Presentation

on
International
Business

Chapter No.
1

WEL COME

INDEX
Introduction to International Business
Nature & Scope & Feature of I B
Importance of I B
Approaches of I B
Motivation to do I B
Need for I B
Adopting to Customers Needs
Problems in I B
Entry Strategy
Advantages & Disadvantages of I B
Reasons for recent I B Growth
International Organization

WHAT IS INTERNATIONAL
BUSINESS ?
Theexchange of

goods & services,

Resources,
Knowledge,
& Skills , amongindividuals &businessesin multiple/two
Transaction that are carried out across national borders

individuals and organization

or more countries.

to satisfy the objectives of

WHAT IS INTERNATIONAL
BUSINESS ?
All Commercial transactions that take place between two or
more countries.

1-Private & Government

2-Sales
3-Investments
4-Logistics
5- Transportation

NATURE OF IB
1. Accurate Information & timely
2. The size of the international business
3. Market segmentation
4. International markets have more potential than
domestic markets

SCOPE OF IB
1. International Marketing
2. International Finance and Investments
3. Foreign Exchange
4. Global HR

FEATURES OF IB
1. Large scale operations
2. Integration of economies
3. Dominated by developed countries and MNCs
4. Benefits to participating countries
5. Keen competition
6. Special role of science and technology
7. International restrictions

IMPORTANCE OF IB
1. Earn foreign exchange
2. Optimum utilisation of resources
3. Achieve its objectives
4. To spread business risks
5. Improve organization's efficiency
6. Get benefits from Government
7. Expand and diversify
8. Increase competitive capacity

GOING INTERNATIONAL

I B APPROACHES
1. Ethnocentric approach
2. Polycentric

approach

3. Regiocentric approach
4. Geocentric

approach

I B APPROACHES
1. Ethnocentric approach
Under this approach , target market is own
country , Exccesive production will export due
to change in customer taste, preferences

1. Ethnocentric approach
Organization Structure
Managing Director

MGR

MGR

R&D

FIN

MGR

MGR

MGR

PROD

HRD

MKTG

Asstt. Mgr

Asstt. Mgr

Asstt.

Mgr
North india

South India

Exports

I B APPROACHES
2.

Polycentric approach

Under this approach, the companies

customizes the marketing mix to meet the
taste, performance and needs of the
customers of each international market.

2.

Polycentric approach
Organization Structure
Managing Director

CEO

FOREIGN SUBSIDIARY

SOUTH AFRICA

MGR

MGR

R&D

FIN

MGR

MGR

MGR

PROD

HRD

MKTG

I B APPROACHES
3. Regiocentric approach
Under this approach, the company operating
successfully in a foreign country thinks of exporting
other neighbouring countries of the host country.
At this stage, the concerned subsidiary considers the
regional environment ( such as laws, culture, policies
etc) for formulating the policies & strategies.

3. Regiocentric approach
Organization Structure

Managing Director

CEO

SOUTH AFRICA

Mktg

Mktg

Mktg

( Lesotho) ( Kenya) ( Nambia)

MGR

MGR

MGR

MGR

MGR

I B APPROACHES
4. Geocentric approach

Under this approach, the company analyses the tastes,

preference and needs of the customers in all foreign markets
and then adopts a standardized marketing mix for all the foreign
markets.

Coca-cola adopted this strategy by selling its popular soft drink

with the same content, packaging, branding & advertisement
themes worldwide

Whirlpool designs a world-washer small, stripped-down

automatic washing machine for Mexico, Brazil & India. However,
it modified its product for Indain market to wash the

delicate sarees.

4. Geocentric approach
Organization Structure
Managing Director
Headquarters India

Subsidiary

Subsidiary

Subsidiary

Subsidiary

MOTIVATION TO DO I B
1. Proactive:

to increase profit

to take advantage of product life cycle

to achieve Economies of scale

2. Reactive:

Competitive pressures

Overproduction and excess capacity

Declining domestic sales

saturated domestic markets

NEED FOR I B
1. Achieve higher rate of profits
2. Expanding the production capacity beyond the demand
of the domestic country
3. Availability of technology and managerial competence
4. Cost of manpower, transportation & Nearness to R/M
5. LPG Implt.
6. Market share

ADOPTING TO CUSTOMERS
NEEDS
1.

Products and Services should meet to foreign

market

2.

Price adjustments by considering the cost of

foreign trade, such as transportation, taxes,
exchange rate

3.

Distribution system through existing transportation

system, suppliers and stores

4.

Promotion should be modified based on different

languages, law, and culture from country to
country

PROBLEMS IN I B
1.

Political factors

2.

High foreign investments and high cost

3.

Exchange instability

4.

Entry requirements

5.

Tariffs, quota etc.

6.

Corruption and bureaucracy

7.

Technological policy

8.

Quality Management

ENTRY STRATEGY
1.

Exporting

2.

Indirect & Direct

Licensing

Agreement

Patent, trademark, copy right, technology,

production processes, and product

licensees fee

ENTRY STRATEGY
2. Franchising

by franchisers to franchisee

Usage

3. Foreign Assembly

Subsidiary

local assembly

ENTRY STRATEGY
4. Turnkey Operation
Staff of an operating facility
foreign buyer

5. Foreign production subsidiary

Establishment
Purpose

ENTRY STRATEGY
6. Foreign production subsidiary
Purpose of production

7. International Firm
Significant portion
In foreign countries

ENTRY STRATEGY
8. Multinational Corporation
Parent country
host country

9. Joint Venture
Property rights

ENTRY STRATEGY
10. Foreign Direct Investment
Arrangement in which a firm buys or establishes
tangible assets
In another country
Through direct investment
By buying a company stock in capital markets

MAIN BARRIERS
1.

Cultural and social barriers

2.

Legal and political barriers

3.

Economic barriers:

ADVANTAGES OF I B
1. Faster growth
2. Access to cheaper inputs
3. Increased quality and efficiency
4. New market opportunities
5. Diversification

DISADVANTAGES OF I B
1. Increased costs
2. Foreign regulations and standards
3. Delays in payments
4. Complex organizational structure

REASONS FOR RECENT

GROWTH IN I B
1. Expansion of technology
2. Business is becoming more global because
Transportation is quicker
Communications enable control from afar
Transportation and communications costs are more
conducive for international operations
3. Liberalization of cross-border movements
4. Lower Governmental barriers to the movement of
goods, services, and resources enable Companies to
take better advantage of international opportunities

INTERNATIONAL
ORGANIZATION

General agreement on Tariff and trade

(GATT) an international organization formed to
reduce or eliminate tariff and other barrier to
international trade

International Monetary Fund (IMF) an

international financial organization that lend money to
countries in conducting international trade

INTERNATIONAL
ORGANIZATION

World Bank an international financial organization

that lend money to underdeveloped and developing
countries for development

Economic Communities the creation of

common economic policies

World Trade Organization (WTO)

European Community (EC)

North American Free Trade Agreement (NAFTA)

Asian Free Trade Agreement (AFTA)

Presented by

Rahul Boddhul MBA

UNIVERSITY of
SOLAPUR

Thank you !