AN INTERNATIONAL BUSINESS

PROJECT

 What is international business? Discuss its need & importance in current global
scenario?

 International business is a term used to collectively describe all commercial

transactions (private and governmental, sales, investments,logistics,and transportation)
that take place between two or more nations. Usually, private companies undertake
such transactions for profit; governments undertake them for profit and
for political reasons. It refers to all those business activities which involves cross border
transactions of goods, services, resources between two or more nations. Transaction of
economic resources include capital, skills, people etc. for international production of
physical goods and services such as finance, banking, insurance, construction etc.

International business is defined as ‘any commercial transaction taking place

across boundary lines of a sovereign entity.

NEED FOR INTERNATIONAL BUSINESS

 Most companies are either international or compete with international companies.

 Modes of operation may differ from those used domestically.
 The best way of conducting business may differ by country.
 An understanding helps you make better career decisions.
 An understanding helps you decide what governmental policies to support.

Managers in international business must understand social science disciplines and how they
affect all functional business fields.

IMPORTANCE OF INTERNATIONAL BUSINESS

Every company is trying to expand its business by entering foreign markets. International

business helps in the following ways:-

1. Helps as growth strategy: - Geographic expansion may be used as a business strategy. Even

though companies may expand their business at home.

2. Helps in managing product life cycle: - every product has to pass through different stages of

product life cycle-when the product reaches the last stages of life cycle in present market, it may

get proper response at other markets.

3. Technology advantages: - some companies have outstanding technology advantages through

which they enjoy core competency. This technology helps the company in capturing other

markets.

4. New business opportunities: - business opportunities in overseas markets help in expansion of

many companies. They might have reached a saturation point in domestic market.

5. Proper use of resources: -Sometimes industrial resources like labor, minerals etc. are available

in a country but are not productively utilized.

6. Availability of quality products: - when markets are open, better quality goods will be

available every where. Foreign companies will market latest products at reasonable prices. Good

product will be available in the markets.

7. Earning foreign exchange: - international business helps in earning foreign exchange which

may be used for strategic imports .India needs foreign exchange to import crude oil, deface
equipment, raw material and machinery.

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.

 Describe the various environmental factors affecting international business ?

 Environmental factors for international business comprise the external relations a

firm will face in going global. These include, most importantly, the economic,
political and legal environments, each of these always entangled with the others.

Basic Issues
 The central issues for the decision to go global are concerned with minimizing risk. A
company, when considering the environment that it will deal with when entering a new market,
has to deal with certain variables. These concern, for example, the cultural barriers to investment,
the ability to reach a competitive edge with new investments and the strategic use of new
technologies and natural resources that international investment might bring.

The Economic Environment

 This element comprises the nature of the economic system and institutions of a particular
country or region. It also takes into account the nature of human and natural resources within the
target market. A firm will function very differently in a libertarian environment than within a
highly statist one. Here, the activities and functions of local economic elites are also very
important.

The Political Environment

 Closely tied to the economic environment is the political one, itself also dealing with the
nature of systems and institutions. Many variables to consider here are the stability of the
political system, the existence of local or international conflict, the role of state enterprises and
the nature of the bureaucracy.
The Legal Environment
 The existence of bureaucratic systems and cultures is central in making the decision to invest
globally. The nature of corruption, local values and assumptions that are built into national
ideologies are major variables in this field. A great concern is the extent to which there is a
culture of law or a culture of personal patronage, where negotiations are done on a personal
rather than a legal basis. The impact of international lending agencies such as the International
Monetary Fund or the World Bank is also important in creating a legal culture that a business
will have to take seriously.

Social Structure
 Experts such as Robert Brown and Alan Gutterman hold that social structure comprises the
basic values of a people and transcends the institutions mentioned above. Issues such as the
relation between the individual and the collective, religion, family life and even time concepts
and gender roles are all significant in terms of dealing with a new population. Being sensitive to
these might be the difference between success and failure.

These were some of the factors affecting international business.

  Discuss the impact of technology on international business?
 Technology plays a vital role in business. Over the years businesses have become
dependent on technology so much so that if we were to take away that technology
virtually all business operations around the globe would come to a grinding halt. Almost
all businesses and industries around the world are using computers ranging from the most
basic to the most complex of operations.

Technology played a key role in the growth of commerce and trade around the world.
It is true that we have been doing business since time immemorial, long before there were
computers; starting from the simple concept of barter trade when the concept of a currency was
not yet introduced but trade and commerce was still slow up until the point when the computer
revolution changed everything. Almost all businesses are dependent on technology on all levels
from research and development, production and all the way to delivery. Small to large scale
enterprises depend on computers to help them with their business needs ranging from Point of
Sales systems, information management systems capable of handling all kinds of information
such as employee profile, client profile, accounting and tracking, automation systems for use in
large scale production of commodities, package sorting, assembly lines, all the way to marketing
and communications. It doesn't end there, all these commodities also need to be transported by
sea, land, and air. Just to transport your commodities by land already requires the use of multiple
systems to allow for fast, efficient and safe transportation of commodities.

Without this technology the idea of globalization wouldn't have become a reality. Now
all enterprises have the potential to go international through the use of the internet. If your
business has a website, that marketing tool will allow your business to reach clients across
thousands of miles with just a click of a button. This would not be possible without the internet.
Technology allowed businesses to grow and expand in ways never thought possible.
 The role that technology plays for the business sector cannot be taken for granted. If
we were to take away that technology trade and commerce around the world will come to a
standstill and the global economy would collapse. It is nearly impossible for one to conduct
business without the aid of technology in one form or another. Almost every aspect of business is
heavily influenced by technology. Technology has become very important that it has become a
huge industry itself from computer hardware manufacturing, to software design and
development, and robotics. Technology has become a billion dollar industry for a number of
individuals.

Technology has revolutionized the lives of consumers and businesses alike. The
increased array of products on the shelves, the lowered cost of goods and services, and the ease
of accessing information are just a few of the ways technology has enhanced society. The field of
international business is particularly sensitive to technological innovations.
  Discuss the role of history in the development of IB in the 21st century?

 The Early Era of International Business

A. International business has been around for centuries. In fact, its origins can be traced back as
far as 2000 B C to the trading that took place between north African tribes and parts of the
Middle East. Greece and the Roman Empire owe part of their early prosperity to international
trade and its associated political and military power. Some significant trading relationships that
endure today were developed during the Middle Ages.

Ancient Trade Routes

C. During the colonial period and the subsequent Age of Imperialism, foreign direct investment
and multinational companies grew rapidly as Europeans invested in their colonial empires in
America, Asia, and Africa. Australia and New Zealand are recent arrivals on the scene in terms
of international business development. The sheep and gold industry were important in
internationalising the Australian economy.

International Business Growth Since the Second World War

The Growth of Exports since 1969.

D. Since the Second World War, international business has seen continued growth. World
exports have grown from about US$53 billion in 1950 to US$5.5 trillion by 1998.
 International business grew over the last half of the twentieth century partly because of
liberalization of both trade and investment, and partly because doing business internationally had
become easier.
In terms of liberalization, the General Agreement on Tariffs and Trade (GATT) negotiation
rounds resulted in trade liberalization, and this was continued with the formation of the World
Trade Organization (WTO) in 1995.
 Write a note on European Union?
 The European Union (EU) is an economic and political union of 27 member states
which are located primarily in Europe.

The EU operates through a hybrid system of supranational independent institutions

and intergovernmentally made decisions negotiated by the member states.

27 sovereign Member States: Austria, Belgium, Bulgaria, Cyprus, the Czech

Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia,
Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Republic of Ireland, Romania,
Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. The Union's membership has
grown from the original six founding states—Belgium, France, (then-West) Germany, Italy,
Luxembourg and the Netherlands—to the present day 27 by successive enlargements as
countries acceded to the treaties and by doing so, pooled their sovereignty in exchange for
representation in the institutions.To join the EU a country must meet the Copenhagen criteria,
defined at the 1993 Copenhagen European Council. These require a stable democracy that
respects human rights and the rule of law; a functioning market economy capable of competition
within the EU; and the acceptance of the obligations of membership, including EU law.

Treaty on European Union, which was signed in Maastricht on 7 February 1992,

entered into force on 1 November 1993. 'The Maastricht Treaty changed the name of the
European Economic Community to simply "the European Community". It also introduced new
forms of co-operation between the Member State governments - for example on defence, and in
the area of "justice and home affairs". By adding this inter-governmental co-operation to the
existing "Community" system, the Maastricht Treaty created a new structure with three "pillars"
which is political as well economic. This is the European Union (EU).
 Important institutions of the EU include the European Commission, the Council of
the European Union, the European Council, the Court of Justice of the European Union, and the
European Central Bank. The European Parliament is elected every five years by EU citizens.

“United in diversity” is the motto of the European Union.

The motto means that, via the EU, Europeans are united in working together for peace
and prosperity, and that the many different cultures, traditions and languages in Europe are a
positive asset for the continent. Ode to Joy.

This is the anthem not only of the European Union but also of Europe in a wider
sense.

The EU is a secular body with no formal connection with any religion, but Article 17
of the Treaty on the Functioning of the European Union recognizes the "status under national law
of churches and religious associations" as well as that of "philosophical and non-confessional
organizations"

Human rights, democracy and the rule of law are core values for the European Union.

The Lisbon Treaty, which sets out the legal and institutional basis for the EU,
makes clear that the Union shall be guided by the following principles: democracy, the rule of
law, the universality and indivisibility of human rights and fundamental freedoms, respect for
human dignity, the principles of equality and solidarity, and respect for the principles of the
United Nations Charter and international law. These principles are reinforced by the EU’s
Charter of Fundamental Rights, which draws all of these rights together.