INTERNATIONAL

ENVIRONMENT AND
MANAGEMENT
FAMOUS INTERNATIONAL
BRANDS
MOST SUCCESSFUL
INTERNATIONAL BUSINESSES
GLOBALIZATION

 Shift toward a more integrated and

interdependent world economy

 Facets of Globalization:
Globalization of Market
Globalization of Production
GLOBALIZATION OF MARKETS
 Merging of historically distinct and separate
national markets into one huge global marketplace.

 Tastes and preferences of consumers in different

nations are beginning to create global market.
 Example: Coca-cola, McDonald Hamburger, Sony Play-Station
etc.

 Markets for industrial goods and materials that

serve a universal need has also become a part of
global market.
 Example: Steel, Aluminum, Crude Oil, Micro Processors, Jet-
Aircrafts etc.
 GLOBALIZATION OF
PRODUCTION
 Sourcing of goods and services from locations around
the globe

 To take advantage of national differences in the cost

and quality of factors of production

 To lower overall cost structure or improve the quality

or functionality of their product offering

 To compete more effectively

 Example: Boeing 777, a commercial jet airliner have

Eight Japanese suppliers, one supplier in Singapore &
three suppliers in Italy.
INTERNATIONAL BUSINESS
 International business is defined as “any
commercial transaction-taking place across
the boundary lines of a sovereign entity”.

 It take place either between countries or

companies or both.

 Transactions include investments, physical

movements of goods and services, transfer of
technology and manufacturing.
Difference Between
Globalization and International
Business
 Globalization and international business as
business terms are often used synonymously in
casual conversation. ...

 Globalization has a more broad and universal

concept of the global marketplace,

 while international business is application of a

business model to various markets.
REASONS TO ENTER INTERNATIONAL
BUSINESS

 From an individual company’s

view

 From the government view

 FROM AN INDIVIDUAL
COMPANY’S VIEW
 Managing the product life cycle

 Example:
Enfield India reached maturity and
declining stage in India and entered
Kenya, West Indies, Mauritius and other
destinations
HP laptops are moving all the developing
countries the moment they reached
maturity in the U.S. market
 Geographic expansion as a growth strategy
 Example:
 Arvind mills expanded their business by
either setting up units or opening
warehouses abroad.
 Ranbaxy’s, Cipla and Dr. Reddys
growth is mainly attributed to
geographic expansion every year to
new territories
 The adventurous spirit of the younger
generation
 Example:
Laxmi Mittal has emerged as the steel king
of the world

Vijay Mallya of the UB Group took a major

risk in setting up operations in South Africa.

Kumar Birla expands to Australia and

Europe through acquisitions
 Corporate ambition

 Example:
 Kellogge cannot think of profits in India for
further five years. They are ambitious to be
visible and then revenue

 Coco Cola is still to day not earning any profit

in a number of countries. But this will not
affect the company because more than a
hundred countries are contributing to offset
losses
 Technology advantage

 Example:
Biocon, Infosys, Gharda chemicals are
known for their core competency in
biotechnology, IT and pesticides
respectively

Bharat Heavy Electricals and Larsen &

Toubro have marched ahead in
International business
 Building a corporate image

 Example:
 Samsung and LG built their image in India for the
first three years

 Generation of revenue and profits has been

considerable, as they have expanded to semi-urban
and rural India as well.

 Today their market share and penetration levels

have gone far ahead of other players in India
 Incentives and business impact

 Example:
Aditya Birla Group enjoyed fiscal,
physical and infrastructural
incentives in Thailand and Indonesia
 Lobour advantage

 Example:
Knitwear, handlooms, embroidery, metal
ware, carpet weaving, cashew processing and
seafood call for cost-effective lobour force.
India is endowed with such skills.
 New business opportunities

 Example:
Enormous amount of growth
potential is untapped in Latin
America, Sub-Saharan Africa, CIS
countries and China
 Emergence of SEZ’S, EOU’S, AEZ

 Example:
Special economic zones, Agrizones and
Technology parks by Ministry of Commerce
& Industry give new dimensions to
international business.
FROM A GOVERNMENT VIEW
 Earning valuable foreign exchange

 Example:
India imports crude oil, defense
equipments, essential raw materials and
medical equipments for which the
payments have to be made in foreign
exchange.
 Interdependency of nations

 Example:
Today, India depends on the Gulf regions
for crude oil and in turn the Gulf region
depends on India for tea, rice etc.

Developed countries depend on developing

countries for primary goods, whereas
developing countries depend on developed
countries for value added finished products.
 Trade theories and their impact

 Example:
Absolute advantage, comparative
advantage and competitive advantage.
India is labour intensive economy.
U.S. is a capital intensive economy
 Diplomatic relations

 Example:
Indian diplomats in Latin America have
done a remarkable job of promoting India’s
business in the 1990’s.
Indian embassies and high commissions in
all the countries around the world play a
catalytic role of promoting trade and
investment.
 Core competency of nations

 Example:
Rubber products from Malaysia
Knitwear from India
Rice from Thailand
Wool from Australia
 Investment for infrastructure

 Example:
Economies like Mauritius, Hong Kong,
Singapore, Malta and Cyprus invest in trade
related infrastructure
 National image

 Example:
“Made in China” and “Japan” & “Made in
India”.
L.N.Mittal operating in Indonesia or
Kazakhstan or Trinidad is perceived by the
people as Indian
Indian Foreign Trade
 Foreign trade of India. Foreign trade in
India includes all imports and exports to and
from India.
 At the level of Central Government it is
administered by the Ministry of Commerce
and Industry.

 Foreign trade accounted for 48.8% of India's

GDP in 2015.
 Foreign trade policy and targets

 Example:
Allthe trade policies of India had three fold
objectives in their agenda
production,
promotion and
competitiveness
BALANCE OF PAYMENT
 National targets

 WTO and international agencies