The challenges include geographical changes control over operations and adoptability. International business is always changing.

Globalization is coming through all types of companies, the profit or no-profit, public or private, small or large. Need for physical and technological infrastructure is increasing. Internationalization creates wealth and employment.

International Entrepreneurship is a process of conducting business across national boundaries.

REASONS:

More profits. More sales. Expansion To get international exposure. To have more brand awareness. As a result of cut throat local competition. Encouraging host government policies. Capitalize on natural and human resources of host country.

IMPORTANCE OF INTERNATIONAL BUSINESS TO FIRM:

GE = C1 + PL + E + D + C2 + C3

GE = C1 = PL = E = DC = C2 = C3 =

Global Entrepreneurship Culture Politics and Legal Environment Economy and economic integration Distribution Channel Change Communication (Level of Technology)

1. ECONOMICS:
Differences exist in level of economic development, currency valuation, Government regulations, Interest, banking systems, Venture Capital Market, Marketing and Distribution System and issues of raising capital.

2. STAGE OF ECONOMIC DEVELOPMENT: Differences exist on Infra-structure e.g. roads, electricity, communications, banking facilities, educational system, legal system, business ethics and norms.

3. BALANCE OF PAYMENTS:
The difference between country value of export and import over time and effects Business transactions and exchange rates among countries.

Export > Import Export < Import 4. TYPE OF SYSTEM:

(Surplus Balance) (Deficit Balance)

The socio-economic system existing in a country. Various systems include capitalism, communism, imperialism, dictatorism, socialism and social welfare.

5. POLITICAL ND LEGAL ENVIRONMENT:

Political system is law making i.e. system of parliament. Legal system constitutes of law implementation i.e. system of courts. Individualism Vs collectivism. Individualism: A person is looking after him or his immediate family members and then society Collectivism: In collectivism it look it society first and then after his family members. Democracy Vs Totalitarianism Democracy: People have right to choose their representative. Totalitarianism: No involvement of public.

Political Risk Analysis: Risk includes operating risk, transfer risk, ownership risk, conflicts, gorilla war fare, civil disturbance and terrorism. Legal system covers property rights, contract laws, product safety and liability.

6. CULTURAL ENVIRONMENT: Each element of business plan has some concurrency with local culture. Collection of bellicose, norms, artifacts, symbols,. Bribery and corruption issue. Translation problems and errors. 7. TECHNOLOGICAL ENVIRONMENT: (Production and Operational Technology) Variations exist among countries. Standardization and National responsiveness Customers are interest in consistent technology. New Product Development.

Common ways of thinking and behavior that are passed on from generations or transmitted by social organization, developed, reinforce and learnt.
Elements include language, social situations, religion, political philosophy, economic philosophy, education, manners and customs.

i) Language:
Language is composed of verbal and non-verbal components whereas non-verbal includes body position, eye contact, gestures and physical space. Time is assumed differently in different cultures. E.g. in Arabs it is very common to say Bukra Inshallah. Business relationship is also important.

ii) Social Structure:

This affects life style, living standards, and consumption patterns. E.g. a family in USA comprises of parents and children whereas in other countries grand parents and other relatives are also part of family Social classes that is upper class, middle class and lower class. Reference Group that reflects individuals behavior. Manager, Employees relationships.

iii) Religion:
The shared believes and attitudes e.g. Christianity, Islam, Hinduism, Buddhism and non-religious. Religion is reflected in values and attitudes of individual and society. iv) Political Philosophy: The rules and regulation of a country impacting the global entrepreneur and the way he conducts the business e.g. Embargos controls sanctions.

v) Economics and Economic Philosophy:

Whether the country is overall in favour of trade or impose trade restrictions e.g. Import duties, Tariffs and subsides. vi.) Education:

The formal and informal education that may include literacy rate, skills, career paths and technology levels.

vii)

Manners and Customs:

Negotiation: One has to be careful before reaching on conclusion e.g. use of silence gaps Gift Giving: Whether to give a gift, what gift, how to wrap it and manner of giving it.

CATEGORIES OF ECONOMIC SYSTEM: There are four categories of economic system:

i) Market Economy: All or most of the activities are privately owners and services are not planned. Production depends on supply and demand factors, that determines price. No restriction on supply, economic efficiency and economic growth and development.

ii) Command Economy: Type, quantity and price are planned by government and pre government owned. Lack of efficiency as there is no competition. iii) Mixed Economy: Both market and command economy that is private and government ownership e.g. France, Italy, Sweden, usually health care is controlled by government. iv.) State Directed Economy: Government has an established industrial policy and direct investments of private firms e.g. Japan and Korea.

Logistics and transportation had improved a lot.

Distribution channel differ considerably among countries and can affect, success of a company a lot. Factors include overall sales potential, amount and type of competition, cost of product, geographic size of country, investment policies, exchange rates, political risks and marketing plan.

i) General Agreement for Trade & Tariff (GATT):

WTO (World Trade Organization) (The purpose of WTO is free trade among nations) Barriers include duties, tariff, restrictions quota, subsidies and taxes. Mutually agreed upon systems of reduction of above and violating country may be pressurized to change its policies.

ii) Increasing Protectionist Attitude: They results from events happening in the last decade. E.g. Trade deficit of USA, emergence of Japan and China and bilateral export restraints to avoid GATT. iii) Trade Blocks and Free Trade Areas: Groups of nation facilitating trade among themselves And excluding outsides. NAFTA (North American Free Trade Agreement) European Community based on the principle of Supranationality and the members countries cannot enter Into trade agreement on their own.

The problems include:

Increased cost of product. Voluntary export restraint. Conformance with the local content one.

The influence, attractiveness as the potential investment opportunities. Careful analysis and determine the best country to enter.