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INTERNATIONAL BUSINESS MANAGEMENT

We dont merely think as an American Company with extensions overseas, we think in terms of a global enterprise, a company of the world rather than any one country, (Kaisers Global Empire Forbes Magazine). This is an apt description of International Business as the concept has come to prevail in the current global environment. Introduction: Current interest in International Marketing/business can be explained in terms of competitive structures, coupled with shifts in demand characteristics in markets throughout the world. Companies that never ventured abroad until recently are now seeking foreign markets, to become more competitive, and more profitable.

For the firm venturing into international business for the first time and for those already experienced, the requirement is generally the same a thorough commitment and new ways of operating. International Business Defined International business consists of transactions that are devised and carried out across national borders to satisfy the objectives of individuals, companies, and organizations. International business activity focuses on transactions, which take various forms. Primary types of international businesses are: International Trade (Marketing) Investment Flows Other Capital Flows

The Marketing Concept:


During the past three decades the concept of marketing has changed dramatically.

It has evolved from a focus on product to a better product to the customer, the basic objective being profit, achieved through variations in the marketing mix. The Strategic Concept of marketing, which is being practiced since the 1990s, has brought in a major revolution in the history of marketing thought, and has shifted the focus of marketing from the customer or product or customer in the context of a wider external environment. The objective of marketing has now shifted from profit to stakeholder benefits. There is a growing recognition that profits are a reward for performance, defined as satisfying customers in a socially responsible or acceptable way. The strategic management focuses on managing strategic partnerships between vendors and customers in the value chain with the aim of creating value for customers. This concept of marketing relies on three principles of marketing Customer value and the value equation Competitive or the differential advantage Focus or concentration on Attention.

A clear focus on customer needs and wants and on competitive offer is needed to mobilize the effort to maintain a differential advantage. Evolution of Definition of Marketing Marketing is a human activity directed at satisfaction of needs and wants through an exchange process. Kotler Marketing is the process of focusing the resources and objectives of an organization on environment opportunities and needs. Warren Keegan Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. Kotler Marketing has been described as the art of selling products. - A managerial definition. Kotler Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services, to create exchanges that satisfy individual and organizational goals. American Marketing Association

International Marketing is the performance of business activities that direct the flow of goods and services to consumers or users in more than one nation (for profit). Cateora & Graham The Process Marketing can be conceived as an integral of two processes technical and social. In so far as technical process, comprising the product, pricing, branding etc. is concerned, domestic and International marketing are similar. But the social aspects of marketing, comprising the human factors, are distinct in each marketing environment as these involve consumer behavior patterns depending on customs, values and attitudes. Like in domestic marketing, international marketing is also directed towards satisfaction of human needs and wants through an exchange process, but these exchanges take place across national boundaries. The International Marketing Environment

Marketing concepts, processes, and principles are universally applicable and the marketers task lies in implementing marketing programs with respect to the environment within which he must operate. The marketing environment comprises two components Controllable and Uncontrollable factors. The International Marketing Task However, the International marketers task is more complicated since he must deal with two levels of uncontrollables: Domestic uncontrollables Foreign uncontrollables A business operating in a number of foreign countries might find polar extremes in political stability, class structure, economic climate which are critical elements in business decisions. Becoming International Depends on Mode of entry in a foreign market Degree of foreign involvement Degree of commitment.
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Phases of International Marketing Involvement A business can be placed in one of five distinct, but overlapping phases of International marketing: 1. No direct foreign Marketing. Characterized by Export marketing. 2. Infrequent Foreign Marketing. Temporary surpluses are disposed in foreign markets. 3. Regular Foreign Marketing. Production capacity is devoted to Exports on a regular basis. 4. International Marketing. Companies in this phase are fully committed and involved in International marketing activities. 5. Global Marketing. Companies treat the whole world as one market, in contrast to an International company that views the world as a series of country markets.

EVOLUTION IN INTERNATIONAL ORIENTATION Significant change in international orientation occurs when the company relies on foreign markets to absorb permanent production surpluses and comes to depend on foreign profits. International operations of businesses reflect the changing competitiveness brought about by globalization of markets. Global markets exist for some products but not yet for all products.

International Marketing concepts:


Three orientations exist. Level of commitment is explained by the EPRG schema: Domestic market extension concept: The primary motive is to dispose of excess domestic production, and international operations are secondary. Firms with this approach are Ethnocentric in EPRG schema, and consider the home country as superior to the rest of the world, thus enabling the company to sell its products everywhere without any adaptation.
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Multi-domestic market concept: Firms with this orientation market on a country-bycountry basis, with separate marketing strategies for each country, and are classified as Polycentric, or Multinational companies. Global marketing concept: A company guided by this philosophy is referred to as a Global company, and its market coverage is the world. Such companies are classified as Regiocentric or Geocentric under the EPRG schema. Regiocentric approach calls for development of an integrated regional strategy. I.e. a U.S. company focusing on Canada, Mexico & American Market (Nafta arrangement), or a European company developing strategies for the European market (E.U. arrangement). Geocentric approach focuses attention of the company on the entire world as a potential market and calls for development of integrated market strategies.

GLOBAL MARKETING At the global level, companies treat the whole world, including the home market, as one market. A global company develops a strategy to reflect the existing commonalities of market needs among many countries to maximize returns through global standardization of its business activities, wherever it is cost effective and culturally possible. The concept was first mooted by Prof Theodore Levitt (HBR 1983) on the basis of homogenizing effect of mass communication that reduced the cultural differences among markets. Global Awareness: To be globally aware, companies must have Objectivity in assessing opportunities, evaluating potential and responding to problems. Tolerance toward cultural differences. You do not have to accept, as your own, the cultural ways of another, but you must allow others to be different and equal. Knowledge of cultures, history, world market potential, global economic, social and political trends.
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A globally aware person must continuously monitor markets around the world, as economic and social trends in emerging markets like Eastern Europe, Latin America, China and India have already ushered in a new world economic order. Transnational company is a global company with a regiocentric or geocentric orientation. Driving Forces: Technology and innovation Market needs and wants Transportation and communication improvements Product development costs Quality standardization Development of WWW and the Internet. World economic trends towards deregulation & privatization. Regional economic groupings. Leverage which has resulted in Experience transfers Economies of scale Resource utilization Development of global strategy based on standardization

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Globalization of Markets Globalization of Production Restraining Forces Despite the impact of driving forces, several restraining forces have slowed down the impact of global marketing: Management Myopia when corporate managements try to impose their policies and culture. Organizational culture when global companies fail to integrate global vision and perspective with local initiative and inputs. Regional & National controls and barriers implies protection to local enterprise and interests and emergence of Regional Economic Groups. Unintended consequences of globalization: Although the drivers of globalization are overwhelming, recent trends have slowed the process to some extent. Concerns have been expressed in areas of worker exploitation, domestic job losses, cultural extinction, diminished sovereignty, and environmental dangers, resulting in violent protests on several occasions.
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Future of Globalization: Economic power and marketing potential having become more evenly distributed among countries than at the outset of globalization, companies with a global vision are adopting more diversified orientation than mere standardization of products or markets and may be pursuing a global strategy in some markets and a multi-domestic strategy in other markets. Multinational Enterprises The multinational corporation represents the highest level of overseas involvement, and is characterized by a global strategy of investment, production and distribution. A multinational enterprise is any enterprise that has productive activities in two or more countries. Charles Hill This definition emphasizes the structural element. An alternate definition emphasizes the ownership not the operation of the company. A third definition describes a multinational whose top management is composed of nationals of various countries.

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A final definition of multinationality is to look at the organizational structure of the company. An absolute measure would be commitment of certain amount of resources to foreign operations. This should imply commitment of substantial resources in terms of financial, technological and human resources. Recent Trends Two notable trends in demographics of multinationals are: Rise in Non-U.S. multinationals, particularly Japanese. Rise of Mini-multinationals. Basis of Distinction Companies may be classified on the basis of strengths they possess at each level. International: Ability to exploit the parent companys knowledge and capabilities through worldwide diffusion of products. Multinational: A companys flexibility to respond to national differences.

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Global: Exploiting cost advantage through centralized operations. Transnational: A company combines strengths of each of the preceding stages in an integrated network, which leverages worldwide knowledge and experience.

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