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Edited by:

Hitesh Jhanji

international BusinessEdited By

Hitesh Jhanji

Printed by

EXCEL BOOKS PRIVATE LIMITED

A-45, Naraina, Phase-I,

New Delhi-110028

for

Lovely Professional University

Phagwara

SYLLABUS

I nternational Business

Objectives: the objective of the course is to:

enable students build strong foundation in concepts of international tra de and business Help students understand social, cultural and economic factors that lead to trade between countries Help students study various economic integrations for promoting regional trade and investments S r. N o.Topics 1

international Business, stages of internationalization, Differences between Domestic and international Business,

international Business approaches, advantages of international Business.

2theories of international trade - mercantilism, theory of absolute cost advantage, comparative cost advantage

theory, relative factor endowment theory, country similarity theory, Pro duct life cycle theory.

3international Business environment - social and cultural environment, technological environment, economic

environment, Political environment. 4

manufacturing, management contracts, turnkey projects, foreign direct investment, alliances like mergers and

5 foreign Direct investment in india.

6World trade organization - General agreement on tariffs and trade (Gatt), establishment of World trade

organization, the uruguay round Package: organization structure of the Wto, Wto - the third Pillar in the

Global Business.

7

8Basics of international marketing, Basics of Global Hrm, Basics of international financial management, Basics of

international accounting. 9 of resources, location Decisions, international logistics management.

10Global strategic management and Business ethics - Peculiarities of Global strategic management, value creation,

Global strategic management Process, collaborative strategies, ethics an d Global Business.

Unit 1: International Business: An Overview

Notes LOVELY PROFESSIONAL UNIVERSITY 1Unit 1: International Business: An OverviewCONTENTS objectives introduction

1.1 evolution of international Business

1.2 Drivers of Globalization

s

1.4 stages of internationalization

1.5 Differences between Domestic and international Business

1.6 international Business approaches

1.7 advantages of international Business

1.8 summary

1.9 keywords

1.10 review Questions

1.11 further readingsObjectivesafter studying this unit, you should be able to:

enumerate the concept of international businessanalyse the evolution of international businessDiscuss the drivers of globalizationDescribe the stages of internationalizationDiscuss the approaches of international businessIntroduction

rapid, sustained growth of international business. markets have become truly global for most takes place in the so-called euromarkets, markets outside the country whose currency is used. if national economic policies or performances diverse in short run. the rapid dissemination rate +LWHVK-KDQML/RYHO\3URIHVVLRQDO8QLYHUVLW\

International Business

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more open countries, long ago gave up illusion of domestic policy autonomy. But even the largest communication has been tying economies together. identify the former than interpret the latter. the reason is that during the past few decades, the technological developments, has led to globalization of production. as a result of international their production place, as well as their market and move factors of production to wherever they can optimally be combined. they avail fully of the revolution that has brought about instant worldwide communication, and near instant-transformation. their ownership is transnational; their management is transnational. their freely mobile management, technology and capital, the modern agent for stepped-up economic growth, transcend individual national boundaries. they are domestic in every place, foreign in none-a true corporate citizen of the world. the greater interdependence among nations has already reduced economic insularity of the peoples of the world, as well as their social and political insularity. international business includes any type of business activity that crosses national borders. though spectrum, international business is services across two or more national boundaries, even if management is located in a single big enterprises, which have operating units outside their own country. in the middle are institutional arrangements that provide for some managerial direction of economic activity taking place abroad but stop short of controlling ownership of the business carrying on the activity. Example: Joint ventures with locally owned business or with foreign governments. form of multinational business operations, international business has become massive in scale economic and social from many types of comparative business studies and from knowledge of many aspects of foreign business operations. in fact, sometimes the foreign operations and the comparative business are used as synonymous for international business. foreign business refers to domestic operations within a foreign country. comparative business focuses on similarities and differences among countries and business systems for focuses on similarities and differences among countries and business interest the special problems that arise when business activities cross national boundaries.

Example: the vital

multinational centered or even peripheral in foreign operations and comparative busine ss. 1.1 E volution of I nternational Business the business across the borders of the countries had been carried on since times immemorial. But, the business had been limited to the international trade until the recent past. the post-World business.

Unit 1: International Business: An Overview

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‘international business' has emerged from the term ‘international marketing', which, in turn, International Trade to International Marketing:

Example:

and steel during 1960s.

leather products, tea, coffee etc., arranging for appropriate distribution channels, attractive

package, product development, pricing etc. this process is true not only with india, but also with almost all developed and developing economies. International Marketing to International Business: the multinational companies which were producing the products in their home countries and marketing them in various foreign countries countries. later, they started producing in one foreign country and marketing in other foreign countries. Example: unilever established its subsidiary company in india, i.e., Hindustan lever limited (Hll), Hll produces its products in india and markets them in Bangladesh, sri lanka, History of international business starts with the evolution of human civilization. the integration business and globalization. T imeline

19th century: Broader concept of the integration of economies and societ

ies empires

1913: GDP 22.1: after 1913: increased trade Barriers to Protect Domestic

Production

1930's: Declined trade ratio, GDP 9.1

after 1930's: World nations felt the need for international cooperation in global trade and balance of payments affairs establishment of imf and iBrD (World Bank) imf: international monetary fund iBrD: international Bank for reconstruction and Development

1947: 23 countries conducted negotiations in order to prevent the protectionist policies

and to revive the economies from recession aiming at establishment of World trade organization

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1947: establishment of Gatt (General agreement on trade and tariffs)

1980s: efforts to convert Gatt into Wto

1st Jan 1995: Gatt was replaced by Wto (World trade organization)

trade liberalization

1990 - 2000: the term iB (international Business) has emerged from the term international

marketing. there are two Phases of the evolution of the term international Business 1. international trade to international marketing 2. international marketing to international Business after 1990: rapid internationalization ad globalization today: interpreting the Pestin factors of international trade environmen t more clearly. Did u know? after 1930's, the world felt the need for international cooperation in global trade, so for this reason imf and iBro were established.

1.2 Drivers of Globalization

We have discussed the nature of international business and the precautions that the multinational Principles and Practice of management, managerial economics and financial management from its domestic market in 1994. Expanding the Production Capacities Beyond the Demand of the Domestic Country: some of Severe Competition in the Home Country: the countries oriented towards market economies companies which could not meet the competition of the strong companies in the domestic country started entering the markets of the developing countries. Limited Home Market: When the size of the home market is limited either due to the smaller size of the population or due to lower purchasing power of the people or both, the companies internationalize their operations.

Example:

even african markets due to the smaller size of the home market. itc entered the european internationalize its operations. in fact, this company was forced to concentrate on global market and establish manufacturing facilities in foreign countries.

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Political Stability vs. Political Instability: Political stability does not simply mean that

continuation of the same party in power, but it does mean that continuation of the same policies similarly, uk, france, Germany, italy and Japan are also politically stable countries. most of the african countries and some of the asian countries like malaysia, indonesia, Pakistan and india instable countries into politically stable countries. Availability of Technology and Managerial Competence: availability of advanced technology country. companies from the developing world are attracted by the developed countries due to these reasons. in fact, american companies, in recent years, depend on Japanese companies for 1.

Market Drivers:

(a) Per capita income converging among industrialized nations (b) convergence of lifestyles and tastes (c) organizations beginning to behave as global consumers (d) increasing travel create global consumers (e)

Growth of global and regional channels

(f) establishment of world brands (g)

Push to develop global advertising

2.

Cost Drivers:

(a) continuing push for economies of scale (b) accelerating technological innovation (c) advances in transportation (d) emergence of newly industrialized countries with productive capability and low labour costs (e) increasing cost of product development relative to market life 3.

Government Drivers:

(a) reduction of tariff barriers (b) reduction of non-tariff barriers (c) creation of blocs (d)quotesdbs_dbs20.pdfusesText_26

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