Escolar Documentos
Profissional Documentos
Cultura Documentos
BUSINESS
INTERNATIONAL BUSINESS
International Business is
an attitude of mind,
approach of the Company
with a global outlook,
seeking profits around
the world on a planned
and systemic basis
INTERNATIONAL BUSINESS
Growth Factors
Increase in Global Competition
Global Opportunities for Domestic
Manufacturers and Suppliers
Faster Availability of New Product
Technology
Multiple Manufacturing Locations
Uniformity in quality and price
INTERNATIONAL BUSINESS
Responsible Growth Factors
Development of Supporting Institutions
Insurance
WTO
Banking
Shipping
Trade Associations
Consular Services
Government Agencies
INTERNATIONAL BUSINESS
Domestic vs. International Business
Controllable Domestic Foreign Environment
Environment (Uncontrollable)
Product (Uncontrollable)
Political / Legal Forces
Price Political / Legal
Forces Economic Forces
Promotion
Competitive Forces Cultural Forces
Distribution
Channel Economic Climate Competitive Forces
Geography &
Infrastructure
Level of Technology
Structure of Distribution
INTERNATIONAL BUSINESS
International Business Decisions
Co. Objectives
Vision
Co.’s Decision
Present & Future
Opportunities in Domestic
and International Market
Resources of the Company
Skills / Technology
Finance
Experience
Production Capabilities
Marketing Capabilities
INTERNATIONAL BUSINESS
Corporate Mission Objectives
Strategy
Major Operating Objectives
Profit Motives
Growth Opportunities
For the Company
For the Country
Expand Sales
Capacity Utilisation
INTERNATIONAL BUSINESS
Spin-off Benefits
Duty-free Imports
Capital Goods Imports
Improved Domestic Production
Non-profit Motives
Philanthropic
NGOs – Education, Health, Wild Life
Political
Spread of Ideologies, New base
INTERNATIONAL BUSINESS
Operating Mode
Export and Import
Merchandise Exports and Imports
Visible Exports and Imports
Tangible Goods
Less Complicated
Need Not Be Manufacturer or Actual User
Good Growth Opportunities
INTERNATIONAL BUSINESS
Operating Mode
Export and Import
Service Exports and Imports
Invisible Exports and Imports
Intangible Goods
More Complicated
Mostly Manufacturer or Actual User
Good Growth Opportunities
INTERNATIONAL BUSINESS
Operating Mode
Export and Import
Service Exports and Imports
Entertainment, Travel, Tourism
Performance of Services
Banking, Insurance, Rental,
Management, Engineering,
Software, Turnkey Projects,
Construction, Manpower
INTERNATIONAL BUSINESS
Operating Mode
Export and Import
Service Exports and Imports
Use of Assets
Licensing Agreements
Trademarks, Patents, Copyrights
Franchising Agreements
Royalties and Fees
Use of Capital Assets
INTERNATIONAL BUSINESS
Operating Mode
Investments
FDI
JV, Strategic Alliances
Portfolio Investment
Stocks
Short-term Loans
INTERNATIONAL BUSINESS
International Orientations
External Influences
Political Risks
Confiscation
Expropriation
Nationalisation
Domestication
General Instability Risk
Ownership / Control Risk
Operation risk
Transfer Risk
Privatisation
INTERNATIONAL BUSINESS
External Influences
Political Risks
Indicators Of Political Instability
• Social Unrest
• Attitudes of Nationals
• Policies of Host Government
• War
Management of Political Risk
• Avoidance
• Insurance
INTERNATIONAL BUSINESS
External Influences
Political Risks
Measures To Minimize Political Risk
Stimulation of Local Economy
Local Sourcing
Exports
FDI
Employment Of Nationals Jobs, Contracts
Sharing Ownership Cathay Pacific
in China
INTERNATIONAL BUSINESS
External Influences
Political Risks
Measures To Minimize Political Risk
Being Civic Minded Microsoft
Singapore Airlines
Political Neutrality
Behind the Scenes Lobby
Observation of Political Mood and Reduction in
Exposure
Other Measures Adapting Culture
McDonalds No Beef
INTERNATIONAL BUSINESS
External Influences
Economic Systems
Demand Conditions
Composition of Home Demand
Size and Growth Pattern of Home Demand
Internationalisation of Demand
INTERNATIONAL BUSINESS
Country Classifications
Economic Indicators
GNP
The Market Value of Final Goods and Services Newly Produced by
Domestic Factor of Production at Home or Abroad
GDP
The Value of Production That Occurs Within Country's Borders,
Whether Done by Domestic or Foreign Factors of Production
Macroeconomic Issues
Economic Growth
9 / 11
1997 Asian Financial Crisis
Dot Com Burst
Global Terrorism
Emerging Economies May Have a Higher Growth
With Dangers of Political Instability
INTERNATIONAL BUSINESS
Macroeconomic Issues
Macroeconomic Issues
Inflation
Culture
Culture Its Characteristics
Culture
Culture Its Characteristics
Culture
Influence On Consumption
Consumption Of Beef In US And In India, Cold Cuts In
Russia
Chinese Eat Reptiles, Raw Beef In Ethiopia
French Eat Snails, Americans Prefer Fried Chicken,
Indian Food - Tandoori
Halal For Muslims Pork For Non Muslims, Fish Head In
Bengal
INTERNATIONAL BUSINESS
Culture
Influence On Consumption
Non Alcoholic Beer In Saudi Arabia
Parsi’s & Sikhs Do Not Smoke
Concept Of Vegetarian Food
Dressing Styles In Different Countries
Bindi, Mangalsutra In India, Wedding Rings In West
INTERNATIONAL BUSINESS
Culture
Influence On Thinking Process
Culture
Verbal Communication
Non-verbal Communication
Technological Advance
Impact on Manufacturing – Process, Inventories
Marketing – Promotion
- Distribution, Logistics
- Pricing
Suitability of environment for use of the product
Impact of Technology on Infrastructure
INTERNATIONAL BUSINESS
External Influences
Legal Environment
Legal Systems
Legal Systems in Different Countries
Multiplicity of Legal Environments
Civil Law
Civil law is the most widespread system of law in the
world, also known as European Continental law,
codified law
Codifications in a constitution or statute passed by
legislature
Civil law systems mainly derive from the Roman
Empire
Civil law partly influenced by religious laws such as
Canon law and Islamic law
INTERNATIONAL BUSINESS
External Influences
Legal Environment
Legal Systems
Legal Systems in Different Countries
Multiplicity of Legal Environments
Civil Law
Only legislative enactments, rather than judicial
precedents are considered legally binding. However,
in reality courts do pay attention to previous
decisions, especially from higher courts
• French Civil Law
• German Civil Law
• Scandinavian Civil Law
• Chinese Law is a mixture of civil law & socialist
law
INTERNATIONAL BUSINESS
Legal Systems
Legal Systems in Different Countries
Multiplicity of Legal Environments
Common Law
Common law based on tradition , precedent,
customs and usage
Common law developed in England
Common law inherited by the Commonwealth of
Nations and almost every former colony of the
British Empire
The doctrine of stare decisis or precedent by courts
is the major difference to codified civil law systems
INTERNATIONAL BUSINESS
Legal Systems
Legal Systems in Different Countries
Multiplicity of Legal Environments
Common law is currently in practice in Ireland, most
of the United Kingdom, Australia, India, South Africa,
Canada*, Hong Kong and the United States** etc
In addition several others have adapted the common
law system into a mixed system
Pakistan and Nigeria operate largely on a common law
system, but incorporate religious law
In the European Union the Court of Justice takes an
approach mixing civil law
*excluding Quebec, **excluding Louisiana
INTERNATIONAL BUSINESS
Legal Systems
Legal Systems in Different Countries
Multiplicity of Legal Environments
Theocratic Law
The main kinds of religious law are Sharia in Islam,
Halakha in Judaism and Canon law in some Christian
groups
Sharia Law governs a number of Islamic countries,
including Saudi Arabia, Malaysia and Iran, though
most countries use Sharia Law only as a supplement
to national law
It can relate to all aspects of civil law, including
property rights, contracts or public law Islamic Law
INTERNATIONAL BUSINESS
Legal Systems
Legal Systems in Different Countries
Multiplicity of Legal Environments
Pluralistic systems
• Civil law and common law
• Civil law and religious law
• Common law and religious law
INTERNATIONAL BUSINESS
Legal Systems
Legal Systems in Different Countries
Multiplicity of Legal Environments
International Law
• Public Law or Law of Nations
• International Commercial Law
External Influences
Form of the Company
Pvt., Ltd, Inc, France S.A.(societe
anonyme), Germany GmbH, AG,
KK in Japan
EC is Encouraging PLC
Branch, Subsidiary, JV
INTERNATIONAL BUSINESS
Impact of Laws on Business
External Influences
Bribery
Banned by US Govt., FCPA
Bribing
To Speed Up The Work
To Get Contract
To Prevent Competition
Cooperation Money In Indonesia
INTERNATIONAL BUSINESS
Reconciliation of International Differences
Cultural Awareness
No Foolproof Method
Awareness and Sensitivity
Samsung Junior Executives
Grouping Countries
Language, Ethnicity, Geographical Location
Group Countries by Attitudes and Values
Seemingly Similar Countries May Not Be
Similar As In ME Asia
INTERNATIONAL BUSINESS
Formulating & Implementing Political Strategies
More Complicated Than Formulating
Competitive Marketing Strategy
Marketing Issues Resolved by Voluntary
Agreements
Political Issues Resolved by Power Center and
by Those Who Structure the Conditions
Under Which Market Participants Operate
Many of the Components Implemented in
Public View
INTERNATIONAL BUSINESS
Formulating & Implementing Political Strategies
Watch For
Identify Issue - Protectionism, Environment,
Worker’s Rights
Define – Nature of Politics of the Issue
Assess Possible Action of Other Companies and
Interest Groups
Identify Important Individuals and Key Institutions
Formulate Strategies – Objectives, Major
Alternatives
Determine Impact of Implementation – Public
Reaction
Select Appropriate Strategy and Implement
INTERNATIONAL BUSINESS
LG Case Study
40% weightage
Divide class in two groups, odd roll nos. and even roll
nos.
Form serially group of six students from above
20 minutes presentation with participation of each
group member
10 minutes for Q&A
All students to be present for all the presentations
Presentation to cover
• Vision of LG
• SLEPT Analysis
• Lessons for emerging Indian MNCs