INTERNATIONAL BUSINESS MANAGEMENT

Nature,scope, need and problems for international business

Definition: International Business is the process of focusing on the resources of the globe and objectives of the organisations on global business opportunities and threats. International business defined as global trade of goods/services or investment. More comprehensive view does not focus on the firm but on the e change process !ree "rade occurs when a government does not attempt to influence# through $uotas or duties# what its citi%ens can bu& from another countr& or what the& can produce and sell to another countr&."he Benefits of "rade allow a countr& to speciali%e in the manufacture and e port of products that can be produced most efficientl& in that countr&."he 'attern of International "rade displa&s patterns that are are eas& to understand ()audi *rabia/oil or Me ico/labor intensive goods+. ,thers are not so eas& to understand (-apan and cars+.

Nature of International Business

.. *ccurate Information /. Information not onl& accurate but should be timel& 0. "he si%e of the international business should be large 1. Mar2et segmentation based on geographic segmentation 3. International mar2ets have more potential than domestic mar2ets

Scope of International Business

.. International Mar2eting /. International !inance and Investments 0. 4lobal 56 1. !oreign 7 change

Need for International Business

.. "o achieve higher rate of profits /. 7 panding the production capacit& be&ond the demand of the domestic countr& 0. )evere competition in the home countr& 1. 8imited home mar2et 3. 'olitical conditions 9. *vailabilit& of technolog& and managerial competence :. ;ost of manpower# transportation <. =earness to raw material >. 8iberalisation# 'rivatisation and 4lobalisation (8'4+ .?. "o increase mar2et share ... Increase in cross border business is due to falling trade barriers (@",+# decreasing costs in telecommunications and transportationA and freer capital mar2ets

Reasons for Recent International Business Growth

.. 7 pansion of technolog& /. Business is becoming more global because B"ransportation is $uic2er B;ommunications enable control from afar B"ransportation and communications costs are more conducive for international operations 0. 8iberali%ation of crossCborder movements 1. 8ower 4overnmental barriers to the movement of goods# services# and resources enable ;ompanies to ta2e better advantage of international opportunities

Pro le!s in International Business

.. 'olitical factors /. 5igh foreign investments and high cost 0. 7 change instabilit& 1. 7ntr& re$uirements 3. "ariffs# $uota etc. 9. ;orruption and bureaucrac& :. "echnological polic&

"hat is International Business# Meanin$

International Business conducts business transactions all over the world. "hese transactions include the transfer of goods# services# technolog&# managerial 2nowledge# and capital to other countries. International business involves e ports and imports. International Business is also 2nown# called or referred as a 4lobal Businessor an International Mar2eting. *n international business has man& options for doing business# it includes# .. 7 porting goods and services. /. 4iving license to produce goods in the host countr&. 0. )tarting a joint venture with a compan&. 1. ,pening a branch for producing D distributing goods in the host countr&. 3. 'roviding managerial services to companies in the host countr&.

Features of International Business

"he nature and characteristics or features of international business are:C

Lar$e scale operations % In international business# all the operations are conducted on a ver& huge scale. 'roduction and mar2eting activities are conducted on a large scale. It first sells its goods in the local mar2et. "hen the surplus goods are e ported. Inter$ration of econo!ies % International business integrates (combines+ the economies of man& countries. "his is because it uses finance from one countr&# labour from another countr&# and infrastructure from another countr&. It designs the product in one countr&# produces its parts in man& different countries and assembles the product in another countr&. It sells the product in man& countries# i.e. in the international mar2et. &o!inated ' de(eloped countries and MN)s % International business is dominated b& developed countries and their multinational corporations (M=;s+. *t present# M=;s from E)*# 7urope and -apan dominate (full& control+ foreign trade. "his is because the& have large financial and other resources. "he& also have the best technolog& and research and development (6 D D+. "he& have highl& s2illed emplo&ees and managers because the& give ver& high salaries and other benefits. "herefore# the& produce good $ualit& goods and services at low prices. "his helps them to capture and dominate the world mar2et. Benefits to participatin$ countries % International business gives benefits to all participating countries. 5owever# the developed (rich+ countries get the ma imum benefits. "he developing (poor+ countries also get benefits. "he& get foreign capital and technolog&. "he& get rapid industrial development. "he& get more emplo&ment opportunities. *ll this results in economic development of the developing countries. "herefore# developing countries open up their economies through liberal economic policies.

*een co!petition % International business has to face 2een (too much+ competition in the world mar2et. "he competition is between une$ual partners i.e. developed and developing countries. In this 2een competition# developed countries and their M=;s are in a favourable position because the& produce superior $ualit& goods and services at ver& low prices. Developed countries also have man& contacts in the world mar2et. )o# developing countries find it ver& difficult to face competition from developed countries. Special role of science and technolo$' % International business gives a lot of importance to science and technolog&. )cience and "echnolog& () D "+ help the business to have largeCscale production. Developed countries use high technologies. "herefore# the& dominate global business. International business helps them to transfer such top highCend technologies to the developing countries. International restrictions % International business faces man& restrictions on the inflow and outflow of capital# technolog& and goods. Man& governments do not allow international businesses to enter their countries. "he& have man& trade bloc2s# tariff barriers# foreign e change restrictions# etc. *ll this is harmful to international business. Sensiti(e nature % "he international business is ver& sensitive in nature. *n& changes in the economic policies# technolog&# political environment# etc. has a huge impact on it. "herefore# international business must conduct mar2eting research to find out and stud& these changes. "he& must adjust their business activities and adapt accordingl& to survive changes.

Importance of International Business for 7conom&

Earn forei$n e+chan$e % International business e ports its goods and services all over the world. "his helps to earn valuable foreign e change. "his foreign e change is used to pa& for imports. !oreign e change helps to ma2e the business more profitable and to strengthen the econom& of its countr&. Opti!u! utilisation of resources % International business ma2es optimum utilisation of resources. "his is because it produces goods on a ver& large scale for the international mar2et. International business utilises resources from all over the world. It uses the finance and technolog& of rich countries and the raw materials and labour of the poor countries. Achie(e its o ,ecti(es % International business achieves its objectives easil& and $uic2l&. "he main objective of an international business is to earn high profits. "his objective is achieved easil&. "his it because it uses the best technolog&. It has the best emplo&ees and managers. It produces highC$ualit& goods. It sells these goods all over the world. *ll this results in high profits for the international business. To spread usiness ris-s % International business spreads its business ris2. "his is because it does business all over the world. )o# a loss in one countr& can be balanced b& a profit in another countr&. "he surplus goods in one countr& can be e ported to another countr&. "he surplus resources can also be transferred to other countries. *ll this helps to minimise the business ris2s. I!pro(e or$anisation.s efficienc' % International business has ver& high organisation efficienc&. "his is because without efficienc&# the& will not be able to face the competition in the international mar2et. )o# the& use all the modern management techni$ues to improve their efficienc&. "he& hire the most $ualified and e perienced emplo&ees and managers. "hese people are trained regularl&. "he& are highl& motivated with ver& high salaries and other benefits such as international transfers# promotions# etc. *ll this results in high organisational efficienc&# i.e. low costs and high returns. Get enefits fro! Go(ern!ent % International business brings a lot of foreign e change for the countr&. "herefore# it gets man& benefits# facilities and concessions from the government. It gets man& financial and ta benefits from the government. E+pand and di(ersif' % International business can e pand and diversif& its activities. "his is because it earns ver& high profits. It also gets financial help from the government. Increase co!petiti(e capacit' % International business produces highC$ualit& goods at low cost. It spends a lot of mone& on advertising all over the world. It uses superior technolog&# management techni$ues# mar2eting techni$ues# etc. *ll this ma2es it more competitive. )o# it can fight competition from foreign companies