Future of International Business

By
Hans Sadhu 1211618
Pallav Bhagat 1211630

FORCES DRIVING
INTERNATIONAL BUSINESS
Political preferential trading agreements,

progressive reduction of trade barriers, foreign

investments by most governments, privatization of
much of the industry in formerly communist nations
and the opening of their economies
Technological advances in communication
technology, global communication networks, internet
and network computing
Market global firms become global customers
Cost globalization of product lines and production
helps reduce costs by achieving economies of scale
Competitive firms are defending their home
markets from foreign competitors by entering the
foreign competitors market to distract them

International Business
Environment
Domestic environment: composed of all the

uncontrollable factors originating in the home

country that influence the firms life and
development
-Foreign environment: composed of all the
uncontrollable forces originating outside the home
country that influence the firm
the kinds of forces are the same as those in the

domestic environment but their values often differ

and changes in the values of foreign forces are at
time more difficult so assess
International environment: interaction between

the domestic and foreign environment factors or

between sets of foreign environment factors

FUTURE INTERPRETATIONS
Rise of emerging markets and relative decline

of the developed world

Emerging markets already buy half of the worlds

exports and half of the worlds oil.

They have accumulated more than 70% of global
foreign exchange reserves
They have more than 80% of worlds population
and this is rising by 6m people every month
For the last 15 years, emerging markets
outperformed the developed world in terms of
growth by a margin of 3 to 1.

 Sales growth will be largely in emerging

markets
Many firms are issuing or thinking about issuing

new shares and corporate bonds in emerging

markets. Nestle is listed not only in Switzerland and
in India but also Malaysia, Nigeria, Pakistan, Sri
Lanka and Serbia
A company of the future must become a twoheaded monster; one head must be focused on
protecting (and growing if possible) the large
volume, low growth markets of the developed world,
the other head must be focused on building medium
and long term market positions in emerging
markets.

 The competitive landscape will be tighter than

ever
First, traditional multinationals from the developed

world are becoming more focused and systematic

regarding emerging markets
Second, there is a growing number of emerging
market companies that have regional and global
ambitions.
There are reportedly close to 3,000 Chinese firms
that have serious regional and even global
ambitions
Emerging market multinationals already represent
10% of Fortune 500 firms

 The age of relentless innovation with external

and internal focus

Competitive pressures from multinationals
Competitive pressures from emerging market

multinationals
Price sensitivity
In the new age of moderation, more consumers will
be trading downwards