International Business

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 j
BA ISATI


 ore than $1.2 Billion Foreign transaction every

day.

 Trade in goods and services $4Trillion per year.

 jlobal Culture like cDonald¶s , Coca Cola, Sony,

Disney Films etc.
 Factors for jlobalization

 Technology
 jovernment
 Institutions
 Consumers
 Competition
 Political
 Countries
 Cross- ational co-operation agreements.
 The jlobal Business Environment

Ö Collapse of communist economies.

Ö Economic power of western nations.
Ö Rise of newly industrialized nations.
Ö Free market economies.
Ö Belief in open markets, trade and foreign
investments as the road to economic development.
 The jlobal Business Environment

Ö Trade Agreements and stabilization of trade

policies.
Ö Regional trade blocks.
Ö Free arket Economie.
Ö easures to facilitate trade.
Ö jlobalization of arkets.
Ö Big Emerging arkets.
Ö The internet.
 The jlobal Bus. Env. - Free arket Economies

Ö Privatization and deregulation.

Ö Especially in financial services, transportation and
communications.
Ö ower barriers to trade.
 Challenges For jlobalization

1. Socio-Cultural Factors like Taste, Preferences etc.

2. Competitive Advantage.
3. Closer ook to the Economy.
 International Business

Ö International Transactions - export-import trade, direct

foreign investment - wholly owned subsidiaries, joint
ventures; licensing, franchising, outsourcing, and
management contracts.
Ö ore than one set of environmental variables.
Ö Interactions between countries - Trade and foreign policies,
Tariffs and other barriers, and Exchange rates.
Ö Variables which are Especially Important- Infrastructure,
arket structure, and Socio/cultural variables.
 Types of International Business

 Trading
 anufacturing and arketing
 Sourcing and arketing
 jlobal Sourcing of Production.
 External Environment

 Economic Environment.
 Political Environment.
 Human Cultural Environment.
 Technological Environment.
 egal Environment.
 Economic Environment

 oney- Important Economic Dimension

 The World Economy ± An
verview
 Economic Integration

*10% in beginning of 20th Century

*50% today
*EU and AFTA
Business Success Visa versa ew Reality of Changing World like:-

A. Capital ovements
 Trade $4trillion per year
 Foreign Exchange transaction $1trillion per day
B. Productivity and Employment
 Employment Declining but Production Increasing
 anuf. Constitute 23%to 24% of jP
C. Emerging World Economy as Dominant Economy
 Real Success -jermany and Japan- Business
leader focus on Economy
 Economic System

Types of Economic System

 arket Allocation- Delivering the goods and
Services that people need. Exam-U.S , Japan
 Command Allocation -State has broad powers to
serve public interest. arketing mix is not strategic
variable. Exam- China, Former USSR, India.
 ixed System : This is combination of both
arket and command allocation.
 Stages of kt. Development
 ow income Countries.(Pre Industrial Countries)
Income ess than $786 Per capita.
 ow middle income countries( ess Developed
Countries).
Income between $786 to $3125
 Upper iddle Income (Unindustrialized Country).
Income From $3125 to $9655.
 Stages of kt. Development Cont.

 High Income countries(Advanced Countries).

Income above $9655.

 Basket Cases( ow In come, o jrowth)

 ocation of Population

 72% world income in Triad ( orth

America/EU/Japan).
 World Population 6 Billion
 10 countries Account 59% of World Income
 egative co-relation Between Population, jrowth
rate and Income per capita.
 ktg and Economic Development.

 Industrialized Countries.
Satisfaction of dynamic market Place.

 ess developed countries.

Production/
utput.
o customer needs & wants.
 Role of ktg.

 To identify people eeds & Wants.

 To focus individual & organization efforts to respond

to these needs & Wants.

 Comparison in low & high income countries.

 Economic Risk.

 Economic Development
 Economic change effect
 jratuity of economic disorder.
 Stagnation to depression.
 Few consumer buyer.
 arket Adjustment.
 Balance of Payment.

 Current Account.
Recurring trade in mercendise & service.
Private jift.
Public Aid Between countries.
 Capital Account.
ong term Derived investment.
Portfolio gmt.
Short/ ong Capital Flow.
 Trade Pattern

 FDI Increase 5 times than World Trade.

 FDI Increased 10 times than jP.
 erchandise Trade.
 75% World Export-Industralized countries.

 Service Trade
 Copyright, Patent Acts Enforced.

 Economic Co-operation
 Human cultural Environment.

 Culture.
 anguage of Friendship.
 Cultural Universal.
 Social institution.
 Human & the universe belief system.
 Aesthetics/jraphics/Plasticart/Folkbre/usic/Dra
ma/Dance.
 anguage.
 Culture
 Conscious and Unconscious
 Characterstic of Culture:-
* Culture is Prescriptive
* Culture is socially shared
* Culture Facilitate communication
* Culture is earned
* Culture is Subjective
* Culture is Enduring
* Culture is Cumulative
* Culture is Dynamic
 Technological environment.

 Types of technology in use.

 evel of technology developments

 Speed of new technology adoption.

 Problems of technological Environment.

U abour intensive vs Technology.
UTime lack.
 Political Environment.

jlobal marketer must attempt to comply with each set

of national and in some instance regional
constraints.

Any company doing business outside the home

country must go through the government policy and
analyze the political problem.

Example: The jerman Packaging.

 Types
f jovernment.

Political System
Parliamentary(open).
All democratic .

Absolutist (closed).
All onarchies & Dictatorship.
 Classification of Political Parties.

 Two parties.
U.S. and U.K.
 ultiparty System
jermany and Israel
 Single Party System
Egypt
 Dominated
ne Party.
Cuba and ibya
 Political risk

 Confiscation
 Expropriation
 ationalization
 Domestication
 Creeping Ex-expropriation
 jeneral Instability risk.

wnership/Control risk.

peration Risk.
 Transfer risk.
 egal Environment

 egal System

Common aw

Statute aw.

Common Vs Code aw.

Statutory aw.
 Side stepping egal Problems

 Establishment
 Jurisdiction
 The ultilateral Agreement on Invt.
 Intellectual Property-Patents and trade mark.
 Counterfeiting.
 Antitrust.
 icensing and Trade secret
 Copyright
 Branch Vs Subsidiary
 jray arket
 Conflict resolution.
 World Trade
rganization

š Created at the conclusion of the last j.A.T.T.

agreement.

š 149 countries (as of December 2005)

š Functions:
 Administering WT
trade agreements
(Exam- jATT, jATS, TRIPS)
 Forum for trade negotiations.
 Handling trade dispute
 onitoring national trade policies
 Ethical Issue.
 U.S. aws and Exports:
 uclear onproliferation Treaty:
 Human Rights Policy.
 Antiboycott Regulations.
 Foreign Corrupt Practices Act(FCPA).
 Healthy, safety and Environmental Regulations.
 Antitrust.
Chapter -1

EDS