INTRODUCTION

International business includes any type of business activity that crosses national borders.
Though a number of definitions in the business literature can be found but no simple or
universally accepted definition exists for the term international business. At one end of the
definitional spectrum, international business is defined as organization that buys and/or sells
goods and services across two or more national boundaries, even if management is located in
a single country.
At the other end of the spectrum, international business is equated only with those big
enterprises, which have operating units outside their own country. In the middle are
institutional arrangements that provide for some managerial direction of economic activity
taking place abroad but stop short of controlling ownership of the business carrying on the
activity, for example joint ventures with locally owned business or with foreign governments.
In its traditional form of international trade and finance as well as its newest form of
multinational business operations, international business has become massive in scale and has
come to exercise a major influence over political, economic and social from many types of
comparative business studies and from a knowledge of many aspects of foreign business
operations.
In fact, sometimes the foreign operations and the comparative business are used as
synonymous for international business. Foreign business refers to domestic operations within
a foreign country. Comparative business focuses on similarities and differences among
countries and business systems for focuses on similarities and differences among countries
and business operations and comparative business as fields of enquiry do not have as their
major point of interest the special problems that arise when business activities cross national
boundaries. For example, the vital question of potential conflicts between the nation-state and
the multinational firm, which receives major attention is international business, is not like to
be even peripheral in foreign operations and comparative business.

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HISTORY OF INTERNATIONAL BUSINESS

International business refers to the trade of goods, services, technology, capital and/or
knowledge across national borders and at a global or transnational level.

It involves cross-border transactions of goods and services between two or more countries.
Transactions of economic resources include capital, skills, and people for the purpose of the
international production of physical goods and services such as finance, banking, insurance,
and construction. International business is also known as globalization.

To conduct business overseas, multinational companies need to bridge separate

national markets into one global marketplace. There are two macro-scale factors that
underline the trend of greater globalization. The first consists of eliminating barriers to make
cross-border trade easier (e.g. free flow of goods and services, and capital, referred to as "free
trade"). The second is technological change, particularly developments in
communication, information processing, and transportation technologies.

International business is not a new phenomenon but has been practiced around the world for
thousands of years. Through the routes established in the Mediterranean, the Phoenicians,
Mesopotamians, and Greeks did trading. As sophisticated business techniques emerged,
facilitating the flow of goods, resources and funds between countries flourished. This growth
was further stimulated by colonization activities. The Industrial Revolution further stimulated
the growth of international business by providing methods of production for mass ,markets
and efficient methods for utilizing raw materials. The inventions and technological
developments from Industrial revolution further accelerated the smooth flow of goods,
services and capital between the countries. The production grew at unprecedented levels by
1880’s as the industrial revolution was in full swing in Europe and the United States. Growth
continued in an upward spiral as mass production was realized and the manufactures were
pushed to seek foreign markets for their products.

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 IMPORTANTCE OF INTERNATIONAL BUSINESS
1. Earn foreign exchange: International business exports its goods and services all over the
world. This helps to earn valuable foreign exchange. This foreign exchange is used to pay
for imports. Foreign exchange helps to make the business more profitable and to strengthen
the economy of its country.
2. Optimum utilisation of resources: International business makes optimum utilisation of
resources. This is because it produces goods on a very large scale for the international
market. International business utilises resources from all over the world. It uses the finance
and technology of rich countries and the raw materials and labour of the poor countries.
3. Achieve its objectives: International business achieves its objectives easily and quickly.
The main objective of an international business is to earn high profits. This objective is
achieved easily. This it because it uses the best technology. It has the best employees and
managers. It produces high-quality goods. It sells these goods all over the world. All this
results in high profits for the international business.
4. To spread business risks: International business spreads its business risk. This is because
it does business all over the world. So, a loss in one country can be balanced by a profit in
another country. The surplus goods in one country can be exported to another country. The
surplus resources can also be transferred to other countries. All this helps to minimise the
business risks.
5. Improve organisation's efficiency: International business has very high organisation
efficiency. This is because without efficiency, they will not be able to face the competition
in the international market. So, they use all the modern management techniques to improve
their efficiency. They hire the most qualified and experienced employees and managers.
These people are trained regularly.
6. Get benefits from Government: International business brings a lot of foreign exchange
for the country. Therefore, it gets many benefits, facilities and concessions from the
government. It gets many financial and tax benefits from the government.
7. Expand and diversify: International business can expand and diversify its activities. This
is because it earns very high profits. It also gets financial help from the government.

8. Increase competitive capacity: International business produces high-quality goods at low

cost. It spends a lot of money on advertising all over the world. It uses superior technology,

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 APPROCHES OF INTERNATIONAL BUSINESS

1. ETHNOCENTRIC ORIENATION
The ethnocentric orientation of a firm consider that the products, marketing strategies and
technique applicable in the home market are equally so in the overseas market as well. In
such a firm, all foreign marketing operations are planned and carried out from home base,
with little or no difference in product formulation and specification, pricing strategy,
distribution and promotion measures between home and overseas.

2. REGIOCENTRIC ORIENATION
In regiocentric approaches, the firm accepts a regional marketing policy covering a group of
countries which have comparable market characteristics. The operational strategies are
formulated on the basis of the entire region rather than individual countries. The production
and distribution facilities are created to serve the whole region with effective economy on
operation, close control and co-ordination.

3. GEOCENTRIC ORIENATION
In geocentric orientation, the firm accept a world wide approach to marketing and its
operation become global. In global enterprises, the management establishes manufacturing
and processing facilities around the world in order to serve the various regional national
market through a complicated but well co-ordinate system o distribution network. There are
similar between geocentric and regiocentric approaches in the international market.

4. POLYCENTRIC ORIENATION
When a fund adopt polycentric approaches to overseas markets, it attempt to organize its
international marketing activates on a country basis. Each country is treated as a separate
entity and individual strategies are worked out accordingly. Local assembly or production
facilities and marketing organisation are created for serving market needs in each country.
Polycentric orientation could be most suitable for firms seriously committed to international
marketing.

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REASONS FOR INTERNATIONAL BUSINESS GROWTH

Worldwide developments

International business has brought the set of changes in the economic activities of almost
every country in the world. One of the primary reasons is increase of foreign investment and
trade. This trend has forced policy makers, managers, and entrepreneurs to refocus their
efforts and look for new opportunities in the international markets. Today, every nation and
increasing number of companies buys and sells products and services in the global
marketplaces.
A. There are several reasons why the growth in international business has occurredand is
expected to continue. The desire to increase returns for shareholders is perhaps the
most significant catalyst for increased international growth. This desire leads to
market expansion as firms seek new markets through growth strategies ,and factories outgrow the
size of their home markets. Firms seeking materials labour, and/or capital unavailable in their
own countries must go to foreign sources. Therefore resource acquisition
is another reason for the growth of international business .

B. The presence of competitive forces also prompts foreign investment as firms struggle to
keep pace with their rivals.
Changes in technology have spurred the growth of international business as firms capitalise
on computer technology and better transportation when developing their strategies. 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.
Social change is also responsible for the expansion of international business. Today's
consumers are more aware of the products and services offered in other countries and
frequently seek such products to replace domestically produced ones.

C. Finally, government trade and investment polices are making it easier for firms to develop
foreign markets. Import tariffs and barriers to foreign investment have been reduced in the
last forty years, and regional trading alliances have been established - all of which is
expanding opportunities for international transactions.

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11 Biggest Challenges of International Business

1.International company structure

If your aim is to be competitive globally, you must have a team in place that’s up for the
challenge. One fundamental consideration is the structure of your organization and the
location of your teams. For instance, will your company be run from one central
headquarters? Or will you have offices and representatives “on the ground” in key
markets abroad? If so, how will these teams be organized, what autonomy will they have, and
how will they coordinate working across time zones? If not, will you consider hiring local
market experts who understand the culture of your target markets, but will work centrally?

Coca-Cola offers one example of effective multinational business structure. The company
is organized into continental groups, each overseen by a President. The central Presidents
manage Presidents of smaller, country-based or regional subdivisions. Despite its diverse
global presence, the Coca-Cola brand and product is controlled centrally and consistent
around the world.

2.Foreign laws and regulations

Along with getting your company structure in place, gaining a comprehensive understanding
of the local laws and regulations governing your target markets is key. From tax
implications through to trading laws, navigating legal requirements is a central function
for any successful international business. Eligibility to trade is a significant consideration,
as are potential tariffs and the legal costs associated with entering new markets.

it’s important to note that employment and labor requirements also differ by country. For
instance, European countries stipulate that a minimum of 14-weeks maternity leave be
offered to employees, while on the other hand, there is no such requirement for U.S.
employers. With the complexity involved in foreign trade and employment laws, investing in
knowledgeable and experienced corporate counsel can prove invaluable.

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3.International accounting

Of the main legal areas to consider when it comes to doing international business, tax
compliance is perhaps the most crucial. Accounting can present a challenge to
multinational businesses who may be liable for corporation tax abroad. Different tax systems,
rates, and compliance requirements can make the accounting function of a multinational
organization significantly challenging.

Accounting strategy is key to maximizing revenue, and the location where your business is
registered can impact your tax liability. Mitigating the risk of multiple layers of taxation
makes good business sense for any organization trading abroad. Being aware of tax
treaties between countries where your business is trading will help to ensure you’re not
paying double taxes unnecessarily.

4.Cost calculation and global pricing strategy

Setting the price for your products and services can present challenges when doing business
overseas and should be another major consideration of your strategy. You must consider costs
to remain competitive, while still ensuring profit. Researching the prices of direct, local-
market competitors can give you a benchmark, however, it remains essential to ensure the
math still works in your favour. For instance, the cost of production and shipping, labour,
marketing, and distribution, as well as your margin, must be a taken into account for your
business to be viable.

5.Universal payment methods

The proliferation of international e-commerce websites has made selling goods overseas
easier and more affordable for businesses and consumers. However, payment methods that
are commonly accepted in your home market might be unavailable abroad. Determining
acceptable payment methods and ensuring secure processing must be a central
consideration for businesses who seeks to trade internationally. Despite the risk of
fluctuating value, the lack of fees is one of the reasons a number of online companies,
including Word Press, the Apple App Store, Expedia, and a number of Etsy sellers accept
Bitcoin.

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6.Currency rates
While price setting and payment methods are major considerations, currency rate
fluctuation is one of the most challenging international business problems to navigate.
Monitoring exchange rates must therefore be a central part of the strategy for all international
businesses. However, global economic volatility can make forecasting profit especially
difficult, particularly when rates fluctuate at unpredictable levels.

Another option for mitigating the risk of unpredictable currency rates can be setting up
a forward contract and agreeing a price in advance for future sales. Of course, this potentially
means missing out on greater profit should rates shift in your favor. However, it can protect
your sales from the risk presented by unstable currency.

7. Communication difficulties and cultural differences

Good communication is at the heart of effective international business strategy.

However, communicating across cultures can be a very real challenge. At Hult, developing
cross-cultural competency and communication skills are a core focus inside and outside of
the classroom.

Effective communication with colleagues, clients, and customers abroad is essential for
success in international business. And it’s often more than just a language barrier you need to
think about — nonverbal communication can make or break business deals too. Do your
research and know how different cultural values and norms

8.Political risks
An obvious risk for international business is political uncertainty and instability.
Countries and emerging markets that may offer considerable opportunities for expanding
global businesses may also pose challenges, which more established markets do not. Before
considering expansion into a new or unknown market, a risk assessment of the economic
and political landscape is critical.

Issues such as ill-defined or unstable policies and corrupt practices can be hugely problematic
in emerging markets. Changes in governments can bring changes in policy, regulations, and
interest rates that can prove damaging to foreign business and investment.

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 9. Supply chain complexity and risks of labor exploitation
When it comes to sourcing products and services from overseas, managing suppliers and
supply chains can also be a tricky process. Unfortunately, the length and complexity of
supply chains increases the chance of working with suppliers who have unethical — and even
illegal — business practices. Of growing concern is the risk in international business of
forced labor and worker exploitation.

10. Worldwide environmental issues

As the environmental risks and effects of climate change are becoming better
understood, sustainability is high on the agenda of many major global corporations.
Recent international legislations and proposals, such as the UN’s Sustainable Development
Goals, have put environmental issues at the forefront of international business development.
The Ashridge Centre for Business and Sustainability at Hult researches innovative ways that
organizations can develop and implement more environmentally sustainable business models.

On a practical level, if you’re considering expanding your business overseas, it’s important to
be aware of the country-specific environmental regulations and issues associated with your
industry. Some key considerations include how your production methods might impact
the local environment through waste and pollution.

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INTERNATIONAL BUSINENESS SCENARIO OF INDIA

The service sector is assuming increasing importance in the Indian economy. The share o f
agriculture sector, which constituted 38% of GDP in 1950-80, has now come down to around
20%. The service sector in the Indian economy accounted for 38 % of the total GDP in 1950-
80. This share increased by 41.0% in 1980-90, 46.6 in 1990-99, 48.3% in 1999-00, 48.9% in
2000-01 and 49.3% in 2001-02 and has reached up to 54.1% in 2005-06. It shows sharp
increase in the relative share o f service sector.

Such a positive trend is found almost in all the developing countries. However, the
contribution of industry to the GDP is by and large same. A striking feature of India’s growth
performance over the past decade has been the strength of the services sector. Table 1.3
shows that on average services grew more slowly than industry between 1951 and 1990.
Growth of services picked up in 1980s, accelerated in 1990s and averaged 7.4 per cent per
annum, thus providing a valuable proportion to industry and agriculture which grew on
average by 5.8 percent and 3.1 percent respectively. Growth rate of agriculture between
2001and 2005 on average is 1.4 per cent and 6.0 per cent for industry while as services grew
on average by 7.8 per cent in the same period. Most forecasters expect that services will grow
at similar if not higher rates over the next few years (Gordon and Poonam, 2003).

As India is moving forward to emerge as one of the developed economies in the world, its
effervescent services sector is also fast growing as one of the most spectacular by products of
ongoing resurgent in the country’s economic growth. The service sector, the tertiary sector of
economy, covers a wide array of activities like trading, banking and finance, health care, real
estate, transportation, security, management and technical consultancy among several others.
Industries such as software, biotechnology, finance, education and health care are considered
as the centre of excellence in Indian market. Among these industries the growth in IT is the
fastest. It has crossed $20 billion market and its share has increased to 3.5% (2004-05) from
2.4% (2003-04) and 2.09% (2002- 03) in the world software and service market (Hearld,
2005).

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The other notable fast growing services segments include Financial Services Industry (FSI)
which has undergone a more liberal reform process since liberalization of Indian economy.
Specifically, two segments viz., car finance and mutual fund have witnessed fast growth rate
in FSI (Hearld, 2005). Education is another field □ which is not only a huge segment of
services sector within the country but also a foreign exchange earner. Moving further on the
gamut, entertainment industry covering film, music, broadcast, television and live
entertainment is another fast emerging sunrise sector. The FCCI survey shows that the
entertainment has grown by 15 percent to an estimated market size o f Rs. 19,200 crore in
2003 and by 17 percent to Rs.22,610 crore in 2005 (Hearld, 2005). Like aforesaid service
sectors, health sector is another major

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Case Study
Documentary Credit
M/S Auto India
Introduction
M/S Auto India is a public limited company; they manufacture SUVs (sports utility vehicle),
in technical collaboration with General Motors of USA. The company has established their
manufacturing base at Ranjangaon in Pune. They have acquired an area of 250 acres and the
total project cost is estimated at Rs 1500 crores. As per the projections, the company is slated
to achieve a 25% market share in the Indian market, within a period of two years.

Out of the total project cost, 49% is brought in by General Motors and the rest is tied up with
financial institutions, international banks and Indian banks. The working capital is financed
by a consortium of banks in which Global bank, Pune branch, is the leader. The company
imports many parts of the car engine in a CKD (completely knocked down) condition from
General Motors, Detroit, after establishing import letters of credit through its main bankers,
Global Bank, Pune Branch

M/S Auto India approached Global Bank, Pune for opening of import letter of credit as per
UCP ICC 600 for USD 100,000, on sight basis, in favour of General Motors, Detroit.

Type of credit – Irrevocable negotiable

Application - UCP ICC 600
Applicant - M/S Auto India, Pune, India
Beneficiary - M/S General Motors, Detroit, USA
Issuing Bank - Global Bank, Pune, India
Advising Bank - The American Bank, New York
Negotiating Bank - The American Bank, New York
Reimbursing Bank - International Bank, New York
Availability - Negotiable at sight
Expiry - At the counters of The American Bank, New York
Amount - USD 100,000
Merchandise - Car engine parts
Quantity and price - 50 units @ USD 2000 per unit

Circumstances
Issuing Bank
Global Bank, Pune issued its irrevocable negotiable credit through its head office in Pune
since Global Bank co-ordinated all its accounting and communication functions at its head
office. The Bank’s head office transmitted the credit through Swift network as instructed by
its Pune branch to General Motors, Detroit, through The American Bank, New York.

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Advising Bank
The American Bank, New York advised the credit to General Motors, Detroit on receipt of
the swift transmission.

Credit
Along with other conditions, the credit clearly stated that the negotiating bank was to
forward the documents directly to Global Bank’s head office at Pune.
Beneficiary After export of the consignment, General Motors, Detroit presented the
documents under the credit to The American bank, New York.

Negotiating Bank

The American Bank, New York, examined the documents presented by General Motors and
determined that they were in compliance with the terms and conditions of the credit. The
American bank negotiated the documents and forwarded the documents, as per the credit
terms, to the HO of Global Bank in Pune and claimed reimbursement from International
bank, New York.

Reimbursing Bank
International Bank, New York honoured the reimbursement claim by crediting the current
account of the American Bank, New York and debiting the account of Global Bank, Pune,. in
its books.

Issuing Bank Head Office

Global Bank’s Head Office, at Pune, received the documents and after internal registration of
the documents, forwarded the documents to its Pune Branch by inter-office mail

Issuing Bank Branch

On receipt of the documents by the Pune branch of Global Bank, they examined the
documents and determined that they were discrepant. They were (a) 60 units were shipped
instead of 50 units, thereby overdrawing the credit value by USD 2000 (b) Inspection
certificate by Auto Inspection Council, USA is not submitted, as per credit terms. Global
Bank contacted Auto India for waiver of the discrepancies.

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Applicant
Auto India requested for copies of the documents to be forwarded by fax and after reviewing
the same, they refused to waive the discrepancies.

Issuing Bank Branch

Global Bank, Pune Branch instructed its HO to transmit an authenticated swift to The
American Bank, New York stating that Global Bank had rejected the documents for the noted
discrepancies, requesting the American Bank’s instructions as to disposal of the documents,
and demanding a refund of the funds reimbursed.

Issuing Bank Head Office

The HO of the Global Bank sent the authenticated swift message to the American Bank, New
York, as instructed by its Pune Branch.

Negotiating Bank
On receipt of the swift notification advising that Global Bank had rejected the documents for
the stated discrepancies, the American Bank informed Global Bank that it did not accept the
rejection of the drawing since the Global Bank did not comply with UCP 600 sub-article 14
for standard examination of documents. Therefore, Global Bank was said to be stopped from
dishonouring its irrevocable obligation.

Issuing Bank
Global Bank, Pune Branch responded by stating that they acted in accordance with UCP
article 14, since their action did not exceed five banking days following the day of receipt of
the documents at their branch counters after which they scrutinised the documents and
determined to refuse them. They maintained that as per article 14 of UCP 600, they notified
about the rejection of the documents, by swift, not later than the close of the fifth banking day
following the day of receipt of the documents. They had pointed out all the discrepancies and
had informed American Bank, New York that they were holding the documents at the latter’s
disposal.

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Negotiating Bank
The American Bank, New York replied as follows:- We disagree with your position that you
acted in accordance with UCP 600 article 14. Documents were delivered by courier to your
HO as per the terms of the credit, on Monday, January 7, 2008. Your swift notifying rejection
of the documents was not sent until Wednesday, Jan 16, 2008 that is, on the eighth banking
day after receipt of the documents by your bank

Issuing Bank Global Bank,

Pune Branch, responded by stating that even though its HO received the documents on
January 7,2008; the Global Bank’s Pune Branch did not receive the documents until the
following Thursday, January 10, 2008, and the swift advice rejecting the documents was sent
within the time period permitted in UCP

Negotiating Bank
The American Bank, New York, replied that it was not their concern how Global Bank’s
operational policy impacted on their inability to comply with UCP. The American Bank, New
York stated that in accordance with the credit terms and conditions, documents were
negotiated by them and forwarded to Global Bank’s HO by courier. The documents were
received by Global Bank on Jan 7, 2008, and any notice of rejection of the documents should
have been given within the close of the fifth banking day following receipt of the documents.
Global Bank’s Pune Branch failed to do so. Therefore, the American Bank, New York’s
position was firm relative to UCP 600 article 14 and they would not refund the funds
reimbursed.

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Advantages of Internationalization

There are multiple advantages of going international. However, the most striking and
impactful ones are the following four.

Product Flexibility
International businesses having products that don’t really sell well enough in their local or
regional market may find a much better customer base in international markets. Hence, a
business house having global presence need not dump the unsold stock of products at deep
discounts in the local market. It can search for some new markets where the products sell at a
higher price.
A business having international operations may also find new products to sell internationally
which they don’t offer in the local markets. International businesses have a wider audience
and thus they can sell a larger range of products or services.

Protection from National Trends and Events

Marketing in several countries reduces the vulnerability to events of one country. For
example, the political, social, geographical and religious factors that negatively affect a
country may be offset by marketing the same product in a different country. Moreover, risks
that can disrupt business can be minimized by marketing internationally.

Learning New Methods

Doing business in more than one country offers great insights to learn new ways of
accomplishing things. This new knowledge and experience can pave ways to success in other
markets as well.

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GLOBALIZATION
Although globalization and internationalization are used in the same context, there are some
major differences.

 Globalization is a much larger process and often includes the assimilation of the markets
as a whole. Moreover, when we talk about globalization, we take up the cultural context
as well.

 Globalization is an intensified process of internationalizing a business. In general terms,

global companies are larger and more widespread than the low-lying international
business organizations.

 Globalization means the intensification of cross-country political, cultural, social,

economic, and technological interactions that result in the formation of transnational
business organization. It also refers to the assimilation of economic, political, and social
initiatives on a global scale.

 Globalization also refers to the costless cross-border transition of goods and services,
capital, knowledge, and labor.

Factors Causing Globalization of Businesses

There are many factors related to the change of technology, international policies, and
cultural assimilation that initiated the process of globalization. The following are the most
important factors that helped globalization take shape and spread it drastically.

The Reduction and Removal of Trade Barriers

After World War II, the General Agreement on Tariffs and Trade (GATT) and the WTO have
reduced tariffs and various non-tariff barriers to trade. It enabled more countries to explore
their comparative advantage. It has a direct impact on globalization.

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Trade Negotiations
The Uruguay Round of negotiations (1986–94) can be considered as the real boon for
globalization. It is considerably a large set of measures which was agreed upon exclusively
for liberalized trade. As a result, the world trade volume increased by 50% in the following 6
years of the Uruguay Round, paving the way for businesses to span their offerings at an
international level.

Transport Costs
Over the last 25 years, sea transport costs have plunged 70%, and the airfreight costs have
nosedived 3–4% annually. The result is a boost in international and multi-continental trade
flows that led to Globalization.
Growth of the Internet
Expansion of e-commerce due to the growth of the Internet has enabled businesses to
compete globally. Essentially, due to the availability of the Internet, consumers are interested
to buy products online at a low price after reviewing best deals from multiple vendors. At the
same time, online suppliers are saving a lot of marketing costs.

Growth of Multinational Corporations

Multinational Corporations (MNCs) have characterized the global interdependence. They
encompass a number of countries. Their sales, profits, and the flow of production is reliant on
several countries at once.

The Development of Trading Blocs

The 'regional trade agreement' (RTA) abolished internal barriers to trade and replaced them
with a common external tariff against non-members. Trading blocs actually promote
globalization and interdependence of economies via trade creation.

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SCOPE OF INTERNATIONAL BUSINESS ACTIVITIES

The study of international business focus on the particular problems and opportunities that
emerge because a firm is operating in more than one country. In a very real sense,
international business involves the broadest and most generalized study of the field of
business, adapted to a fairly unique across the border environment. Many of the parameters
and environmental variables that are very important in international business (such as foreign
legal systems, foreign exchange markets, cultural differences, and different rates of inflation)
are either largely irrelevant to domestic business or are so reduced in range and complexity as
to be of greatly diminished significance. Thus, it might be said that domestic business is a
special limited case of international business.
The distinguishing feature of international business is that international firms operate in
environments that are highly uncertain and where the rules of the game are often ambiguous,
contradictory, and subject to rapid change, as compared to the domestic environment. In fact,
conducting international business is really not like playing a whole new ball game, however,
it is like playing in a different ballpark, where international managers have to learn the factors
unique to the playing field. Managers who are astute in identifying new ways of doing
business that satisfy the changing priorities of foreign governments have an obvious and
major competitive advantage over their competitors who cannot or will not adapt to these
changing priorities.

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OBJECTIVE OF INTERNATIONAL BUSINESS

Training and management development of human resource is the pivot

around which all the techniques of growth process revolves. On the one hand,
promoting employment is an accepted national goal and on the other finding
suitable and trained manpower is a basic necessity for running economic
enterprises. It has been rightly said that skills are the single most important factors
in development. No matter how bountiful other resources may be, social and
economic advancement depends mainly on the quality manpower. Quality
manpower can be developed through proper training.
Nowadays everybody looks for precise result to justify training and this
means financial result. To illustrate this AlanMumford in his book “The manager
and training” narrated his experience in a bottling plant where he was employed
first. He was employed to fill crates with bottles as the bottles emerge from a
filling machine and was deposited on a circular table. The rate at which the
machine produced bottles was initially faster than his rate of filling the crates.
Bottles eventually began to fall of the table on which the conveyor belt placed
them. When this happened a bell rang and most of the department came to a
standstill, until the backlog bottles were cleared and the machines could be started
up again. The reason he could not keep up with the machine was not that it was
really going too fast, but that he did not know how to pick up the bottles
efficiently in two hands, how to place them in crates in the best sequences and
how to stack the crates. The bottles smashed, the liquid lost, the delays in the
production process caused by his inability to work efficiently was an example to
unnecessary costs in industry and this situation gave him the first experience of a
common method of training because he was shown how to do the job by being

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Review of Literature

Dr. Subhash Gangwal(1) Published his book about industrial sicknesses he concluded that
sickness is an organic process, and so it does not develop all a sudden and passes generally
through various stages from normal health to sickness before a unit become sick and finally
closed. He further said, the dynamics of Industrial estates reflecting about the significance of
industrialization in a developing economy. Shree Jawahar Lal Nehru has said that “real
progress must ultimately depend on industrialization.” An industrial estate is a catalyst
primarily for locating, expending and strengthening small scale and medium scale industries.

N. T. Vedanchalam Explained in his book about sickness of industries in the era of

globalization that, the growing sickness in small sector as well as medium sector has attracted
the attention of developmental and funding agencies. The problem of defining sickness has
also surfaced. This is very important because unless the unit is identified as sick, the
rehabilitation process cannot be 43 initiated. The banks have considered the purely financial
aspect of sickness and have defined sickness accordingly. The failure of the unit to repay
loans and interest has been assumed to be synonymous with its sickness by the banker in
addition to cash loans for two years and erosion in net worth of 50 % and more. The other
agencies have defined industrial sickness in terms of the utilization of capacity, the
generation of internal surpluses, the complete closure of activity or abnormality in any area of
operations.

Aradhana Agrawal published a book on “liberalization Multinational Enterprises and

Export Performance : Evidence from Indian Manufacturing , Globalization Process in India:
A Historical Perspective Since Independence, 1947”In view of the findings of this paper, The
liberalization of markets and technological changes taking place have changed the kind and
determinants of trans-border activities engaged in by Multinational Enterprises. MNEs are
increasingly looking for physical and human infrastructures, which enable them to create and
exploit their ownership specific core competencies.
However, for such efficiency seeking FDI they prefer locations, which have well-developed
45 R&D base, a good physical infrastructure, skilled labour and we developed economic
clusters. In the absence of such assets, developing countries may fail to attract such FDI. It is
therefore crucial for the countries to upgrade the competitiveness of their own resources and
capabilities. Governments may also need to revise their policies with respect to FDI
regulations and intellectual property rights. The results also suggest that the lowering of tariff

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walls on the imports of capital goods and inputs have had desirable impact on firms’
competitiveness. This policy may further be rationalized. Finally, it may be suggested that
government should promote a strong nucleus of flagship indigenous firms in internationally
oriented sectors’ to compete in world markets finally the researcher saw positive approach of
policy of 1991.

Dr. Jyotsna D. Haran The study of researcher focused on his findings under the headline of
Globalization does not change the investment pattern, She says under this, basic changes in
the new industrial policy were introduced in 1991. The basic reasoning behind this is that of
reducing size of the public sector and lifting of government controls and the private sector
left to enter into more competition, improve efficiency improvement and quality up
gradation. She says further, the process of globalization in India has led to an unequal
competition a competition between giant MNC’s and dwarf Indian enterprise. According to
Baldev Raj Nayar, an MP from West Bengal globalization of Indian 46 economy is like
integrating a mouse into a herd of elephants. Then how can we imagine that our mouse will
be able to survive?

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SPECIAL DIFFICULTIES IN INTERNATIONAL BUSINESS

1. POLITICAL AND LEGAL DIFFERENCES

The political and legal environment of foreign markets is different from that of the domestic. The
complexity generally increases as the number of countries in which a company does business
increases. It should also be noted that the political and legal environment is not the same in all
provinces of many home markets. For example, the political and legal environment is not exactly
the same in all the states of India.

2. CULTURAL DIFFERENCES
The cultural differences, is one of the most difficult problems in international marketing.
Many domestic markets, however, are also not free from cultural diversity.

3. ECONOMIC DIFFERENCES
The economic environment may vary from country to country.

4. DIFFERENCES IN THE CURRENCY UNIT

The currency unit varies from nation to nation. This may sometimes cause problems of
currency convertibility, besides the problems of exchange rate fluctuations. The monetary
system and regulations may also vary.

5. DIFFERENCES IN THE LANGUAGE

An international marketer often encounters problems arising out of the differences in the
language. Even when the same language is used in different countries, the same words of
terms may have different meanings. The language problem, however, is not something
peculiar to the international marketing. For example: the multiplicity of languages in India.

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6. DIFFERENCES IN THE MARKETING INFRASTRUCTURE
The availability and nature of the marketing facilities available in different countries may
vary widely. For example, an advertising medium very effective in one market may not be
available or may be underdeveloped in another market.

7. TRADE RESTRICTIONS
trade restriction, particularly import controls, is a very important problem, which an
international marketer faces.
8. HIGH COSTS OF DISTANCE
When the markets are far removed by distance, the transport cost becomes high and the time
required for affecting the delivery tends to become longer. Distance tends to increase certain
other costs also.

9. DIFFERENCES IN TRADE PRACTICES

Trade practices and customs may differ between two countries

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CONCULSION
Fast changing international economic and trading environment have added a new dimension
to the global economic cooperation. Since 1990s most of the developing countries of the
world initiated economic reforms and liberalization to stimulate growth rate and to exploit
their potential in the best possible manner. The economic reforms in India began in 1991
while in China after death of Mao in 1978. Liberalisation of foreign trade sector has been the
cornerstone of economic reforms in both economies. India and China are often compared
with each other because of the large size of their population, land and domestic economies.
Both countries embarked on planned development almost at the same time with an emphasis
on import substitution policies. In the beginning, the basic thrust of both the countries was on
selfreliance, but later both turned towards market- oriented and outward- looking policies.

Frequency of direct shipping routes be increased. Efforts should be undertaken to reduce

costs of transportation and expansion of air cargo facilities between the two countries need
consideration. Direct banking links and bilateral confirmation of Exim banks of India and
China and other issues of co-operation in this field should be strengthened.

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Bibliography

BOOKS REFERRED

1.International Business: Competing in the Global Marketplace

2. International Reactions

WEBSITES:

1.wwwslidshare.com

2.Www.scribd.com

3. www.google.com

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