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International business

International business
International business focuses on global resources,
opportunities to buy/sell world-wide.
International Business conducts business transactions
all over the world. These transactions include the
transfer of goods, services, technology, managerial
knowledge, and capital to other countries.
International business involves exports and imports.
International Business is also known, called or referred
as a Global Business or an International Marketing.

Need for International Business

More and more firms around the world
are going global, including:
Manufacturing firms
Service companies (i.e. banks, insurance,
consulting firms)
Art, film, and music companies

Need for International Business

International business:
causes the flow of ideas, services, and
capital across the world
offers consumers new choices
permits the acquisition of a wider variety
of products
facilitates the mobility of labor,
capital,
and technology
provides challenging employment
opportunities
reallocates resources, makes preferential
choices, and shifts activities to a global
level

What is International
Business?
International business consists of
transactions that are devised and
carried out across national borders to
satisfy the objectives of individuals,
companies, and organizations.

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throughcollaborators.11.H
12.GlobalStandardizationN
brand image.No such adv
are problems intaxes or m
Unitwho get patronageof G

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The theory of Absolute Advantage

Output per one day of Labour
Pens

Japan

India

20

60
OR

Audio tape recorder

InJapanonedaylabourcanproduce20pensor60recorder.In
Indiaonedayoflabourcanproduceeither60pensor2recorder.
Japanhasabsoluteadvantageinproductionofaudiotape
recorder&IndiahasanAbsoluteadvantageintheproductionof
pens.

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The theory of comparative Advantage

Cost of goods in Japan

Pens

Cost of goods in India

Japan Made
Ys.

Indian Made
Ys.

Japan Made
Rs.

Indian Made
Rs.

100

30

50

OR
Audio tape
recorder

60

IntheabsenceoftradeonepencostYen6=Rs3.likeaudioalso
IntheabsenceoftradeinIndiaonepencostsRs.2=Yen4.likeaudio
Ifthe2countriestradewitheachother,IndianmadepenischeaperinJapanYen4
thanJapanmadepenYen6
Similarly,JapmadeaudiotaperecorderischeaperinIndiai.e.,Rs30thanIndian
Madeaudioi.e.,Rs50
Japanhascomparativeadvantageinproducingaudio&Indiahascomparative
advantageinproducingpens.Therefore,Indiacanimportaudiotaperecordersfrom
Japan&JapancanimportpensfromIndia

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Types / forms of International

Business
Export-importtrade
Foreigndirect
investment

Licensing,Turnkeyproject

Franchising,JointVenture
Managementcontracts,M&A

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Licensing is a business
agreement involving two
companies: one gives the
other special permissions,
such as using patents or
copyrights, in exchange
for payment.
Franchising is the
practice of licensing
another firm's business
model as an operator.

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Exporting is the practice of

shipping goods from the domestic
country to a foreign country.
Imports are the inflow of goods
and services into a country's
market for consumption.
In contract manufacturing, a
hiring firm makes an agreement
with the contract manufacturer
to produce and ship the hiring
firm's goods.

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In a joint venture business model, two

or more parties agree to invest time,
equity, and effort for the development
of a new shared project.
A turnkey project is a contract under
which a firm agrees to fully design,
construct & equip a
manufacturing/business/service
facility and turn the project over to the
purchaser when it is ready for the
operation for a remuneration.

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