Introduction to International Business

1. INTERNATIONAL
BUSINESS
Atif Ghayas
INTRODUCTION TO

2. CONTENTS
• Introduction to International Business
• Nature & Scope & Feature of International Business
• Importance of International Business
• Approaches of International Business
• Problems in International Business
• Entry Strategy
• Advantages & Disadvantages of International Business
• Reasons for recent International Business Growth
• International organisations

3. • The exchange of Goods & Services, Resources, Knowledge, & Skills,
among individuals & businesses in two or more countries.
• Transaction that are carried out across national borders to satisfy the
objectives of individuals and organization
• All Commercial transactions that take place between two or more
countries.
1. Private & Government
2. Sales
3. Investments
4. Logistics
5. Transportation
What is International Business ?

4. • Accurate Information & timely
• The size of the international business
• Market segmentation
• International markets have more potential than domestic markets
Nature

5. • International Marketing
• International Finance and Investments
• Foreign Exchange
• Global HR
Scope

6. • Large scale operations
• Integration of economies
• Dominated by developed countries and MNCs
• Benefits to participating countries
• Keen competition
• Special role of science and technology
• International restrictions
Features

7. 1. Earn foreign exchange
2. Optimum utilization of resources
3. Achieve its objectives
4. To spread business risks
5. Improve organization's efficiency
6. Get benefits from Government
7. Expand and diversify
8. Increase competitive capacity
Importance

8. Ethnocentric
Polycentric
Regiocentric
Geocentric
Approaches of IB

9. Ethnocentric approach
• Under this approach, target market is own country , Excessive
production will export due to change in customer taste, preferences
IB Approaches

10. Polycentric approach
• Under this approach, the companies customizes the marketing mix to
meet the taste, performance and needs of the customers of each
international market.
IB Approaches

11. Regiocentric approach
• Under this approach, the company operating successfully in a
foreign country thinks of exporting other neighboring countries of the
host country.
• At this stage, the concerned subsidiary considers the regional
environment ( such as laws, culture, policies etc.) for formulating the
policies & strategies.
IB Approaches

12. Geocentric approach
• Under this approach, the company analyses the tastes,
preference and needs of the customers in all foreign markets
and then adopts a standardized marketing mix for all the
foreign markets.
IB Approaches

13. • Political factors
• High foreign investments and high cost
• Exchange instability
• Entry requirements
• Tariffs, quota etc.
• Corruption and bureaucracy
• Technological policy
• Quality Management
Problems

14. Entry Strategy
• Indirect & Direct
1. Exporting
• Agreement
• Patent, trademark, copy right, technology, production
processes, and product
• licensee’s fee
2. Licensing
• by franchisers to franchisee
• Usage
3. Franchising

15. Entry Strategy
• Subsidiary
• local assembly
4. Foreign Assembly
• Staff of an operating facility
• foreign buyer
5. Turnkey Operation
• Establishment
• Purpose
6. Foreign production subsidiary

16. Entry Strategy
• Significant portion
• In foreign countries
7. International Firm
• Parent country
• host country
8. Multinational Corporation
• Property rights
9. Joint Venture

17. Entry Strategy
• Arrangement in which a firm buys or establishes tangible
assets
• In another country
• Through direct investment
• By buying a company stock in capital markets
10. Foreign Direct Investment

18. • Faster growth
• Access to cheaper inputs
• Increased quality and efficiency
• New market opportunities
• Diversification
Advantages

19. • Increased costs
• Foreign regulations and standards
• Delays in payments
• Complex organizational structure
Disadvantages

20. 1. Expansion of technology
2. Business is becoming more global because
• Transportation is quicker
• Communications enable control from afar
• Transportation and communications costs are more conducive for
international operations
3. Liberalization of cross-border movements
• Lower Governmental barriers to the movement of goods, services,
and resources enable Companies to take better advantage of
international opportunities
Reason for recent growth in IB

21. Reason for recent growth in IB
• An international organization formed to reduce or
eliminate tariff and other barrier to international
trade
General agreement on Tariff and trade
(GATT)
• An international financial organization that lend
money to countries in conducting international
trade
International Monetary Fund (IMF)

22. Reason for recent growth in IB
• An international financial organization that lend
money to underdeveloped and developing
countries for development
World Bank
• World Trade Organization (WTO)
• European Community (EC)
• North American Free Trade Agreement (NAFTA)
• Asian Free Trade Agreement (AFTA)
Economic Communities

23. Thank You!