International Business

Session 1 & 2
a)- Defining Business in international
context
b)- India’s position in global business

B.S.Pani
Ravenshaw Business School
MBA-II : Octo-2009
 Defining Business
• Business is for making money – creating
wealth for the investor in the venture.
• Wealth is the sum total of additional
assets created from the utilized assets.
• An ‘Asset’ is one whose worth can be
“monetanised” or assessed and
expressed in monetary terms.
• In short – Business means “Making
Money”.
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 What good Business is supposed
to do!
• Generate Revenue in excess of the cost of
money at levels higher than other alternate
businesses.
• Generate revenue to fund operations fully
accommodating, inflation, escalation and
currency fluctuation.
• Add to the surplus or reserves to be able to take
care of growth.
• Create wealth for the stake holders / investors in
excess of what other investments would offer to
them.

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 Easiest way of making money !
• Choose the business in which you have a
unique strength- core competency.
• Operate from a location that is best techno-
commercially viable.
• Cover a region or area of operation which is well
within your capability (capacity + ability) and
span of control.
• Operate within a system that facilitates both
entry and exit.

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 So- what does business do ?
• It manufactures / produces / creates.
• It delivers.
• It services.
• It makes more consumers turn into customers
and more customers into buyers – holds them to
his/her product/service and brand – and –
makes them buy – more and more often.

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 Features of domestic business
• Known terrain- geography, climate, language,
currency, laws, resources, systems etc.
• Know people – their attributes, likings,
preferences, behavior, responses etc.
• Preferences and privileges under the law of the
land.
• Know the local monetary system- banking,
taxes, duties etc.

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 Features of business when you go away
from home grounds !
• Uncertainties appear
• Risks multiply
• Operations become more expensive
• Both entry and exit becomes more difficult.
• Consumer trust drops
• Credit gets restricted
• Legal system treats you as an alien
• Management systems may need expensive
overhaul
• Likely to face higher risks of failure.
………………… etc. etc.
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 So- why go sell away from
home ?
• Create wealth in home country
• Create jobs
• Improve the life quality of its citizen
• Use available resources
• Use available skill
• Take advantage of opportunities
• Create order of political. Social and economic dominance.

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 India’s history of global
business venture !
• The definition of world has been changing in terms
of reach and distances.
• India as a country has been evolving since over
3000 years of recorded human history.
• We information of greatness but no records-
knowledge lost over time.
• Over 3000 years of recorded period of slavery.
• What could we sell other than agro products since
we hardly invented anything !

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 What has India been selling ?
• What have been selling to the world since 1940s
- Manpower
- Iron ore , mica and other non-value added raw material
- Agro products like spices and dyes etc.
- Since 1990s – IT services
• What we have not been able to do:
- Establish an India brand
- Produce and sell value added products in both consumer
and industrial sectors.
- Create a trade surplus

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 India’s rank in Business
Competitiveness in the world
• INDIA RANKS A DISMAL 49TH POSITION IN GLOBAL
COMPETIVENESS REPORT among 133 countries surveyed:
SWITZERLAND TOPPLES U.S.A. TO GRAB TOP POST

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 Factors supporting global
competitiveness
• The index is based on 12 parameters that it claims
provides a comprehensive picture of the competitive
landscape among countries of the world, despite their
different stages of development.

These include public institutions, infrastructure,

macroeconomic stability, health and education
outreach, the sophistication of financial markets and
labour markets and innovation.
• The sum of all these parameters is assumed to set the
sustainable current and medium-term levels of economic
prosperity.
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 Where is India heading to in
2020 ?
• Population could exceed 120 million and cross
China.
• Per capita income and domestic disposable
income could grow by same amount in next 10
years as it happened in last 50 years.
• Domestic market pull would still anchor
aggressive venturing into global markets.
• Lack of technology ownership would continue to
position India below global technology powers in
business competitiveness.
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