INTERNATIONAL BUSINESS Prof Bharat Nadkarni. Business Excellence (Getting the Big Picture of business ) Prof Bharat Nadkarni.

INTERNATIONAL BUSINESS

Prof Bharat Nadkarni

Business Excellence

(Getting the Big Picture of business)

Prof Bharat Nadkarni

International Business

From a very early age, we are taught to break apart problems,

to fragment the world. This apparently makes complex tasks

and subjects more manageable, but we pay a hidden,

enormous price. We can no longer see the consequences of

our actions; we lose our intrinsic sense of connection to a

larger whole. When we then try to “see the big picture”, we try

to reassemble the fragments in our minds, to list and organize

all the pieces. But the task is futile – similar to trying to

reassemble the fragments of a broken mirror to see a true

reflection. Thus, after a while we give up trying to see the

whole altogether.


Who are the Stakeholders of Business ?

• Shareholders and Promoters

• Customers

• Employees

• Suppliers and Partners (incl Contractors, Agents etc)

• Government

• Society


Most Admired Business

“Balancing and Exceeding the Expectations of all it’s

Stakeholders.”

Reference Books : International Business By• Subba Rao

• Francis Cherunilam

• Dr Chandran

• Sundaram and Black

• Daniels & Radebough

• Charles Hill & Jain

• Roebuck & Simon



1. Definition of IB, Domestic vs Int’I business, Adv & Disadv

2. International trade theories

3. Globalisation, Regional groups, Transnational economy.

4. Market entry strategies

5. International Trade Institutions, Policies

6. International finance & Foreign Direct Investments

7. International issues, G 20 issues, MFN status, Intellectual property rights, purchase power parity etc

8. Ethical business, CSR, Millineum goals, HR policies etc

9. Logistics, Information technology, cultural and social issues, Generalised topics etc

10.Case studies


Scope : “World is turning into a Global village”.

“SMOOTH”1. Source raw materials wherever they are cheapest.

2. Manufacture anywhere in the world where it is most cost effective.

3. Obtain and Sell in those global markets where prices are highest.

4. Organize and Raise finances globally.

5. Try and Forge international strategic alliances.

6. Hire the best talent from all over the world. To manage all the above points.

And you will have achieved the stature of a true Global Organization


International Trade Policy• Laissez-faire approach (Free trade)

Vs Interventionist approach

Independence, Dependence and Interdependence

Theories• Mercantilism (ex Colonial rule)• Absolute advantage and Comparative advantage (ex

India – tea, US- wheat)• Theory of Country size (ex India, China, Brazil, USA)• The Product Life Cycle Theory• Factor Proportions Theory (ex India, Hong kong,

Singapore, Dubai)



International business can be defined as activities that buys

and sells goods and services across two or more national

boundaries, even if the management is located in a one

country. It includes any type of business activity that crosses

national borders. International business is related with

those enterprises which have operating units outside their

own country. There are institutional arrangements who

provide some managerial direction of economic activity

taking place abroad.

Conducting international business is really not like playing a

whole new ball game but it is like playing in a different ball

park, where the managers have to learn the factors unique to


the playing field. The guiding principles of a firm engaged in

international business activities should incorporate a global

perspective. Incorporating an international outlook into the

firm’s basic statement will help focus the attention of

management on the opportunities outside the domestic

economy.


Difference between Domestic and International business

1. Higher rate of profits (Absolute advantages, taxes, concessions and incentives)

2. Expansion of production capacities

3. Competition (pull & push effects)

4. Wide market

5. Political stability

6. Technology

7. High cost of transportation


Growing importance of International Business• Current trends are towards the increasing globalisation

and interdependence of firms, markets and countries.• Intense competition at global level• Exchange rate developments – shift from –ve to +ve

growth• Global capital flows to LDCs• Differences in Price and Cost• Restructuring the economy to integrate with global

economy• Increased importance of CSR• The growing importance on enhancing standard of living

in LDCs


• Liberal trade policies and procedures• Revolution in communication and transportation


International Business Corporate Approaches

1. Ethnocentric (Home country orientation)

2. Polycentric (Host country orientation)

3. Regiocentric (Regional orientation)

4. Geocentric (World orientation)


SAARC (7): South Asian Association for Regional CooperationIndia, Pakistan, Sri Lanka, Nepal, Bhutan, Bangladesh, Maldives

NAFTA (3) : North American Free Trade AgreementUSA, Canada, Mexico

LAFTA (9) : Latin American Free Trade AreaArgentina, Brazil, Mexico, Chile, Peru, Uruguay, Paraguay, Columbia, Ecuador

ASEAN (5) : The Association of South East Asian Nations was formed by the Bangkok Declaration, 1967, by five countries, viz., Indonesia, Malaysia, Philippines, Singapore and Thailand.

International Business EU (15) : European Union Austria, Belgium, Britain, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden.Euro : Common currency of the EU was launched by 11 members on 1.1.1999, Britain, Denmark, Sweden did’nt join. Greece joined in 1.1.2001

Maastricht Treaty of 1991 set the stage for the monetory union. EU AdditionsWith effect from May 1, 2004 the total membership of EU increased to 25. Following ten countries were inducted.Estonia, Latvia, Lithuania, Poland, Czech Republic, Hungary, Slovenia, Slovakia, Cyprus and Malta.Two more members, Bulgaria and Romania, were inducted in 2007, taking the tally to 27 countries.


International Business Environment

1. Internal Environment

Org. Structure ( I P O )

Production

Marketing

Finance

H R

R & D

I T

Business Development


International Business Environment

2. External Environment

a. External Micro Environment

All Stakeholders and Competitors

b. External Macro Environment

S T E P I N

(Social, Technical, Economical, Political, International, and Natural)

Thank you

Foreign direct investment approvals will, however, be subject to sectoral caps: (as on 31.03.2010)• 20 percent (40'per cent for NRIs} in the banking sector;

•51 per cent in non-banking financial companies;

•100 per cent in power, roads, ports, tourism and venture capital funds;

•49 per cent in telecommunications;

•40 per cent (100 per cent for NRIs) in domestic air taxi operations/airlines;

•24 per cent in small-scale industries;

•51 per cent in drugs/pharma industry for bulk drugs;

•100 per cent in petroleum; and

• 50 per cent in mining ~ except for gold. silver, diamonds and precious stones

The Millennium Development Goals… as defined by UN

Eradicate extreme poverty and hunger

Achieve universal primary education

Promote gender equality and empower women

Reduce child mortality

Improve maternal health

Combat HIV/AIDS, malaria and other diseases

Ensure environmental sustainability

Develop a global partnership for development

Stop Child Labour

INTERNATIONAL BUSINESS Prof Bharat Nadkarni. Business Excellence (Getting the Big Picture of business ) Prof Bharat Nadkarni.

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