INTERNATIONAL BUSINESS

AND ITS OVERVIEW AND ITS

TYPES AND TYPES OF
ENVIRONMENT

MADE BY- SARBJEET KAUR

ABHISHEK SINGLA
MANPREET SINGH
 INTERNATIONAL BUSINESS-MEANING

● The exchange of goods and services, resources,

knowledge and skills, among individuals & businesses in
two or more countries.
● Transaction that are carried out across national borders
to satisfy the objective of individuals and organization.
● All commercial transactions that take place between two
or more countries.
● Private and Government
● Sales
● Investments
● Logistics
● Transportation
 OVERVIEW OF INTERNATIONAL BUSINESS

● NATURE-
❖ Accurate information timely
❖ The size of international business
❖ Market segmentation
❖ International markets have more potential than
domestic markets
 FEATURES

● Large scale operations

● Integration of economies
● Dominated by developed countries and MNCs
● Benefits to participating countries
● Keep competition
● Special role of science and technology
● International restrictions
 IMPORTANCE

● Earn foreign exchange

● Optimum utilization of resources
● Achieve its objectives
● To spread business risks
● Improve organization’s efficiency
● Get benefits from government
● Expand and diversity
● Increase competitive capacity
 TYPES OF INTERNATIONAL BUSINESS

★ LICENSING
★ FRANCHISING
★ EXPORTING
★ IMPORTING
★ CONTRACT MANUFACTURING
★ JOINT VENTURING
★ OUTSOURCING
★ OFFSHORING
★ MULTINATIONAL FIRM
★ DIRECT INVESTMENTS
★ COUNTER TRADE
 LICENSING

It gives licensee certain rights or resources to

manufacture and/or market a certain product in a host
country.
➢ Licensing is a business agreement involving two
companies: one give the other special permissions,
such as using patents or copyrights, in exchange for
payment.
➢ An agreement here involves two firms from different
countries, with the licensee receiving the rights or
resources to manufacture in the foreign country.
 FRANCHISING

● It is the practice of licensing another’s firm’s

business model as an operator.
● It is an alternative to building chain stores to
distribute goods that avoids the investments and
liability of a chain.
● The franchiser is the supplier who allows an
operator,or a franchisee, to use the supplier
trademark and distribute the supplier goods.
 EXPORTING

● It is the practice of shipping the goods from the

domestic country to a foreign country.
● The export word is derived from the meaning as to
ship the goods and services out of the port of a
country.
● In national accounts,it consist of transactions in
goods and services from residents to non-residents.
● Statistics on international trade do not record
smuggled goods or flow of illegal services.
 IMPORTING

● They are the inflow of goods and services into a

country’s market for consumption.
● The country can increase welfare by specializes in the
export of goods for which it has a comparative
advantage and for imports they have disadvantage.
● Comparative advantage describes the ability of
country to produce one specific good more efficiently
than other goods.
 CONTRACT MANUFACTURING

● In this, a hiring firm makes an agreement with the

contract manufacturer to produce and ship the
hiring firm’s goods.
● A hiring firm may enter a contract with a CM to
produce component or final products on a behalf of
the hiring firm for some agreed-upon price.
● There are many benefits in CM, and companies are
finding many reasons why they should be
outsourcing their production to other companies.
 JOINT VENTURES

● In this business model, two or more parties agree to

invest time, equity and effort for the shared of a new
shared project.
● It involved two parties contributing their own equity
and resources to develop a new project.
● Money involved in the joint venture .it is necessary
to have a strategic plan in place.
● Cost of starting new projects are high, a joint venture
allows both parties two share the resulting profits
and the burden of the project.
 OUTSOURCING

● It functions to developing the foreign countries has

become a popular way for companies to reduce cost.
● It is contracting of the business processes to external
firm, usually in the developing countries where labor
cost are cheaper.
● This practice has increased in prevalence due to
better technology and improvements in the
educational standards of the countries to which the
jobs are outsourced.
 OFF-SHORING

● It entails a company moving a business process from

one country to another.
● It is the reallocating of the certain business process
from one country to other, resulting in large tax
breaks and lower labor costs.
● It can cause controversy in the a company’s domestic
country since it is perceived to impact the domestic
employment situation negatively.
 MULTINATIONAL FIRMS

● With the advent of improved communication and

technology, corporations have been able to expand
into multiple countries.
● Multinational corporations operate in multiple
countries
● MNC’S have considerable bargaining power and may
negotiate business or trade policies with success.
 DIRECT INVESTMENT

● FDI is practiced by the companies in order to benefit

from cheaper labor costs, Tax exemptions, and other
privileges in that foreign country.
● FDI is the flow of investments from one company to
production in a foreign nations, which the purpose of
lowering labor costs and gaining tax incentives.
● FDI can help the economic situations of developing
countries, as well as facilitate progressive internal
policy reforms.
 COUNTERTRADE

● It is a system of exchange in which goods and

services are used as payment rather than money.
● It is the exchange of goods and services for other
goods and services.
● They come under following-
➢ Switch trading
➢ Counter purchase
➢ Buyback
➢ Offset agreement
 EXTERNAL ENVIRONMENT

● It refers to the environment refers to the environment that has indirect influence on the business
and the factors in this are uncontrollable by the business.
Macro environment factors-
▪ Political
▪ Economic
▪ Social
▪ Technological
▪ Legal
▪ Environmental
▪ Ethical
Micro environment factors-
▪ Customers
▪ Employees
▪ Suppliers
▪ Shareholders
▪ Media
▪ Competitors
 ECONOMIC ENVIRONMENT
● It refers to all those economic factors, which have a bearing on the functioning of
business. Business depends on the economic environment for all the needed inputs.
● It also depends on the economic environment to sell the finished goods.
▪ GDP & GNI
● Per capita conversion
● Rate of change in growth
● Purchasing power parity
● Human development index
● Inflation
● Employment
● Debt
● Income distribution
● Poverty
● Labour cost
● Productivity
● Balance of payments
● Economic structures
 POLITICAL ENVIRONMENT

● It includes all laws, government agencies and

lobbying groups that influence or restrict individuals
or organizations in the society.
➢ Philosophy of political parties
➢ Ideology of the party in the power
➢ Nature of bureaucracy
➢ Political stability
➢ Foreign policy
 HUMAN ENVIRONMENT

➢ Our earth is human environment, anywhere humans lives and

create facilities is a human environment. there are various types of
human environment which are created by humans only in this
world.
❖ Settlement
❖ Transportation-
❖ Roadways
❖ Railways
❖ Waterways
❖ Airways
❖ Pipelines
▪ Communication-oral or written
 CULTURAL ENVIRONMENT

● Cultural is something that unites people.

● A system of values and norms that are shared among a group of
people and that when taken together a design for living.
● Components-
➢ Values
➢ Norms
➢ Society
➢ Attitude
➢ Language
➢ Religion
➢ Aesthetics
➢ Education
➢ Tradition