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overview
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.
IB refers to business transactions crossing national borders at any stage
of the transaction. Transaction of economic resources include capital,
skills, people etc. for international production of physical goods and
services such as finance, banking, insurance, construction etc.
Objectives of IB:-
1. To understand the global economy
2. Understand the major arguments in the debate over the impact of
globalization.
3. Be familiar with the main drivers of globalization
Features of IB
Large scale operations
Integration of economies (uses different resources from different
countries)
Dominated by developed countries and MNCs (as they have the
best financial, human and technical resources)
Benefits to participating countries (foreign capital, technology,
industrial dev, employment)
Keen competition (weak position of developing countries)
Special role of science and technology
International restrictions (on capital and technology flow; barriers,
duties, trade blocks are there)
Sensitive nature (Any changes in the economic policies, technology,
political environment, etc. have a huge impact)
Reason for growth of IB
Profit advantages
Growth opportunities
Domestic Market constrains
To minimise the competition
To acquire the resources
Why enter into IB
The reasons for entering overseas markets can be categorized into push and pull
factors:
Push factors
Saturation in domestic markets
Economic difficulty in domestic markets
Near the end of the product life cycle at home
Risk diversification
Excess capacity
Pull factors
The attraction of overseas markets
Increase sales
Enjoy greater economies of scale
Extend the product life cycle
Exploit a competitive advantage
Personal ambition
Constraints and difficulties in entering
overseas markets
Scarcity of Resources
Market uncertainty
Marketing costs
Cultural differences
Linguistic differences
Trade barriers
Regulations and administrative procedures
Political uncertainties
Exchange rates (transactions costs & risks)
Problems of financing
Working capital problems
Cost of insurance
Distribution networks
Steps into internationalization
Deciding whether to go globally
Deciding what market to entre
Deciding how to entre market
Entry strategies
Adjusting the management process
Selecting a Managerial approach
Deciding an organizational structure
Legal clearance of internationalization
Entry strategies to foreign market (IB)