INTERNATIONAL BUSINESS

[INBS-303]
ASSIGNMENT

SUBMITTED TO
DR.PRIYANKA GOSAIN
SUBMITTED BY
ZEELAL AHMAD
 INTERNATIONAL BUSINESS AND
ECOLOGICAL CONSIDERATION
International business refers to the trade of goods, services, technology, capital
and/or knowledge across national borders and at a global or transnational scale.
It involves cross-border transactions of goods and services between two or more
countries. Transactions of economic resources include capital, skills, and people for
the purpose of the international production of physical goods and services such as
finance, banking, insurance, and construction. International business is also known as 
globalization.
To conduct business overseas, multinational companies need to bridge separate
national markets into one global marketplace. There are two macro-scale factors that
underline the trend of greater globalization. The first consists of eliminating barriers to
make cross-border trade easier (e.g. free flow of goods and services, and capital,
referred to as "free trade"). The second is technological change, particularly
developments in communication, information processing, and transportation
 technologies.
Types of operations
Exports and import
Merchandise exports: goods exported—not including services.
Merchandise imports: The physical good or product that is imported into the
respective country. Countries import products or goods that their country lacks
in. An example of this is that Colombia must import cars since there is no
Colombian car company.
Service exports: As of 2018, the fastest growing export sector. The majority of
the companies create a product that requires installation, repairs, and
troubleshooting, Service exports is simply a resident of one country providing a
service to another country. A cloud software platform used by people or
companies outside the home country.
"Tourism and transportation, service performance, asset use".
Exports and Imports of products, goods or services are usually a country's most
important international economic transactions.
CHOICE OF MODE OF IB
 Strategic variables affect the choice of entry mode for multinational corporation expansion beyond their 
domestic markets. These variables are global concentration, global synergies, and global strategic
motivations of MNC.
 Global concentration: many MNEs share and overlap markets with a limited number of other corporations
in the same industry.
 Global synergies: the reuse or sharing of resources by a corporation and may include marketing
departments or other inputs that can be used in multiple markets. This includes, among other things, 
brand name recognition.
 Global strategic motivations: other factors beyond entry mode that are the basic reasons for corporate
expansion into an additional market. These are strategic reasons that may include establishing a foreign
outpost for expansion, developing sourcing sites among other strategic reasons.[14]
 Means of businesses
 Entry modes: Export/import, wholly owned subsidiary, merger or acquisition, alliances and joint ventures,
licensing[15]
 Modes: importing and exporting, tourism and transportation, licensing and franchising, turnkey
 operations, management contracts, direct investment and portfolio investments.
 Functions: marketing, global manufacturing and supply chain management, accounting, finance, 
human resources
 Overlaying alternatives: choice of countries, organization and control mechanisms
PHYSICAL AND SOCIAL FACTORS

Geographical influences: There are many different geographic factors that

affect international business. These factors are: the geographical size, the 
climatic challenges happening throughout the world, the natural resources
 available on a specific territory, the population distribution in a country, etc.
Social factors: Political policies: political disputes, particularly those that
result in the military confrontation, can disrupt trade and investment.
Legal policies: domestic and international laws play a big role in
determining how a company can operate overseas.
Behavioural factors: in a foreign environment, the related disciplines such
as anthropology, psychology, and sociology are helpful for managers to get
a better understanding of values, attitudes, and beliefs.
Economic forces: economics explains country differences in costs, currency
values, and market size.
IMPORTANCE OF IB
Most companies are either international companies or 
compete with other international companies.
Modes of operation may differ from those used
domestically.
The best way of conducting business may differ by 
country.
An understanding helps one make better career
 decisions.
An understanding helps one decide what 
governmental policies to support.
IMPORTANCE OF LANGUAGE AND
CULTURE STUDIES
 considerable advantage in international business is gained through the knowledge and use
of language, thereby mitigating a language barrier. Advantages of being an international
businessperson who is fluent in the local language include the following:
Having the ability to directly communicate with employees and customers
Understanding the manner of speaking within business in the local area to improve overall 
productivity
Gaining respect of customers and employees from speaking with them in their native
tongue
In many cases, it plays a crucial role. It is truly impossible to gain an understanding of a
culture's buying habits without first taking the time to understand the culture. Examples of
the benefit of understanding local culture include the following:
Being able to provide marketing techniques that are specifically tailored to the local market
Knowing how other businesses operate and what might or might not be social taboos
Understanding the time structure of an area. Some societies are more focused on timeliness
("being on time") while others focus on doing business at "the right time".
Associating with people who do not know several languages.
RISK
 Faulty Planning
 To achieve success in penetrating a foreign market and remaining profitable, efforts must be directed towards the
planning and execution of Phase I. The use of conventional SWOT analysis, market research, and cultural research, will
give a firm appropriate tools to reduce risk of failure abroad. Risks that arise from poor planning include: large
expenses in marketing, administration and product development (with no sales); disadvantages derived from local or
federal laws of a foreign country, lack of popularity because of a saturated market, vandalism of physical property due
to instability of country; etc. There are also cultural risks when entering a foreign market. Lack of research and
understanding of local customs can lead to alienation of locals and brand dissociation.[17] Strategic risks can be defined
as the uncertainties and untapped opportunities embedded in your strategic intent and how well they are executed. As
such, they are key matters for the board and impinge on the whole business, rather than just an isolated unit.
 Operational risk
 A company has to be conscious about the production costs to not waste time and money. If the expenditures and costs
are controlled, it will create an efficient production and help the internationalization.[17] Operational risk is the prospect
of loss resulting from inadequate or failed procedures, systems or policies; employee errors, systems failure, fraud or
other criminal activity, or any event that disrupts business processes.
 Political risk
 How a government governs a country (governance) can affect the operations of a firm. The government might be 
corrupt, hostile, or totalitarian; and may have a negative image around the globe. A firm's reputation can change if it
operates in a country controlled by that type of government.[17] Also, an unstable political situation can be a risk for
multinational firms. Elections or any unexpected political event can change a country's situation and put a firm in an
awkward position.[20] Political risks are the likelihood that political forces will cause drastic changes in a country's
business environment that hurt the profit and other goals of a business enterprise. Political risk tends to be greater in
countries experiencing social unrest. When political risk is high, there is a high probability that a change will occur in
the country's political environment that will endanger foreign firms there. Corrupt foreign governments may also 
take over the company without warning, as seen in Venezuela.
Technological risk
Technological improvements bring many benefits, but some disadvantages as well. Some of these risks include "lack
of security in electronic transactions, the cost of developing new technology ... the fact that this new technology may
fail, and, when all of these are coupled with the outdated existing technology, [the fact that] the result may create a
dangerous effect in doing business in the international arena.
Environmental risk
Companies that establish a subsidiary or factory abroad need to be conscious about the externalizations they will
produce, as some may have negative effects such as noise or pollution. This may cause aggravation to the people living
there, which in turn can lead to a conflict. People want to live in a clean and quiet environment, without pollution or
unnecessary noise. If a conflict arises, this may lead to a negative change in customer's perception of the company.
Actual or potential threat of adverse effects on living organisms and environment by effluents, emissions, wastes, 
resource depletion, etc., arising out of an organization's activities is considered to be risks of the environment. As new
business leaders come to fruition in their careers, it will be increasingly important to curb business activities and
externalizations that may hurt the environment.
Economic risk
These are the economic risks explained by Professor Okolo: "This comes from the inability of a country to meet its
financial obligations. The changing of foreign-investment or/and domestic fiscal or monetary policies. The effect of
exchange-rate and interest rate make it difficult to conduct international business."[17] Moreover, it can be a risk for a
company to operate in a country and they may experience an unexpected economic crisis after establishing the
subsidiary.[20] Economic risks is the likelihood that economic management will cause drastic changes in a country's
business environment that hurt the profit and other goals of a business enterprise. In practice, the biggest problem
arising from economic mismanagement has been inflation. Historically many governments have expanded their
domestic money supplying misguided attempts to stimulate economic activity.
ECOLOGICAL
CONSIDERATION
These include inherent innovation, interconnectivity, maximizing
efficiency, compactness, decentralization, conservation of the
natural ecosystem, convenience with historical and cultural
coupling and stepwise greenization
Ecological Environment: Critical Issue in International
Business
Modern industry and internationalization has provided people
with a material prosperity unequaled in the history. It has also
created unparalleled environmental threats to present generation
and to future generations. The very technology that has enabled
people to manipulate and control nature has also polluted the
environment and rapidly depleted the natural resources
Ecology is the study of plants, animals, peoples and institutions in
relation to the environment. It thus refers to the interrelationship
between people, the fauna (birds and animals), the flora (plants and
forests) and their physical surroundings.
Geographical and ecological factors such as natural resource
endowments, weather and climatic conditions, topological factors,
locational aspects in the global context, port facilities are all relevant to
business. Ecological factors have recently assumed great importance.
The depletion of natural resources, environmental pollution, and the
disturbance of the ecological balance have caused great concern.
nternational business firms have also been brought under such
legislation’s and regulations. For example, the Government of India
has drawn up an Environment.
ACTION PROGRAM [EAP] FOCUS ON
THE FOLLOWING AREAS
Conservation bf biodiversity including forests, marine
life and mountain ecosystem.
conservation of soil and moisture and ensuring that
water sources do not get polluted.
Control of industrial pollution and wastes.
Access to clean technologies.
Tackling urban environmental issues.
Alternative energy plan.
Green technologies, green products and green
companies are highly valued in today’s global market
place.
ECOLOGICAL FACTORS AFFECTING IN
BUSINESS
Ecological factors influencing business are connected to actions and processes
necessary to protect natural environment and in the same time maintain or increase 
efficiency of the corporation. Ecology often take form of so-called corporate
environmentalism, i.e. all actions promoting sustainability, gaining consumer
 appreciation of eco-friendly products and services, creating image of 
responsible corporation. There are several ecological factors influencing 
management decision, business and environment goals. Proper identification of 
natural environment and its influences during strategic analysis (STEEP analysis, 
SWOT analysis, TOWS analysis) could lead to better strategic alignment of 
company to ecosystem and state regulations.
Ecological laws and regulations
government policy and policymaker engagement in environmental protection,
fees and fines for using natural environment,
regulations of waste disposal, recycling and storing,
regulations of carbon CO2 and toxic fumes emission,
relative “value of nature” in political campaigns,
Social pressure towards clean business
environmental groups and their activities,
attitudes towards eco-friendly products and services (consumer preferences and demand for such products),
attitudes toward tourism in intact wetlands, forests, lakes and seas,
increased scrutiny of ecological impacts by stakeholders and customers
human well being in relation to ecosystem,
Technological advancements
carbon footprint of used technology,
energy requirements for technological processes,
availability of technologies for emission reduction (chemical-filled smoke, ash and particles),
possibility of recycling of waste and components,
technology used for mining and acquiring of other natural resources,
Natural environment influences
water and air pollution (influencing production processes in high-tech companies and food production),
quality of water used for consumption or production
health problems (employee attrition) in polluted places, healthy environments improve mental and physical
health and reduce absenteeism,
quantity of renewable and non-renewable resources available,
In present scenario environmental issues raise large and
complicated ethical and technological aspects for the
international business society which are as following:
The extent of the environmental damage produced by present
and projected industrial technology.
Extent of largeness that threats pose to the people’s welfare.
Values people must give-up to halt or slow such damage.
Whose rights are violated by pollution and who should be given
the responsibility of paying for the costs of polluting the
environment.
 The time interval of natural resources availability.
THE END