BBA - GGS Indraprastha University BBA-308 INTERNATIONAL BUSINESS MANAGEMENT

Objectives: The basis objective of this course is to provide understanding to the students with the global dimensions of management. UNIT I lectures:-12 Overview: International Business- Introduction, Concept, Definition, Scope, Trends, Challenges and opportunities; Nature, Meaning and Importance of International competitive advantage, Multidimensional view of Competitiveness- Financial Perspectives- International monetary systems and financial markets, IMF, World Bank, IBRD, IFC, IDA, existing international arrangements; Globalization and foreign investment- Introduction FDI, national FDI policy framework, FPI, Impact of globalization.

UNIT II lectures:-12
Globalization- Technology and its impact, Enhancing technological capabilities, Technology generation, Technology transfer, Diffusion, Dissemination and spill over, Rationale for globalization, Liberalization and Unification of World economics, International Business theories, Trade Barriers- Tariff and Non Tariff Barriers.

UNIT III lectures:-12

Strategy making and international business- Structure of global organizations, Types of strategies used in strategic planning for achieving global competitive advantage, Meaning, Concept and scope of distinctive competitive advantage, Financial Integration, Cross border merger and acquisitions.

UNIT IV lectures:-12
Socio cultural Environment- Managing Diversity within and across cultures, Country risk analysis, Macro environmental risk assessment, Need for risk evaluation; Corporate governance, globalization with social responsibility- Introduction, Social responsibility of TNC, Recent development in corporate social responsibility and policy implications. Global Human Resource Management- Selection, Development, Performance Appraisal and compensation, Motivating employees in the global context and managing groups across cultures, Multicultural management. Text Books: 1. Bhalla, V.K. and S. Shivaramu; International Business: Environment and Management, Anmol Publication Pvt. Ltd., 2003 Seventh Revised Edition. 2. Rao, P. Subba; International Business, Himalaya Publishing House, 2002 Second Revised Edition. Reference Books: 1.Goldsmith, Arthur A; Business Government Society, Erwin Book Team. 2. Berry, Brian J L, Edgar C Conkling & D Michael Ray; The Global Economy in Transition, Prentice Hall International Ltd.

International Business Introduction, Business firms today operate in markets beyond their historical and traditional limits. A domestic corporation is one which operates within the national or political boundaries. For many years there have been a handful of companies which have operated on a global basis successfully, companies like Shell, Unilever and Nestle come to mind immediately. The ownership & management is representative of many different nationalities and products are sold in many and diverse markets as well as have plants/offices/subsidiaries across the world. What is International Business? International business operates in transactions across national boundaries. These transactions can be defined as transfer of: - Goods - Service - Technology - Managerial knowledge - & capital to other countries. Features of international business ( or what factors distinguish the international business from domestic firms ) 1. Nationality of key participants the buyers and sellers, supplier and customers are from different nationalities. There are differences in language, culture, attitudes and social values, business goals and practices. These differences may it relatively more different for the participants to interact with and understand each other. 2. Mobility of factors of production : the degree of mobility of factors like labor and capital is affected because of the restrictions placed on the free flow of labor and capital. The variations in socio-cultural environments, geography and economic conditions come in way of the movement. 3. Heterogenity of customers across markets : buyers across nations will differ in their tastes, language, beliefs and product preferences. This would mean demand not only for different products and services but also the variation in communication pattern and purchase behavior. 4. Differences in business practices: countries differ from each other in terms of socioeco development, economic infrastructure and market support services, business customs and practices. These differences make it necessary for firms to adapt their marketing, financing, hr and production plans. 5. Political risks: political factors like type of government , political party systems and ideology and risks affect business operations. One needs to make a special effort to understand the political environment in a foreign country and also need to monitor it on a continuous basis. Also a foreign firm could be more vulnerable to any fallout of the political factors as compared to a domestic firm.

6. Business regulation: laws and regulation differ as do tarrifs, taxation policies , import quota and subsidies etc and these may be different for the foreign firm sometimes discriminatory and sometimes favorable. 7. Currency system: Foreign trade would involve the use of different currency systems. The fluctuations in currency rate would affect the pricing and profitability of the foreign firms. Factors responsible for the growth of international business: 1. Advancement of technology: has led to the growth of several new products, which in turn has led to an increase in the demand of new products and services. As a result of constant changes and innovations the product life cycle has also reduced. A firm operating in a mature market would look for different markets in order to extend the profits from a particular product. Also the extensive technology/capital investment would require a firm to operate in big markets which could be possible only by expanding into other countries. 2. Liberalization of govt. policies: the governments across the world have eased the restrictions created to protect their economies. The setting up of WTO has also eased the way for expansion of business. 3. Development of Institutions: Institutional framework to support international trade has improved considerably. The int. bank for reconstruction & development (IBRD) helped set up industrial credit and investment corp. of India and other developing countries. Exim bank was set up by GOI to provide financial support to export related activities. 4. PULL factor the increased awareness and demand for products as a result of more travel and information flow has also led to the growth of international business. Forms of IB:IB can take 5-6 forms. A firm can choose 6 alternatives to choose for entering a new market. The choice that a firm will ultimately make will depend on the resources of the firm and the market potential of the importing country. These forms are 1. Exporting : Enters an international market through importing its surplus production through one of the following: a. Approach the customers directly in overseas market b. Selling the production to an import house /buying agent in the country 2. Licensing: Grant license to a foreign firm to manufacture the product by using the foreign firms to manufacture the product by using the firms name, patent, trademark & technology under terms of agreement. Works when a. Importing country puts curb on imports b. Country is sensitive to foreign ownership

c. Necessary for a firm to protect its patent/trademark against cancellation for non-use. Especially popular in the 70s and suitable for mid-small size firm as does not require too much of capital 3. Joint ventures: joining the management & sharing of the profits of the firm in the new country. It could be for manufacturing or marketing the product. It helps when a. Companys lack of capital or human resources inhibiting a companys plan of internationalizing the operations. b. Helps utilize skill of the partner in the host country c. A companys desire to take advantage of the local firms distribution system This method reduces the political and economic risks considerably associated with internationalization. However it may lead to a loss of absolute control and loss of freedom of action. 4. Manufacturing in a foreign country : a. The cost of exporting is high b. Lower cost of materials, labor in a foreign country and hence lower cost of production. c. Tariff & non-tariff barriers on its goods in the importing countries. This method helps in circumventing the countrys barriers in imports and other restrictions. The decision to manufacture and market the goods locally is risky as the profitability depends on a fair assessment of the market potential, the economic and the political environment as well. 5. Management contracts: not the choice of the firm, but could be the only possibility at that time. Result of external political pressure from the host countrys government. The government expropriates the investments and there is no suitable managerial capability in the host country. Under this arrangement the host company gets specific fees to manage its former investment for a specific time period. 6. Consultancy services: a. Turn-key projects : projects which involve services like design, construction of plant supervision along with supply of equipment. b. Services contract for services only c. Consultancy services consultation, feasibility report, expertise offered