Domestic Business and International Business

Sl Operating Domestic Business International Business

No. Environment
1 Political Policies
2 Behavioural Factors
3 Economic Factors
4 Geographic
influences
5 Legal practices
6 Competitive Factors
7 -Product Domestic Brand
Differentiation
Types of International Trade
-Some industries supported, most
not interfered.
-Expropriation -1969
-Nationalization of Indian
Commercial Banks
-General Instability
- Same culture-behaviour, attitudes,
values.
-Indian sports aim-unity and
brotherhood.
-India – Individuals important
-Economic conditions within the
country.
-same currency, same cost, known
market size.
- Possible if resources available
locally.
-Geographical conditions create
barrier in communication.
-Seasonal Business, Natural
disasters, affect local business
Home country Regulations
Domestic Law – Tax, Employment
USP
Confiscation - 1949 China
took over US Properties
-Domestication
-General Instability Risk –
Religious/caste fighting,
Military, Terrorism,
-Cultural differences, Attitudes
and Values.
-American sports – born to win
-Japan – Team is important
-Higher Income, Middle
Income, Lower Income.
-cost, currency values, market
size.
-The uneven distribution of
resources
-Communication Barriers –Ex:
Nokia
-Environmental factors,
climatic conditions of world
countries.
Host country regulations
International Law- Tax in both
places, Employment, TRIPs.
Unique characteristics – focus
strategy.
International Brand

1. Inward oriented or Inward

2. Outward oriented or outward looking

Arguments for Free Trade

 Free from artificial barriers – Tariffs, NTBs

 Most economic utilization of resources
 International division of labour - economy of production
 Inefficient producers are compelled to improve or quit.
 Break domestic monopolies – no exploitation of consumers
 Consumers get goods from the cheapest source and large variety of goods.
  No scope for corruption.
 Tariff from 40% to 03%, from 1947 to 2007
Objectives and arguments for protection

 To protect domestic industries from foreign competition.

 To direct the foreign trade in accordance with national priorities.
 To promote indigenous R & D.
 To conserve the foreign exchange reserve.
 To make favourable balance of payments
 To curb conspicuous consumption
 To mobilize revenue for the government.
 To discriminate against certain countries.
 To promote Anti-dumping policies
 To keep the money at home

VER – Voluntary Export Restraints

1. Canalization - Establishment of state monopoly in foreign trade. In other words, an item
that is canalised can be imported or exported only by the designated state trading
agencies. The emphasis is on the control of foreign trade flows rather than on the
ownership of the organization or agency conducting it. India – 24 canalizing agencies -
200 products in 1970s - increased up to two-thirds of Total Imports.