INTERNATIONAL

BUSINESS
PRESENTED BY:

 Ashwini Prasad R
 Anitha T G
 Ayesha Siddiqua
 Asha K
 Bhagath Yadav
 Bharath
INTRODUCTION

Business activities done across national borders is called International

business. The international business is the purchasing and selling of the
goods, commodities and services outside it’s national borders. Such
trade modes might be owned by the state or privately owned
organization.
In which, the organization explores trade opportunities outside its
domestic national borders to extend their own particular business
activities, for example, manufacturing, mining, banking etc.
SIGNIFICANCE

 Market Expansion:
In international business, a company can procure large customer
base, which inturn increases the profits of the company which
helps them in expanding their market share.
 Brings Foreign Exchange:
All the payments are received in terms of foreign currencies
which are used by its home countries in payment of imports. The
foreign exchange earned by these businesses helps in overall
economic development of the country.
 Spreading Of Business Risks:
If there is a loss incurred by this business in any one of the countries
then that can be easily adjusted with the profit earned in other
countries.
 Economies of Scale:
International businesses produce large amount of goods for selling in
different countries. With the increase in amount of production, per cost
of producing goods goes down which helps them in earning large
profits. Hence, they avail the benefit of large scale production.
 Improves International Relations:
It helps in strengthening the economic relations among nations. These
businesses helps other nations by exporting them goods of their
requirements. It helps in developing better mutual understanding
among countries due to which they are ready to support each other in
time of needs.
ROLE OF MNCs IN INDUSTRIAL
DEVELOPMENT OF HOST
COUNTRY
INTRODUCTION:
MNCs is a business that operates in many different countries at the
same time. In other words, it is a company that has business activities
in more than one country.
 Environmental Standards:
Multinational companies are often able to introduce and implement
environmental management systems, cleaner production and
technologies in developing and newly industrialised countries, through
their subsidiaries.
 Building Competition:
MNCs in the host countries makes its market more competitive and
break the domestic monopolies.
 Accelerate Growth Process:
MNCs are also regarded as agents of modernisation and rapid growth.
MNCs accelerate the growth process in the host country through rapid
industrialization and allied activities.
 Research and Development activities:
Developing countries lack in Research and Development areas.
Expenditure on research and development is essential for the
promotion of technology. Multinationals survive in the international
market through their advanced research and development activities.
OPPORTUNITIES TO ENTER
INTERNATIONAL BUSINESS
1. Exporting
2. Foreign Direct Investment
3. Contract Manufacturing
4. Mergers and Acquisitions
5. Licensing and Franchising
 Exporting:
Any company produces it’s products in the domestic market and then
sells them to international market.
 Foreign Direct Investment:
It is a mode of entering foreign market through investment. It can be
done through purchasing share of a company, property and assets.
 Contract Manufacturing:
Contract Manufacturing occurs when a small business hires another
company to produce it’s products. It is also called as international
subcontracting or international outsourcing.
 Mergers and Acquisitions:
Merger is a combination of two or more distinct entities into one.
Acquisitions is one in which one company takes over the other.
 Licensing and Franchising:
Franchises and licenses are both business agreements in which certain
brand aspects are shared in exchange for a fee. However, a Franchising
agreement pertains to a business’s entire brand and operations, while a
licensing is an agreement only.
CHALLENGES AND PROBLEMS

 Language Barriers:
When engaging in international business, it’s important to consider the
languages spoken in the countries to which the company is looking to
expand for.
 Cultural Differences:
Every country has its own traditions and cultures. And, to achieve
success, it is important to respect those culture. It includes holidays,
food, festivals, social values and more.
 Managing Global Teams:
In MNCs, the company has to deal with employees of different
backgrounds. Managing those employees is definitely a challenge due
to the differences in language, culture, and time zones.
 Currency exchange and Inflation:
The currency rate between the two countries doesn’t remain constant or
is always changing. Therefore, the company must consider the
exchange rates when making any financial decision as it may increase
or decrease the final payout which may affect the business profits.
 Deciding Company Structure:
Deciding the company structure depends on the location of
headquarters and the number of offices a company would have.
 Foreign Politics and Policy:
The politics and policies of a country play a crucial part in the
performance of the company. Any new political policy concerning
taxes, labor laws, and more can have direct impact on the cost of the
company.
 International Accounting:
Adhering to international accounting standards is not an easy job as it
requires a lot of effort to conform to different tax systems. A company,
however, can overcome this challenge by hiring the right experts to
take care of the accounting.
 Product Pricing:
To set the right price, a company must consider it’s costs, logistics cost,
as well as the price of the same products from local competitors.
Moreover, when pricing the product, it is necessary to consider how
you plan to position your product as a low-cost product or a luxury
brand.
 Payment Methods:
When operating internationally, a company must select the payment
methods that are convenient. It also need to understand and appreciate
the cost of the various payment methods before making final selection.
 Environmental concerns:
When a company starts operating in a foreign country, it should take
extra efforts to reduce environmental concerns in the region it operate.
Any ignorance or avoidance would cause damage to it’s brand image
and social groups.
 Supply Chain Risks:
Having a short and efficient supply chain is a crucial requirement for a
company’s success in a foreign market. However, managing those
supply chains is not an easy task because of differences in regions and
regulations.
CONCLUSION

It can be concluded by saying that international business is a much

wider term and includes both trade and production of goods and
services across frontiers. It plays a crucial role in the economic
development of a nation as it leads to industrialization, employment
and reduction of scarcity of goods. Though international business
presents several challenges, a company can overcome them by
respecting the culture and traditions of the country, obeying the laws
and honest payment of taxes they are operating in.