Introduction

Module - 1
 Meaning

• IB implies the conduct of

business activities beyond the
national boundaries
• Wide term comprising of all
the commercial transactions
taking place between two
countries

2
 International Trade

• It refers to exports and imports

of goods and services by a firm
to a foreign-based buyer
(importer) or from a seller
(exporter)

3
International Marketing

• It focuses on the firm-level

marketing practices across the
border, including market
identification and targeting,
entry mode selection, and
marketing mix and strategic
decisions to compete in
international markets.

4
 International
Investments
• It implies cross-border
transfer of resources to carry
out business activities. It may
either be portfolio investments
with short-term objectives or
capital investments with long-
term objectives

5
 International
Management
• It refers to application of
management concepts and
techniques in a cross-country
environment and adaptation to
different social-cultural,
economic, legal, political and
technological environment.

6
 International Business
• All those business activities that
involve cross-border transactions
of goods, services, and resources
between two or more nations.
Transaction of economic resources
include capital, skills, people, etc.
• An international transaction
involves both international trade
and international investments

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 Global Business

• Global business refers to the

conduct of business activities
in several countries, using a
highly coordinated and single
strategy across the world.
• Example: McDonalds, Nokia,
Nestle

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Reasons for International
Business Expansion
MARKET-
SEEKING
MOTIVES

DOMESTIC
COMPANY

STRATEGIC ECONOMIC
MOTIVES MOTIVES

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Market-seeking motives

• Marketing opportunities due to

life cycles
• Uniqueness of product /
service

10
 Economic Motives

• Profitability
• Achieving economies of scale
• Spreading R&D costs

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 Economic Motives -
Profitability
• Price differentials
• Export incentives by home country
government
• Fiscal incentives by host country
government makes foreign
investments attractive
• Low cost and abundant availability
of factors of production in the host
country
• Low intensity of competition in
foreign markets.

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 Economic motives – Achieving
economies of scale

• Large scale production requires

disposing off goods in international
markets
• Huge investments on production
facilities and large production
capacities forces firms to achieve
economies of scale
• Global business operations
contribute to business synergies

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 Strategic Motives

• Growth
• Risk Spread

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International Business
Vs. Domestic Business
• Scope
• Currency
• Local customs Vs. International
customs
• Local Government Vs. Multiple
governments
• Applicability of treaties, fees,
tariffs, currency rates of exchange

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 Need for International
Business

– causes the flow of ideas, services, and

capital across the world
– offers consumers new choices
– permits the acquisition of a wider
variety set of products
– facilitates the mobility of labor,
capital, and technology
– provides challenging employment
opportunities
– reallocates resources, makes
preferential choices, and shifts
activities to a global level
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Global Links Today
• International business has
created a network of global
links that bind countries,
institutions, and individuals
with trade, financial markets,
technology, and living
standards.
– For example, a reduction in
coffee production in Brazil would
affect individuals and economies
worldwide.

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 Take a look around
you!
• We make use of goods and services
of multiple origins
• Finnish mobile Nokia
• US toy-maker’s Barbie doll made
in China
• US based Software firm Microsoft
– developed by Indian engineer
based in Singapore – used in Japan
• Thailand manufactured US sports
shoe Nike used by an Indian

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T h e P r o c e s s o f d e c id in g to g o in te r n a tio n a l

? M u s t w e b e m o r e In t e r n a tio n a l

a s s e s s fa c t o r s in h o m e m a r k e t
a s s e s s c o m p e t it io n
t r a d e p o lic ie s
r e g u la t o r y e n v ir o n m e n t

If th e a n s w e r is N O If t h e a n s w e r is Y E S

T hen you ask Then you ask

S h o u ld w e b e m o r e in t'l A r e w e c a p a b l e o f b e i n g i n t 'l
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 T h e P r o c e s s o f d e c id in g to g o in te r n a tio n a l

If th e a n s w e r is N O If t h e a n s w e r is Y E S

T hen you ask T h en yo u ask

S h o u ld w e b e m o r e in t'l A r e w e c a p a b le o f b e i n g i n t 'l

A s s e s s fa c to r s o f lis t
p o te n tia l a d v a n ta g e a s s e ts
s tre n g th s
w eaknesses

L is t a ll p r o a c tiv e r e a s o n s assess
m anagem ent
fin a n c e s
p ro d u c ts

a r e s p e c ific in t'l d e te r m in e
o p p o r tu n itie s id e n tifie d e x p e r tis e
a s a r e s u lt te c h n o lo g ic a l a d v a n ta g e s
o f th is p r o c e s s d is t r ib u t io n a d v a n t a g e s

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If n e g a tiv e a n s w e r I f p o s it iv e a n s w e r If n e g a tiv e a n s w e r If p o s i t iv e a n s w e r
 T h e P r o c e s s o f d e c i d in g t o g o i n t e r n a t i o n a l

a r e s p e c if ic in t 'l d e t e r m in e
o p p o r t u n it ie s id e n t if ie d e x p e r t is e
a s a r e s u lt t e c h n o lo g ic a l a d v a n t a g e s
o f th is p r o c e s s d i s t r ib u t i o n a d v a n t a g e s

I f n e g a t iv e a n s w e r I f p o s it i v e a n s w e r I f n e g a t iv e a n s w e r I f p o s it i v e a n s w e r

T h e n c o n c e n tra te T h e g o to ask can w e ask w hat

o n d o m e s t ic " A r e w e c a p a b le im p ro v e o u r s p e c if ic o p p o r t u n i t ie s
b u s in e s s o f b e in g c a p a b i li t y w e s h o u ld p u r s u e
in t e r n a t io n a l"
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