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International Business -2

Prof: Sham Choughule EMIB-IIFT New Delhi

Background
Globalization Explore national resources/factor of production world wide and make profit making business by way of various entry mode. I.B is the process of focusing on the resources of the globe and objective of organization on global business opportunities and threats, in order to produce-buy-sell or sell of exchange of goods/services worldwide

Objectives
Increase Market share by way of export

Enhancement of capacity Renuka sugar Mill

Expansion of business All cargo tie up with


Belgium company High profit Resources acquisition Adani takeover coalmines in Indonesia
Risk avoidance from domestic market competition -Adverse business environment Pak

Scope
Flows of good & services service export FDI inflows good for economy Manufacturing activities -100% -SEZ Increasing in foreign exchange reserve

Use of natural resources/ Human resources use of human capital Cooperation among countries- FTA Overall growth of economy

Importance
Company can survive Many companies are closedown in MIDC Opportunities for growth more profit Business development expansion of base Country can develop -India1991 to 2010

Current trend
Growth of service sector-banks Setting up manufacturing unit Strategic alliance shipping co Joint venture Merask +CONCOR Merger & Acquisition

Domestic Business V/s I B


Top 500 companies in India mostly are Indian MNC Liberalization policy of Govt Go to foreign country and expand your market. If not then you will finish JCT/Baroda rayon MIDC /GIDC Therefore, many companies become Indian MNC and venturing into foreign business L & T has set manufacturing base in China Indian Overseas bank has opened Branch in Singapore

Reasons of IB
There has been growth in globalization in recent decades due to the following factors Governments are removing international business restrictions. Example-Indias import policy Institutions provide services to ease the conduct of international business. ESSAR in foreign oil field Consumers know about and want foreign goods and services. Electronic items Competition has become more global. Political relationships have improved among some major economic powers. China & USA Countries cooperate more on transnational issues. Example-Communication or gas pipe line from Iron to India Cross-national cooperation and agreements.
Many FTA-Free Trade Agreements are taking place all over world

Approach
1)Domestic purely domestic strategy 2)Ethnocentric-I B is based on domestic experience only extension T.N to S A 3)Polycentric-Formulating different strategies for different market 4)Regiocentric producing in one country & exports to all country 5)Geocentric Transnational companies produce, markets, invest and operates across world. Linkage of Global resources with global market and make profit

Entry mode
Indirect export Deem export Physical export Service export Licensing arrangement with foreign company Franchising Education field Manufacturing Turn Key projects FDI for green field projects Strategic alliance shipping consortium Joint venture Merger & acquisitions

Risk
Economic Inflation Political risk Pakistan-Sri Lanka Africa Foreign debt- Pakistan Exchange rate instability Sri Lanka Legal issues India PSACO SEZ Cultural problem-India Pakistan National security HPS Hongkong in Indian port sector

Thanks
Thanks for your daily reading of business news paper and understanding of international Business

Country risk case study


Indian companies are going aboard for business purpose Pls evaluate country risk as per country selected by you