Lecture 3

FACTORS EFFECTING
INTERNATIONAL BUSINESS
INTERNAL EXTERNAL
INTERNATIONAL BUSINESS ENVIRONMEN
ENVIRONMEN
T T

Environment of international
business
 EXTERNAL ENVIRONMENT
LEGAL/GOVT.
ECONOMI INTERNAL ENVIRONMENT
C
Promoters /Shareholders Value
Missions /objectives
Physical assets/facilities

INTERNATIONAL BUSINESS

Co. image/brand equity

Human resources
Financial capabilities
Technological capabilities
Marketing capabilities
POLITICAL
CULTURE
 INTERNAL FACTORS
• VALUE SYSTEM
• MISSIONS AND OBJECTIVES
• MANAGEMENT STRUCTURE
• HUMAN RESOURCES
• COMPANY IMAGE AND BRAND EQUITY
• PHYSICAL ASSETS AND FACILITIES
• R&D AND TECHNOLOGIAL
CAPABILITIES
• FINANCIAL FACTORS
 Value system
• A value system refers to how an
individual or a group of individuals
organize their ethical or ideological values.
A well-defined value system is a
moral code.
• A personal value system is held by and
applied to one individual only.
• A communal value system is held by and
applied to a community/group/society.
Some communal value systems can take
the form of legal codes or law.
 Corporate value systems
• Fred Wenstøp and Arild Myrmel have proposed a
structure for corporate value systems that consists of
three value categories:

• The first value category is Core Values, which prescribe

the attitude and character of an organization, and are
often found in sections on Code of conduct on its web
page.
• Protected Values are protected through rules, standards
and certifications. They are often concerned with areas
such as health, environment and safety.
• Created Values, is the values that stakeholders,
including the shareholders expect in return for their
contributions to the firm. These values are subject to
trade-off by decision-makers or bargaining processes.
 Core values of Tata group
• Five core values
The Tata Group has always sought to be a value-driven organisation. These
values continue to direct the Group's growth and businesses. The five core
Tata values underpinning the way we do business are:
• Integrity: We must conduct our business fairly, with honesty and
transparency. Everything we do must stand the test of public scrutiny.
• Understanding: We must be caring, show respect, compassion and
humanity for our colleagues and customers around the world, and always
work for the benefit of the communities we serve.
• Excellence: We must constantly strive to achieve the highest possible
standards in our day-to-day work and in the quality of the goods and
services we provide.
• Unity: We must work cohesively with our colleagues across the Group and
with our customers and partners around the world, building strong
relationships based on tolerance, understanding and mutual cooperation.
• Responsibility: We must continue to be responsible, sensitive to the
countries, communities and environments in which we work, always
ensuring that what comes from the people goes back to the people many
times over.
 Wipro
• In the 1970’s Wipro defined a core of values and which its
success is built:
• HUMAN VALUES (concerning employees and customers)
• Wipro won’t go into businesses that harm people (like
tobacco and liquor)
• There should be no shouting at each other .
• THE LACK OF HIERARCHY
• There are no designed parking spaces, so whoever
comes first gets the best parking space .
• No one is called “Sir” by someone else .
• The chairman stands as a model all employees, it means
“do what I do” instead of “do what I say”
• INNOVATIONS
– Wipro always tries to improve their products and to develop
new products and better solutions
• VALUE FOR MONEY
– i.e. good quality of every product and service
MISSIONS AND OBJECTIVES
• Common Operating Objectives of
Organizations
» Profitability
» Market share
» High-quality workforce
» Cost efficiency
» Product and service quality
» Innovativeness
» Social responsibility
 Infosys Mission
• Infosys International Inc. is
dedicated to providing the people,
services and solutions our clients
need to meet their information
technology challenges and business
goals .To do this, we:
• Work to understand the needs and
requirements of our clients before
proposing a solution

• Develop responsive proposals that

provide cost-effective solutions to
our clients needs

• Deploy the right mix of people and

products to deliver value-added
services and solutions to our clients

• Follow-up on the quality of our

services and solutions to our clients

• Appreciate the trust that our clients

put in us as we work with them to
improve their business and
information technology.
 Human Resources
• The process of identifying and attracting a
qualified pool of applicants for vacant
positions.
– Current Employees

– Recent College Graduates

– Local Managerial Talent

• Process of screening and hiring the best-
qualified applicants with the greatest
performance potential.
International Staffing Policy
Regiocentric

Ethnocentric
Geocentric

Staffing Policy
The customary means
by which a company
staffs its offices.

Polycentric
 COMPANY IMAGE AND BRAND
EQUITY
• COMPANY IMAGE MATTERS WHILE-
1)RAISING FINANCE
2)FORMING JOINT VENTURES/ALLIANCES
3)LAUNCHING NEW PRODUCT
 TATAS GLOBAL FOOTPRINT
ACQURING ACQUIRED DEAL SIZE
COMPANY COMPANY
TATA STEEL CORUS $12.1 bn
TATA TEA TETLEY $407 mn
TATA DAEWOO $102 mn
MOTORS COM.VECI.
TATA BRUNNER $177 mn
CHEMICALS MOND

SOURCE-Business World,14,JAN,2008
Tata NANO
Building Global Brands