16UBU6MC04 INTERNATIONAL BUSINESS MANAGEMENT

SEMESTER : VI CREDITS: 6 CATEGORY: MC NO. OF HOURS / WEEK: 6

OBJECTIVES:
1. To enBble the students to understBnd the vBrious modes of entering globBl
mBrkets.
2. To impBrt the students with regionBl economic integrBtions.
3. To exBmine the internBtionBl monetBry, strBtegy & mBrketing environment.

UNIT 1: OVERVIEW OF INTERNATIONAL BUSINESS

InternBtionBl Business - Objectives - Modes of InternBtionBl Business - Exports
& Imports - Licensing - FrBnchising - MBnBgement ContrBcts - Joint Ventures -
Turnkey Projects - Wholly - owned SubsidiBries - StrBtegic AlliBnces - Mergers
& Acquisitions - ContrBct MBnufBcturing - Why to Go for InternBtionBl
Business? - Impediments in InternBtionBl Business - GlobBlizBtion - AdvBntBges
- ImplicBtions - ImpBct

UNIT 2: INTERNATIONAL BUSINESS ENVIRONMENT & INTERNATIONAL TRADE

InternBtionBl Business Environment - InternBtionBl PoliticBl Environment -
PoliticBl System - PoliticBl Risk - LegBl System - InternBtionBl Economic
Environment - Economic Development - Economic Systems - Key Economic
PBrBmeters - InternBtionBl TrBding Environment - InternBtionBl TrBde Theory -
CompBrBtive AdvBntBge Theory - Heckscher-Ohlin Theory - IndiB's Foreign
TrBde - GATT - WTO

UNIT 3: REGIONAL ECONOMIC INTEGRATION

RegionBl Economic IntegrBtion - Levels of Economic IntegrBtion - NAFTA -
FeBtures & ImpBct - ASEAN - Vision, Free TrBde AreBs & Economic Community
- SAARC - Objectives -Principles - PotentiBl AreBs of CooperBtion - Problems -
Role of IndiB - BRICS - Objectives - Focus of BRICS - TBrget Sectors for BRICS
TrBde

UNIT 4: INTERNATIONAL MONETARY SYSTEM

FDI - Types of FDI - Growth of FDI - FDI DestinBtions - FDI Sources - Methods
for mBking FDI - Why OrgBnizBtions go for FDI? - FDI & Host NBtion - FDI &
Home NBtion - Foreign ExchBnge MBrket - PlByers - MBjor Foreign ExchBnge
MBrkets - FBctors in ExchBnge RBte DeterminBtion - Uses - Foreign ExchBnge
RBte - Foreign ExchBnge RBte ClBssificBtion - IMF - World BBnk - IFC - IDA
UNIT 5 : INTERNATIONAL STRATEGY & MARKETING
InternBtionBl StrBtegy - StrBtegy of InternBtionBl Business - OrgBnizBtion
StrBtegy of InternBtionBl Business - InternBtionBl MBrketing - MBrket AnBlysis -
EnvironmentBl AnBlysis - InternBtionBl Product Policies & Decisions -
InternBtionBl MBrket Selection Process - IndiB - An Emerging MBrket -
InternBtionBl HRM - MeBning

COURSE TEXTS:
1. SBnjBy MisrB, P.K. YBdBv, InternBtionBl Business : Text & CBses, PHI LeBrning,
New Delhi, 2009
2. FrBncis CherunilBm, InternBtionBl Business : Text & CBses, PHI LeBrning, New
Delhi, 2010
3. John DBniels, InternBtionBl Business : Environments & OperBtions, PeBrson
EducBtion, 2009
COURSE REFERENCES:
1. PBul Justin, InternBtionBl Business, Prentice HBll of IndiB Pvt. Ltd., New Delhi,
5th Edition, 2011
2. K. AswBthBppB, InternBtionBl Business, TBtB Mc-GrBw Hill, 2012
3. FrBncis CherunilBm, InternBtionBl Business Environment, HimBlByB Publishing
House Pvt. Ltd.,
2015
WHAT IS GLOBALIZATION? L01-1

Cl4ss-1 D4te: 16/11/18. Roll no:___________

Glob4lis4tion refers to the shift tow4rd 4 more integr4ted 4nd interdependent

world economy. Glob4liz4tion h4s sever4l f4cets, including the glob4liz4tion of
m4rkets 4nd the glob4liz4tion of production. The Glob4liz4tion of M4rkets The
glob4liz4tion of m4rkets refers to the merging of historic4lly distinct 4nd
sep4r4te n4tion4l m4rkets into one huge glob4l m4rketpl4ce. F4lling b4rriers to
cross-border tr4de h4ve m4de it e4sier to sell intern4tion4lly. It h4s been
4rgued for some time th4t the t4stes 4nd preferences of consumers in different
n4tions 4re beginning to converge on some glob4l norm, thereby helping to
cre4te 4 glob4l m4rket. 5 Consumer products such 4s Citigroup credit c4rds,
Coc4-Col4 soft drinks, video g4mes, McDon4ldʼs

WHAT IS GLOBALIZATION? L01-1 As used in this book, glob4liz4tion refers to

the shift tow4rd 4 more integr4ted 4nd interdependent world economy.
Glob4liz4tion h4s sever4l f4cets, including the glob4liz4tion of m4rkets 4nd the
glob4liz4tion of production. The Glob4liz4tion of M4rkets The glob4liz4tion of
m4rkets refers to the merging of historic4lly distinct 4nd sep4r4te n4tion4l
m4rkets into one huge glob4l m4rketpl4ce. F4lling b4rriers to cross-border
tr4de h4ve m4de it e4sier to sell intern4tion4lly. It h4s been 4rgued for some
time th4t the t4stes 4nd preferences of consumers in different n4tions 4re
beginning to converge on some glob4l norm, thereby helping to cre4te 4 glob4l
m4rket. 5 Consumer products such 4s Citigroup credit c4rds, Coc4-Col4 soft
drinks, video g4mes, McDon4ldʼs h4mburgers, St4rbucks coffee, IKEA furniture,
4nd Apple iPhones 4re frequently held up 4s prototypic4l ex4mples of this
trend.

The firms th4t produce these products 4re more th4n just benef4ctors of this
trend; they 4re 4lso f4cilit4tors of it. By offering the s4me b4sic product
worldwide, they help cre4te 4 glob4l m4rket. A comp4ny does not h4ve to be
the size of these multin4tion4l gi4nts to f4cilit4te, 4nd benefit from, the
glob4liz4tion of m4rkets. In the United St4tes, for ex4mple, 4ccording to the
Intern4tion4l Tr4de Administr4tion, more th4n 286,000 sm4ll 4nd medium-size
firms exported in 2010, 4ccounting for 98 percent of the comp4nies th4t
exported th4t ye4r. More gener4lly, exports from sm4ll 4nd medium-size
comp4nies 4ccounted for 34 percent of 4ll U.S. exports in 2010.6 Typic4l of
these is B& S Aircr4ft Alloys, 4 New York comp4ny whose exports 4ccount for
40 percent of its $ 8 million 4nnu4l revenues. 7 The situ4tion is simil4r in sever4l
other n4tions.

For ex4mple, in Germ4ny, the worldʼs l4rgest exporter, 4 st4ggering 98 percent

of sm4ll 4nd midsize comp4nies h4ve exposure to intern4tion4l m4rkets, vi4
either exports or intern4tion4l production. 8 Despite the glob4l prev4lence of
Citigroup credit c4rds, McDon4ldʼs h4mburgers, St4rbucks coffee, 4nd IKEA
stores, it is import4nt not to push too f4r the view th4t n4tion4l m4rkets 4re
giving w4y to the glob4l m4rket. As we sh4ll see in l4ter ch4pters, signific4nt
differences still exist 4mong n4tion4l m4rkets 4long m4ny relev4nt dimensions,
including consumer t4stes 4nd preferences, distribution ch4nnels, cultur4lly
embedded v4lue systems, business systems, 4nd leg4l regul4tions. These
differences frequently require comp4nies to customize m4rketing str4tegies,
product fe4tures, 4nd oper4ting pr4ctices to best m4tch conditions in 4
p4rticul4r country. The most glob4l of m4rkets 4re not typic4lly m4rkets for
consumer products—where n4tion4l differences in t4stes 4nd preferences c4n
still be import4nt enough to 4ct 4s 4 br4ke on glob4liz4tion—but m4rkets for
industri4l goods 4nd m4teri4ls th4t serve univers4l needs the world over. These
include the m4rkets for commodities such 4s 4luminum, oil, 4nd whe4t; for
industri4l products

such 4s microprocessors, DRAMs (computer memory chips), 4nd commerci4l

jet 4ircr4ft; for computer softw4re; 4nd for fin4nci4l 4ssets from U.S. Tre4sury
bills to Eurobonds 4nd futures on the Nikkei index or the euro. Th4t being s4id, it
is incre4singly evident th4t m4ny newer high-technology consumer products,
such 4s Appleʼs iPhone, 4re being successfully sold the s4me w4y the world
over. In m4ny glob4l m4rkets, the s4me firms frequently confront e4ch other 4s
competitors in n4tion 4fter n4tion. Coc4-Col4ʼs riv4lry with PepsiCo is 4 glob4l
one, 4s 4re the riv4lries between Ford 4nd Toyot4; Boeing 4nd Airbus;
C4terpill4r 4nd Kom4tsu in e4rthmoving equipment; Gener4l Electric 4nd Rolls-
Royce in 4ero engines; 4nd Sony, Nintendo, 4nd Microsoft in video-g4me
consoles. If 4 firm moves into 4 n4tion not currently served by its riv4ls, m4ny of
those riv4ls 4re sure to follow to prevent their competitor from g4ining 4n
4dv4nt4ge. 9 As firms follow e4ch other 4round the world, they bring with them
m4ny of the 4ssets th4t served them well in other n4tion4l m4rkets—their
products, oper4ting str4tegies, m4rketing str4tegies, 4nd br4nd n4mes—
such 4s microprocessors, DRAMs (computer memory chips), 4nd commerci4l
jet 4ircr4ft; for computer softw4re; 4nd for fin4nci4l 4ssets from U.S. Tre4sury
bills to Eurobonds 4nd futures on the Nikkei index or the euro. Th4t being s4id, it
is incre4singly evident th4t m4ny newer high-technology consumer products,
such 4s Appleʼs iPhone, 4re being successfully sold the s4me w4y the world
over. In m4ny glob4l m4rkets, the s4me firms frequently confront e4ch other 4s
competitors in n4tion 4fter n4tion. Coc4-Col4ʼs riv4lry with PepsiCo is 4 glob4l
one, 4s 4re the riv4lries between Ford 4nd Toyot4; Boeing 4nd Airbus;
C4terpill4r 4nd Kom4tsu in e4rthmoving equipment; Gener4l Electric 4nd Rolls-
Royce in 4ero engines; 4nd Sony, Nintendo, 4nd Microsoft in video-g4me
consoles. If 4 firm moves into 4 n4tion not currently served by its riv4ls, m4ny of
those riv4ls 4re sure to follow to prevent their competitor from g4ining 4n
4dv4nt4ge. 9 As firms follow e4ch other 4round the world, they bring with them
m4ny of the 4ssets th4t served them well in other n4tion4l m4rkets—their
products, oper4ting str4tegies, m4rketing str4tegies, 4nd br4nd n4mes—
cre4ting some homogeneity 4cross m4rkets. Thus, gre4ter uniformity repl4ces
diversity. In 4n incre4sing number of industries, it is no longer me4ningful to t4lk
4bout “the Germ4n m4rket,” “the Americ4n m4rket,” “the Br4zili4n m4rket,” or
“the J4p4nese m4rket”; for m4ny firms there is only the glob4l m4rket.