Professional Documents
Culture Documents
8. Helps in mutual growth: - countries depend upon each other for meeting
their requirements. India depends on gulf countries for its crude oil
supplies.
9. Investment in infrastructure: - international business necessitates proper
development of infrastructure. A company entering international business
must invest in roads.
INTERNATIONAL VERSUS DOMESTIC ENTREPRENEURSHIP
International Entrepreneurship is the process of an entrepreneur
conducting business activities across national boundaries. It may consist of
exporting, licensing, opening a sales office in another country. International
and domestic entrepreneurship are alike with respect to sales, costs and
profits, what differentiates domestic from international entrepreneurship is
the variation in relative importance of the factors involved in each decision.
International entrepreneurial decisions are more complex due to such
uncontrollable factors as economies, politics, culture and technology.
ECONOMIES:
In domestic entrepreneurship a single country at specified level of
economic development is focus of their efforts.
But in the case of international entrepreneurship, creating a business
strategy means dealing with differences in the level of economic
development, currency valuations, government regulations and marketing
systems.
STAGES OF ECONOMIC DEVELOPMENT:
In domestic entrepreneurship, suppose the entrepreneur concentrating
in the United States which is an industrially developed nation with
variances of relative income, need not worry about fundamental
infrastructures and established business ethics and norms.
But these factors vary greatly in other countries, from those
industrialized to those in the process of developing.
.TECHNOLOGICAL ENVIRONMENT
The variations and availability of technology are often surprising
particularly to an entrepreneur from a developed country. New products in
a country are created based on the conditions and infrastructure operant in
that country.
STRATEGIC ISSUES
Four strategic issues are of paramount importance to the international
entrepreneurs or an entrepreneur thinking about going international:
Factor-driven economies
Economies primarily compete on low prices and natural resources
Enterprises are mainly involved in primary production and occupy a
small part of the value chain
Investment-driven stage
Companies produce standard products and services
Productivity is improved through increased investment in
infrastructure and a business-friendly environment
Innovation-driven stage
Economies produce unique goods and services for the global market,
driving advances in technology and business methods
Service industries play an increasingly important role and contribute
significantly to GDP
CULTURE
Customs,
Work
Values,
skills &
beliefs
LEGAL
INFRASTRUC
TURE
Commerce,
Law ,ex-lm
systems
POLITICA
L SYSTEM
DECISION
TO EXPORT
OR INVEST
IN FOREIGN
BUSINESS
OPERATIONS
Leadership
and
Stability
ECONOMIC
FACTORS
Foreign
exchange
costs,
taxes
CULTURE
Culture consists of values , beliefs and attitudes shared by members of a
society that collectively influence there behavior. For example , in Japan ,
Women seldom achieve promotions to important managerial posts , and
although this situation is changing , entrepreneur in Japan will find that
.doing business is generally reserved for men
POLITICAL SYSTEMS
It clearly differs between countries. Most countries have trade quatos for
both imports and exports, and these are controlled politically through
agreements and treaties. More important, changes in govt leadership can
.dramatically alter these agreements
LEGAL SYSTEMS
This affect taxation, licensing, bank lending, hiring practices and safety
regulations among many other factors. Foreign subsidiaries must be setup
under domestic laws of foreign host countries business owners may have to
be local citizens, post bonds, have govt sponsorship.
ECONOMIC SYSTEMS
Economic differences influence all overseas decisions. Because foreign
customers may be more or less affluent than domestic onces, product
quality, packaging promotion and methods of distribution will differ. Also
because most foreign countries have pronounced difference in income.
EXPORTING
Exporting is the process of selling domestic goods or manufactured
products to foreign consumers.
For ex, the American company Weyerhauser, inc., can sell number to a
Japanese contractor for use in housing, or Compaq can shift fully
assembled micro computers from United States to its export agent for resale
in Nigeria. Exporting is a easiest way to enter global markets with little cost
or risk to the domestic company, and exporting can be relatively simple.
Consequently, exporting is particularly attractive to entrepreneurs who
seldom have capital for foreign investment or the expertise to set up
international ventures.
Direct exporting
It has the advantage of personal control by entrepreneurs, but they must
understand foreign markets and have experience negotiating with
foreigncustomers.
Foreign
Retailers
Domestic
manufacturer or
marketing company
seeking export
markets.
Directly
contracts
with
Foreign
Wholesalers
Overseas
Distributors
Indirect Exporting
Entrepreneurs can simplify the export process by indirect marketing
through an expert intermediary. Having someone else handle foreign
negotiation and legal transactions minimizes an entrepreneurs
responsibility. Perhaps more important, intermediaries usually have
excellent market connections to arrange sales efficiency.
The several types of intermediaries are:
1.
2.
3.
4.
5.
Commission agents
Export Management Companies [EMCs]
Export Trading Companies [ETCs]
Export Merchants or Remarketers
Piggyback Marketing
An individual;
A group of related individuals;
A government body;
Methods
The foreign direct investor may acquire 10% or more of the voting power of
an enterprise in an economy through any of the following methods:
Preferential tariffs
Infrastructure subsidies
R&D support