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International - Prof.

Business Abhishek
Marks Distribution
Break-up of Internal Assessment
Attendance/Class Case Study Projects Total
Participation Analysis
10 20 10 40

Break-up of University Question Paper Pattern-(3 hrs)

Total Questions & Questions to be Marks
Marks answered
7 @ 10 Marks each 4 @ 10 Marks each 40
1 Case Study @ 20 Case Study 20
Marks (Compulsory) Compulsory
Total 60
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Chapter I:
Introduction to IB
• Objective, Scope, Importance & Current Trends

• Domestic Business v/s International Business

• Reasons for International Business

• Modes of Entry & Operation

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International Business
- Meaning & Scope
• Any commercial transaction taking place across the boundary lines
of a sovereign entity
– Either between countries, companies or both
• Private companies gets involved in IB for revenue, profit and
• Governments are involved in these transactions to maintain their
image, dependency and economic growth
• Transactions include investment, physical movement of goods and
services and transfer of technology and manufacturing
• The slogan “Export or Perish” has been changed into
“Internationalize or Perish”

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International Business
- Meaning & Scope
• The future success of a company will depend on its operations in
many other countries through investment, manufacturing and
marketing – Not solely on revenues generated indigenously
• The success of a Nation will depend on businessmen operating
successfully in other countries and establishing their credentials
– In the 1950s and 1960s, companies from the United States build
business operations throughout the world and brought pride to
their Nation
– In the 1970s and 1980s, Japanese Electronics & Automobile
companies revolutionized the way world functions

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Why Study
International Business
 Human Resources

Overseas Operations
Country of Origin
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Current Trends
(Reform Process)
• Almost all countries are reforming their economy through
Liberalization, Privatization & Globalization
• Many South-East Asian Nations, China, South Korea and a few Latin
American Countries were quick to introduce Reforms Process
• India too, injected new vigor into its economy and industry by
introducing an open-door policy, eliminating licenses, replacing
foreign restrictions by other models and liberalizing procedures in
• Through the reforms process, manufacturers in India are required
to increase the production capacity and divert products to various

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Domestic Business v/s
International Business
Dimension Domestic Business International Business
Environment PEST environments are known PEST environments are not fully
known. Innumerable hidden
factors may pose problems

Plan & Strategy Can be worked out for short- Only long-term strategy will
term and carried forward to the work. Strategic inputs are
long-term required in multiples

Competitive The maximum domestic International competitive

Forces & Their competitive forces operate and forces play a vital role and it is
Intensity one can understand their difficult to understand their
movements as they are visible motives and movement

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Domestic Business v/s
International Business
Dimension Domestic Business International Business
Currencies & Local currency is used for Transactions are carried out in various
their transactions. Volatility may currencies. Fluctuations is the cross-
Movements have a minimum impact on currency movement and associated
business in the short term risks are common.

Business Comparatively, one can Very difficult to predict and risks may
Risks predict future risks and crop up at any time due to political
shocks. This won’t have situations, the society itself as well as
major impact on strong several other unknown factors
Research Reasonable, easy to conduct Very expensive, difficult to conduct.
& Reliable Reliability depends on individual
countries and there is no uniformity in
the output and findings
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Domestic Business v/s
International Business
Dimension Domestic Business International Business
Human Due to past laurels and Multilingual, multi-strategic and
Resources established systems, multi-cultural human resources
organizations can succeed even which should be able to withstand
if the Human Resources have larger risks. Every individual is a Profit
the minimum skills & Knowledge Centre and hence, Accountable
Organizational Narrowed down to work in a Broadened to cover many countries.
Vision & single country with a steady Geographic & cultural diversity may
Objective growth objective influence the vision and objectives

Product & Adapted to the local Varies from country to country,

Usage environment acc. To Domestic subject to regulations (esp. true for
customers’ affordability, beliefs, consumer and medicinal items).
values, cultural elements &
Buying Behavior
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Domestic Business v/s
International Business
Dimension Domestic Business International Business
Legal Aspects Only local regulations are International and the host
applicable. Minimum country regulations are
adherence to International applicable
rules related to IPR
Investing & Depending on the size of the All overseas operations except
Sourcing business, one can start with a Export, calls for huge investment.
minimum investment. Special regulatory bodies are
Individual ability and involved since foreign currency is
repayment terms determine transacted
the funds
Pricing Strategy Majority of companies use Companies may use marginal
cost-plus margin pricing or cost pricing, transfer pricing or
competitive pricing competitive pricing to succeed

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Domestic Business v/s
International Business
Dimension Domestic Business International Business
Distribution The business house can use its Govt. or Market practice governs the
Channels discretion to select any distribution channel. Cash and carry,
channel to reach the customer. shopping malls & mail-order services
No restriction exists here are becoming popular in IB

Promotion Advertising, Personal selling Different countries have different

and other promotional restrictions. Ex. Advertisements for
methods are not restricted liquor & cigarettes are not permitted in
through a strict legal some countries and campaigns using
framework (if they are not Female models are banned in some
socially objectionable) countries
Logistics Domestic players are involved International players with advanced
in all activities. The cost of technology & systems are involved. The
logistics is very high locally cost is proportionately low

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Reasons for
International Business
I. From an Individual Company’s Point of View
i. Managing the Product Life Cycle
ii. Geographic Expansion as a Growth Strategy
iii. The Adventurous Spirit of the Younger Generation
iv. Corporate Ambition
v. Technological Advantage
vi. Building a Corporate Image
vii. Incentives & Business Impact
viii. Labor Advantage
ix. New Business Opportunities
x. Emergence of SEZ’s, Agrizones & Technology Parks etc.

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Reasons for
International Business
II. From the Governments’ Point of View
i. Earning Valuable Foreign Exchange
ii. Interdependency of Nations
iii. Trade Theories & Their Impact
iv. Diplomatic Relations
v. Core Competency of Nations
vi. Investment for Infrastructure
vii. National Image
viii. Foreign Trade Policies & Targets
ix. National Targets
x. WTO & International Agencies

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Advantages of
International Business
• High Living Standard • Economic Growth of the
• Increased Socio-Economic Welfare World
• Wider Market • Optimum & Proper Utilization
• Reduced Effects of Business Cycles of World Resources
• Reduced Risks • Cultural Transformation
• Large-scale Economies • Knitting the World into a
closely Interactive Traditional
• Potential Untapped Markets Village
• Provides the Opportunity for & • Division of Labor &
Challenge to Domestic Business Specialization

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Problems of
International Business
• Political Factors
• Huge Foreign Indebtness
• Exchange Instability
• Entry Requirements
• Tariffs, Quotas & Trade Barriers
• Corruption
• Bureaucratic Practices of Government
• Technological Pirating
• Quality Maintenance
• High Cost
“Borderless Global Economy Enlarges International Business”.

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- Prof.