips
petroleum / "roducte-tension$mergeroccurswhenacuiring
andacuiredcompanyhaverelatedproductionor
distributionactivitiesbutdonothaveproductsthat
competedirectlywitheachother..mergerbetween
westernpublishing.children6sbooks/and,attel . toy company / .
"roduct e-tension merger is a combination of two firms producing
the same product but selling them in
differentgeographicmarket.,a&oradvantageof these mergers is
that firms can economically combine its management skills,
production and marketing with acuiredfirms..Theacuisitionof,obilink
TelecomInc.by"roadcomisaexampleofproduct
extensionmerger/.."roadcomdealsinthe
manufacturing"luetoothpersonalareanetwork
hardwaresystemsandchipsforIEEE;3
