International Business Introduction, Nature and Scope
1. INTERNATIONAL BUSINESS
INTRODUCTION, NATURE AND SCOPE
Submitted By:
Deepak Tushir (30615210001)
Dheeraj Rawal (30615210002)
Gaurav Saroha (30615210003)
BBA (IIIrd Year)
Submitted To:
Mrs. Deepshikha Sharma
Assistant Professor
2. OVERVIEW
• INTRODUCTION
• NATURE OF INTERNATIONAL BUSINES
• BENEFITS OF INTERNATIONAL BUSINESS
• PROBLEMS IN INTERNATIONAL BUSINESS
• WHY INTERNATIONAL BUSINESS?
• SCOPE OF INTERNATIONAL BUSINESS
• ENTRY STRATEGY
3. INTRODUCTION
Ordinary,
“International Business refers to
buying and selling of goods or services
beyond geographical limits of a country. ”
In Simple Words,
“International Business refers to
business across countries”
4. NATURE OF INTERNATIONAL BUSINESS
Accurate and Timely Information Available
The Size of International Business
Market Segmentation
International Market have more potential then Domestic Market
5. OPTIONS FOR DOING INTERNATIONAL BUSINESS
Exporting goods and services.
Giving license to produce goods in
the host country.
Starting a joint venture with a
company.
Opening a branch for producing &
distributing goods in the host
country.
Providing managerial services to
companies in the host country.
6. BENEFITS OF INTERNATIONAL BUSINESS
Large Scale Operations
Integration of Economies of Many Countries
Keen Competition
Dominated by Developed Countries & MNC’s
Benefits to Participating Countries
Special Role of Science and Technology
7. PROBLEMS IN INTERNATIONAL BUSINESS
Different Currencies, Languages and Culture
High Foreign Investment and High Cost
Corruption and Bureaucracy
Entry Requirements Laws and Regulations
Tariff, Quotas, Varying Trade Policies etc.
Exchange Instability
8. WHY INTERNATIONAL BUSINESS
To Export Surplus Stock
To Explore Growth Opportunity
To Increase Profitability
To Reduce Cost of Inputs
To Achieve Economies of Scale
To Overcome Competition
To Circumvent Rigid Laws
To Secure Advanced Technology
To Obtain much Needed Foreign Capital
To Generate Employment
To Spur Innovation
To Raise Standards of Living
10. Export Business
• Domestic Firms which produce entirely in the home country and export a part of their output directly or through
in International County.
International Firm
• Such a firm, decides to exploit business opportunities outside the home country. It locates its branch in foreign market and
uses the domestic marketing mix abroad.
Multinational Firm
• An international firm turns into a multinational firm when it responds to specific needs of foreign markets in terms of
product, promotion and distribution. Different Strategies for different markets.
Global Firm
• A global firm also has business operations in several countries but there is coordination between different subsidiaries
operate under a common strategy. The subsidiaries are bound by global strategy decided by the parent company.
Transnational Firm
• A transnational firm produces, markets, invest and operates across the globe. It is an integrated global enterprise which
thinks globally but acts locally.
12. 1. LICENSING
For Example:
In the global strategy, a firm (Licensor) allows a
foreign company (Licensee) to produce its product in
exchange for a fee(loyalty). The licensor usually helps
the licensee in setting up production and also in
distribution and promotion.
Licensing enables the firm to earn revenues which
could not be generated in home market.
Corporation entered the Indian
Market initially through licensing.
13. 2. EXPORTING
A firm may export directly or through export house.
An export house matches importers and exporters
and also deals with customs office, documentation
etc.
Exporting requires no investment abroad.
It is a low cost and low risk of doing international
business.
Exports face tariff and non tariff barriers.
Intensive Marketing is needed to succeed in exports.
The exports gets payment quickly.
14. 3. FRANCHISING
For Example:
Franchising is a contractual agreement under which
one party(franchiser) sells the other party(franchisee)
the right to use the former’s business name and sell
the product service in a given territory in a specified
manner.
Franchising enables a firm to enter foreign market
without making investment and without assuming
huge risk. The franchisee bears the cost of
operations. The franchisor gets royalty.
Jubilant Food works is the franchisee of
in India.
15. 4. CONTRACT MANUFACTURING
For Example:
In contract manufacturing the company attaches its brand
name or trade make to goods produced by a foreign
company.
Company manufacturing enables a company to enter a
foreign market without investing in manufacturing or
marketing.
The company can also use contract manufacturing to
meet a temporary increase in sales
Labour costs are low.
has more than 700 contract factories
around the world that manufacture its
footwear and apparel.
16. 5. JOINT VENTURES AND STRATEGIC ALLIANCES
In an international joint venture, two or more companies from
different countries enter into a partnership to undertake a major
project.
International joint venture allows sharing of risk, technology and
expertise.
This mode if useful where foreign companies are not allowed.
Ex: PepsiCo and Elite Industries to market Frito- Lay Snacks in Israel.
A Strategic alliance is a long term agreement between two or more
companies to gain competitive market advantage. Unlike joint
venture there is no sharing of cost, management risks and profits.
Strategic alliance provides broad access to markets, capital and
technical expertise. It is more flexible than a joint venture.
Ex: Hewlett Packard has strategic alliances with Hitachi and Samsung
17. 6. FOREIGN DIRECT INVESTMENT (FDI)
FDI is the buying of property and business in foreign
countries.
The most common form of FDI is a foreign subsidiary.
The subsidiary operates like a domestic firm with
production and distribution functions.
It has to observe the laws of both home country and
host country.
Foreign Subsidiary allows complete control over
technology and expertise.
It requires high investment and involves risk.
