Intro ib

Introduction to International Introduction to International Business (IB)Business (IB)

--Prof. .Roshni Prof. .Roshni Sawant KumarSawant Kumar

Syllabus Syllabus

Introduction to International BusinessIntroduction to International BusinessPorters Diamond Competitive AdvantagePorters Diamond Competitive Advantage theory theoryMethods of Entering International BusinessMethods of Entering International BusinessBarriers to International TradeBarriers to International Trade International Business Strategy International Business Strategy International Business EnvironmentInternational Business Environment

Books for ReferenceBooks for Reference

International Business : KeeganInternational Business : Keegan International Business :Dr. ChandranInternational Business :Dr. Chandran International Business : Francis International Business : Francis

CherunilamCherunilam International Economics – Salvothar International Economics – Salvothar

DominicDominic International Business – Hill, CharlesInternational Business – Hill, Charles

ScenarioScenario

The world is shrinking rapidly with the The world is shrinking rapidly with the advent of faster communication, advent of faster communication, transportation and financial flows.transportation and financial flows.

International trade is boomingInternational trade is boomingBetween 1996 and 2006, U.S. exports Between 1996 and 2006, U.S. exports

have increase by nearly 51%.have increase by nearly 51%.Global competition is intensifyingGlobal competition is intensifying

Cont…Cont…

To compete, many International companies are To compete, many International companies are continuously improving their products, continuously improving their products, expanding into foreign markets, expanding into foreign markets,

International firms face several major problems:International firms face several major problems: Inflation, and unemployment have resulted in highly Inflation, and unemployment have resulted in highly

unstable governments & currencies, unstable governments & currencies, Governments placing more regulations on foreign Governments placing more regulations on foreign

firmsfirms Protectionist policies and trade barriers,Protectionist policies and trade barriers, Corruption.Corruption.

NIKE: a cultural issueNIKE: a cultural issue

When Nike learned When Nike learned that this stylized that this stylized

“ “Air” logo resembled Air” logo resembled “Allah” in Arabic “Allah” in Arabic script, it apologized script, it apologized and pulled the shoes and pulled the shoes from distributionfrom distribution

Colgate Goes to China Colgate Goes to China

Using aggressive promotional and educational programs, Colgate has Using aggressive promotional and educational programs, Colgate has expanded its market share from 7% to 35% in less than a decadeexpanded its market share from 7% to 35% in less than a decade

Objectives of IBObjectives of IB

To establish trade relation among the To establish trade relation among the nations and to maintain cordial relation nations and to maintain cordial relation among nations for maintaining world among nations for maintaining world peace peace

To provide better life and welfare to people To provide better life and welfare to people To bring country’s closer for trading To bring country’s closer for trading

purpose and to encourage large scale free purpose and to encourage large scale free trade among the country's of the world.trade among the country's of the world.

To provide assistance to developing countries To provide assistance to developing countries in their economic and industrial growth and to in their economic and industrial growth and to remove or reduce gap between the develop & remove or reduce gap between the develop & developing countries .developing countries .

To keep international trade free and fair to all To keep international trade free and fair to all countries by avoiding trade barriers.countries by avoiding trade barriers.

To ensure optimum utilization of resource at the To ensure optimum utilization of resource at the global level. global level.

Call for Int. Business TradeCall for Int. Business Trade International interdependence of countries: International interdependence of countries:

no country in the world is self sufficient.no country in the world is self sufficient.Absence of uniform geographic & climatic Absence of uniform geographic & climatic

condition.condition.Availability of comparative cost advantageAvailability of comparative cost advantageGrowing needs of countriesGrowing needs of countriesTo solve the problem of surplus/shortage To solve the problem of surplus/shortage

of production in countries.of production in countries.

Bridge the gap between developed and Bridge the gap between developed and developing nation: i.e. transfer of technical developing nation: i.e. transfer of technical know how and skills .know how and skills .

International cooperation and world peaceInternational cooperation and world peaceFacilitates culture exchange Facilitates culture exchange Provides higher standard of living Provides higher standard of living Special benefits during emergency Special benefits during emergency

situations situations Company exporting abroad may earn Company exporting abroad may earn

substantial profits out of its operation substantial profits out of its operation

Major International Business DecisionsMajor International Business Decisions

Looking at the International Looking at the International Business Business

The International Trade SystemThe International Trade Systemi.e. Tariff, Quota, Exchange i.e. Tariff, Quota, Exchange

Control, and Non-tariff Trade BarriersControl, and Non-tariff Trade Barriers

The World Trade Organization and GATTThe World Trade Organization and GATTTreaty designed to promote world trade by reducing Treaty designed to promote world trade by reducing

tariffs and other international trade barrierstariffs and other international trade barriers

Regional Free Trade ZonesRegional Free Trade ZonesGroup of nations organized to work toward Group of nations organized to work toward

common goals in the regulation of international common goals in the regulation of international tradetrade

Patterns of TradePatterns of Trade Trade in goods: commodities, raw materials,part Trade in goods: commodities, raw materials,part

or finished goods-between different locationsor finished goods-between different locations Trade in services:travel and tourism,financial Trade in services:travel and tourism,financial

services,consultancy,education and training-services,consultancy,education and training-expanding marketsexpanding markets

E-commerce and E-business: using IT to trade E-commerce and E-business: using IT to trade across bordersacross borders

Business with Governments and Agencies-Business with Governments and Agencies-impact of privatization and economic impact of privatization and economic developmentdevelopment

Stages of International MarketingStages of International Marketing

Export Marketing: Ethnocentric: e.g Export Marketing: Ethnocentric: e.g smaller playerssmaller players

International marketing: some overseas International marketing: some overseas activity: e.g Hidesignactivity: e.g Hidesign

Multinational: marketing in countries or Multinational: marketing in countries or regions which differ significantlyregions which differ significantly

Global marketing-Integrated to exploit Global marketing-Integrated to exploit global opportunitiesglobal opportunities

Export MarketingExport Marketing

Domestic market remains of prime Domestic market remains of prime importanceimportance

Profitable by product of its domestic Profitable by product of its domestic strategystrategy

Challenge is to select appropriate markets, Challenge is to select appropriate markets, determination of appropriate product determination of appropriate product modifications to meet the requirements modifications to meet the requirements and development of export channelsand development of export channels

International MarketingInternational Marketing

Go beyond exporting and become more Go beyond exporting and become more directly involved in the local marketing directly involved in the local marketing environment within a given country.environment within a given country.

Have its own sales subsidiaries,develop Have its own sales subsidiaries,develop entire marketing strategies to fit new entire marketing strategies to fit new market demands.market demands.

Need to understand different environmentsNeed to understand different environments

Multinational MarketingMultinational Marketing

Result of development of Multinational Result of development of Multinational corporations.corporations.

Characterized by extensive development of Characterized by extensive development of assets abroad,operate in several foreign assets abroad,operate in several foreign countries as if the firms were local companies. countries as if the firms were local companies. This has led to the development of many This has led to the development of many domestic strategies also called domestic strategies also called multi-domesticmulti-domestic strategystrategy-whereby a MNC competes with many -whereby a MNC competes with many strategies, each tailored to a particular local strategies, each tailored to a particular local market.market.

Cont…Cont…

Challenge is to find the best possible Challenge is to find the best possible adaptation of a complete marketing adaptation of a complete marketing strategy for an individual country.strategy for an individual country.

Maximum localizationMaximum localization

Global MarketingGlobal Marketing

Single strategy for a product,service, or Single strategy for a product,service, or company for the entire global market. E.g company for the entire global market. E.g DellDell

Aimed at leveraging the commonalities Aimed at leveraging the commonalities across many marketsacross many markets

Last stage in the development of the field Last stage in the development of the field of International Marketing of International Marketing

THANKYOU THANKYOU