Professional Documents
Culture Documents
Definitions
International Business
is a business whose activities are carried out across national borders.
Business people
define a transnational as a company formed by a merger of two firms of approximately the same size that are from two different countries
Unilever (Dutch-English) Dunlop-Pirelli (English-Italian)
8
Definitions
Foreign Business
domestic operations within a foreign country
A Multidomestic Company
has multicountry affiliates, each of which formulates its own business strategy based on perceived market differences.
A Global Company
attempts to standardize and integrate operations worldwide in all functional 9 areas.
Evolution of IB
International trade to International marketing. International marketing to International business.
12
1960s Strengthening of Europe and Japan 1970s OPEC oil crisis & small car invasion from Japan
End of the 1970s, manufacturers began to copy the Japanese - Theory Z (the participative organisational practices), TQM , JIT
Nature of IB
IB houses need accurate information to make appropriate decision. Also need timely information Size of business should be large enough in order to have impact on foreign economy IB house segment business based on geographic segmentation. IB involve export & import, investments and trade
15
IB involves inter country comparative study to evaluate market potential of various countries. IB houses can group countries to design offer marketing mix. International market most of the time offers more potential than domestic markets.
16
The presence of competitive forces also prompts foreign investment as firms struggle to keep pace with their rivals. Changes in technology as discussed have also spurred the growth of international business
Firms have capitalised on computer technology and better transportation
Shift in tastes
Today's consumers are globe-savvy and aware of the products and services offered in other countries
The most stunning changes to international business during the 1990s were developments in electronic commerce.
Electronic commerce is the buying and selling of information, products and services via computer networks.
Why go international?
To achieve higher rate of profits. Expanding production capacity beyond the need of domestic demand. Severe competition in home country. Limited/Lack of growth of domestic market. Political stability/ political instability.
19
Availability of technology & man power. High cost of transportation. Nearest to raw materials. Quality manpower at less cost. Liberalization and globalization. To increase market share. To avoid tariff and market quotas .
20
Licensing
IB Activity (cont)
2. International investments -residents of one country
supply capital to those of a second country Foreign direct investments (FDI) investments in property, assets, or companies located in foreign host countries Portfolio investments
3. 4. 5.
purchases of foreign financial assets such as shares & bonds (not for a takeover) Licensing agreements - allows a firm in one country to use all
or some of the intellectual property of a firm in a second country
Stages of internationalization
Stage Stage Stage Stage Stage One: Domestic company two: International company three: Multinational company four: Global company Five : Trans national Company
24
Characteristics of T N C
Geocentric orientation Vision & aspirations Information acquisition Geographic scope Operating style Purchasing/ sourcing Adaptation, Extension HR management
27
28
The result was a worldwide depression and the collapse of the world financial system.
32
33
34
Globalization
Because of globalization, for the first time in history, the availability of international products and services can be accessed by individuals in many countries, from diverse economic backgrounds.
38
Productivity theory The Vent for surplus theory The Mills theory of reciprocal demand
40