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.

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.[1] 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.[2]

A multinational enterprise (MNE) is a company that has a worldwide approach to markets and
production or one with operations in more than a country. An MNE is often called multinational
corporation (MNC) or transnational company (TNC). Well known MNCs include fast
foodcompanies such as McDonald's and Yum Brands, vehicle manufacturers such as General
Motors, Ford Motor Company and Toyota, consumer electronics companies
like Samsung, LG and Sony, and energy companies such as ExxonMobil, Shell and BP. Most of
the largest corporations operate in multiple national markets.

Areas of study within this topic include differences in legal systems, political systems, economic
policy, language, accounting standards,labor standards, living standards, environmental
standards, local culture, corporate culture, foreign exchange
market, tariffs, import and exportregulations, trade agreements, climate, education and many
more topics. Each of these factors requires significant changes in how individual business units
operate from one country to the next.

The conduct of international operations depends on companies' objectives and the means with
which they carry them out. The operations affect and are affected by the physical and societal
factors and the competitive environment.

Operations

 Objectives: sales expansion, resource acquisition, risk minimization

Means

 Modes: importing and exporting, tourism and transportation, licensing and franchising, tur
nkey operations, management contracts, direct investment and portfolio investments.
 Functions: marketing, global manufacturing and supply chain
management, accounting, finance, human resources
 Overlaying alternatives: choice of countries, organization and control mechanisms

Physical and societal factors

 Political policies and legal practices

 Cultural factors
 Economic forces
 Geographical influences

Competitive factors

 Major advantage in price, marketing, innovation, or other factors.

 Number and comparative capabilities of competitors
 Competitive differences by country

There has been growth in globalization in recent decades due to the following eight factors:

 Technology is expanding, especially in transportation and communications.

 Governments are removing international business restrictions.
 Institutions provide services to ease the conduct of international business.
  Consumers know about and want foreign goods and services.
 Competition has become more global.
 Political relationships have improved among some major economic powers.
 Countries cooperate more on transnational issues.
 Cross-national cooperation and agreements.

Studying international business is important because:

 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.

Tom Travis, the managing partner of Sandler, Travis & Rosenberg, PA. and international trade
and customs consultant, uses the Six Tenets when giving advice on how to globalize one's
business. The Six Tenets are as follows[3]:

1. Take advantage of trade agreements: think outside the border

 Familiarize yourself with preference programs and trade agreements.
 Read the fine print.
 Participate in the process.
 Seize opportunities when they arise.
2. Protect your brand at all costs
 You and your brand are inseparable.
 You must be vigilant in protecting your intellectual property both at home and
abroad.
 You must be vigilant in enforcing your IP rights.
 Protect your worldwide reputation by strict adherence to labor and human rights
standards.
3. Maintain high ethical standards
 Strong ethics translate into good business.
 Forge ethical strategic partnerships.
  Understand corporate accountability laws.
 Become involved with the international business self-regulation movement.
 Develop compliance protocols for import and export operations.
 Memorialize your company's code of ethics and compliance practices in writing.
 Appoint a leader.
4. Stay secure in an insecure world
 Security requires transparency throughout the supply chain.
 Participate in trade-government partnerships.
 Make the most of new security measures.
 Secure your data.
 Keep your personnel secure.
5. Expect the Unexpected
 The unexpected will happen.
 Do your research now.
 Address your particular circumstances.
6. All global business is personal
 Go to the source.
 Keep communications open.
 Keep the home office operational.
 Fly the flag at your overseas locations.
 Relate to offshore associates on a personal level.
 Be available to overseas clients and customers 24/7.

Types
1. Calculative 2. Moral 3. ALIENATIVE
CALCULATIVE involvement designates either a negative or a low intensity of positive orientation
towards the organization. If the rules of the game are such is where only one group or particular
participants are benefited all the time, other groups or participants will be calculative.

MORAL involvement designates positive orientation of high intensity. We morally involve ourselves
in a system whose environment is conducive to excel skills and provide with opportunity to fulfil
personal goals and aspirations.

ALIENATIVE involvement designates an intense negative orientation. This kind of involvement is

born in atmosphere where people feel that they are not getting what they are expecting. The alienation
takes place when people have less trust in each other and every one is working for their own self
interests.
International Business Research