ROLE OF ENTREPRENEUR IN INTERNATIONAL BUSINESS

INTRODUCTION
International business is a term used to collectively describe all
commercial transactions that take place between two or more nations. It
refers to all those business activities which involves cross border
transactions of goods, services, resources between two or more nations. It
can be either the buying (importing) or selling (exporting) of goods or
services on a global basis. In the achievement of the strategic objectives of a
self-reliant and dynamic economy, the government considers a substantial
expansion in export earnings to be of great importance. Exports enable the
country to pay for critical imports, new technological inputs and setup the
pace of economic development.
International trade necessarily requires interaction with governmental
agencies, and most all governments wish to expand their country’s role in
international trade, entrepreneurs can look to governments themselves for a
great deal of information. There are some non-governmental resources to
expand the knowledge of entrepreneurs about international trade
• The federation of international trade associations provides
portals to trade leads, market research, a global trade shop and
even a job bank.
• Search engines such as google or yahoo provide a huge
database of information that will require selectivity to retrieve
the most helpful information.
• The large network of international trade market places,
providing trade leads and new business contacts.

INTERNATIONAL BUSINESS SCENE

For an Indian entrepreneur to go to international business is not easy,
they has to cross many hurdles. India is a small player in overall global
exports. Exports from India value wise are less than 0.8%. Exports from
India since last two years are growing by 20% despite low growths in
agriculture and industry. The external factors that affect lower growth rates
are:
• Recessionary conditions in USA.
• Low or no growth in Japan.
• Distributing conditions in west Asia.
• Progressive strengthening of rupee against dollar.
There are constraints which an entrepreneur has to face. They are:
• Price competition in the global market due to various reasons.
• Indian entrepreneur has to meet the challenges of continuous
deficiencies on the infrastructural front especially lack of
regular quality power, lack of cheap power supply, inadequate
physical infrastructural such as roads and efficiently run ports.
• High cost of funds and high service charge of banks. Though
credit rates are coming down for the competing countries, the
export credit is still costly.
• Appreciating Indian rupee.

India is on high export growth trajectory making many entrepreneurs

to look for global markets. Government of India is giving boost to export
from time to time in its exim policies. Particular focus is on agro exports.
The high growths of exports are expected by the agricultural and agri-
products sector and growing service. The export of services is growing
where Indian entrepreneurial talent is seen in action. Thus, country has large
reservoir of entrepreneurial talent and efforts are under way to go
international. During the reforms period India has opened up with its
policies to help liberalization, privatization and globalization. Every effort is
made by governments and industry to go to global markets. In recent past
the result of growing economy is seen due to these steps. They are:
• Indian global trade is increasing at 20% growth since last 3
years.
• Growth in GDP and per capita incomes.
• The percentage of Indian trade in global level is 0.8% is low.
• In the new knowledge industries like IT (Information
Technology), BPO (Business Process Outsourcing), R&D
(Research & Development) and BT (biotechnology) the
progress of India is impressive at global level.
• Lots of Indian entrepreneurs are taking up lead in establishing
knowledge based industries in various parts of globe.
• Indian entrepreneurs are developing niche products.
• There is positive outlook and supporting ambiance for
international trade and industry.

INFRASTRUCTURAL SETUP
 The government has setup adequate and appropriate institutions
mainly to assess export promotion in particular. They are:
• Export promotion council – promotion of specific commodities
or groups.
• Commodity board for coffee, tea, cardamom, rubber, coir, silk,
handicraft and handloom.
• Board of trade, Advisory council of trade zonal advisory
committee.
• The Indian Institute of packaging.
• The Indian Institute of foreign trade.
• Export Houses and trading houses.

NATURE OF INTERNATIONAL ENTREPRENEURSHIP

International entrepreneur is doing business across his or her national
boundaries. The activities that are necessary to satisfy the customers that an
entrepreneur targets across another countries involving exporting goods and
services, opening sales offices, subsidiaries, manufacturing or joint ventures
and development of business. Historically India is known as an exporter of
specialized items like spices, silk, handicrafts to many countries. For about
past one century trade and manufacturing business exist with European
countries. Since independence India started exporting to many countries
agri-produce, basic minerals and metals, manufactured items and services.
It takes careful and fairly complex consideration, before a business
decides to open operations abroad and become a multinational corporation.
The company needs to ask what advantages are related to expanding
abroad and how foreign operations should be run. In addition, the choice of
foreign location should be based on a thorough scanning of the environment
in several candidate countries.
India adopted globalization since 1991. Since then, Indian companies
are going all over globe for business and industry. Foreign investors and
technology providers are helping Indian entrepreneurs to take up new
ventures in Information Technology and other manufacturing activities.
Indian entrepreneurs are also choosing joint ventures, acquisition and
strategic partnership to grow faster. Even today Europe remains big partner
of trade with India. The future commercial strength of India depends on the
ability of Indian entrepreneurs to take advantage of large markets that are
developing outside India. Further, incentives and subsidies are provided for
an entrepreneur to encourage them.
INCENTIVES
 The term incentive means encouraging productivity. It is a
motivational force which makes an entrepreneur to take a right decision and
act upon it. Broadly, incentives include concessions, subsidies and bounties.
Economic incentives (both financial and non-financial) push an entrepreneur
towards decisive decision and action.

SUBSIDY
Subsidy denotes single lump-sum which is given by a government to
an entrepreneur to cover the cost.

BOUNTY
The term bounty denotes a bonus or financial aid given to an industry
to help it to compete with other units in country or in a foreign market. The
objective of incentives is to motivate an entrepreneur to set up a new venture
in the large interest of the nation and the society.

TYPES OF PARTICIPATION
International entrepreneur has different choices of engagement of his
new venture. The options are different levels of ownerships and controls.
The options are licensing, franchising, joint ventures, foreign direct
investments and strategic partnerships. The choice of one of above alternates
by an entrepreneur depends on:
• Target market environment.
• The market potential.
• Decision regarding marketing mix.
• Customers trust in the brand.
• Policies of government.
• Competitor activities.
• Resource availability at competitive prices.
• Advantage of flexibility and resilience to meet market changes.
• Dynamism of entrepreneur and his team.

IMPORTANCE OF INTERNATIONAL ENTREPRENEURSHIP

The importance of Entrepreneurship may be summarized as faster
development of business, accessing large markets, attaining cost advantage
of large scale manufacturing. Use of cheaper resources to get market
advantages, earning money for the expertise in the areas of technology,
consultancy, management, manufacturing and the like.
India meets global export, today, only a small fraction that is less than
one percent. Roughly 99% of the total world market for all products and
services for Indian entrepreneur is outside India. To achieve growth potential
the large growing markets in India attract an entrepreneur. Indian companies
and Indian entrepreneurs are also meeting the global competition by
acquisitions, joint ventures, etc. This is seen more in the areas of information
technology, business process outsourcing and pharmaceutical industries.

WORLD TRADE ORGANIZATION AND ENTREPRENEUR

In the reforms period that is from year 1991 onwards Indian
entrepreneur is moving to international entrepreneurship in a big way taking
advantage of the trade liberalization and development of global trade across
borders. The modern communication and growth in IT, BT and BPO
industries are helping Indian entrepreneurs to grow global with his skills and
less capital on hand. WTO has helped in the areas of:
• Removal of trade restrictions.
• Low tax regime across globe.
• Agreements on TRIPS (Trade-related aspects of Intellectual
Property Rights) and TRIMS (Trade Related Investment
Measures).
• Growth of service industries.
• Market access to number of advanced countries without
discrimination or trade restrictions like, large duties or
procedural hassles.

INDIANS IN INTERNATIONAL VENTURES

Indians are making headlines in international entrepreneurship in
many countries in last two decades. Information technology has given a
boost in this direction. IT ventures needless capital and results are seen
faster. IT companies need in-depth knowledge of IT, process in the industry
and management skills. Indian entrepreneurs have made a mark in this area
in USA. Some of the examples of international entrepreneurship are:
• Co-founder of Sun Micro Systems is Vinod Khosla in USA.
• Creator of Pentium chip is Vinod Dahm in USA.
• Founder and creator of Hotmail is Sabeer Bhatia in USA.
• Lord Swraj Paul established Caparo group in UK. The group
has large interests in steel companies in many countries.
• Many software companies are started in USA and UK by Indian
entrepreneurs. For example, two young software entrepreneurs
recently made a headline for their entrepreneurial work in
camera phones.
EXAMPLES
• Government of Punjab agricultural department and Mahindra
group signed an agreement for ‘contract framing’.
• Similar ‘contract framing’ agreement was signed by two
companies ICICI and Hindustan Lever for growing Wheat and
Basmati Rice in Haryana and Madhya Pradesh.
• Rallis and ICICI have signed for big retail chains ‘Food World’.

Strategic partnering helps an entrepreneur to go international by

combining strengths of allies and direct their competitive energies towards
common rivals in the market place. The strategic alliance helps an
entrepreneur in:
• Getting access to new markets in a new country.
• Get access to local distribution network.
• Advantage of additional finance resources.
• To reduce risk in a new venture.
• To reduce competition.
• Improve production technologies, improve quality.
• Access to management know-how and know new fields of
manufacturing and services.
• Large-scale, improved performance, training and market
expansion.

On the negative side the strategic alliance has following pitfalls:

• Free access to information make trade secrets goes to others.
• Incompatibility of the partners - the cultural differences
between the partners.
• Autonomy – the loss of autonomy to an entrepreneur.
• Changes in market or products may bring the strategic
partnership to a close.

CONCLUSION
Over the last decade the role of entrepreneurs in international business
has become a key emerging issue. With the help of international trade the
countries are able to acquire commodities, which they cannot produce
locally due to the non availability of factors of production in sufficient
quantity and due to high costs of production. It has also resulted in the
improvement in means of transport in all parts of the world.
The global economy seems to be recovering after the recent economic
shock. The Indian economy, however, was hit in the latter part of the global
recession and the real economic growth has witnessed a sharp fall, followed
by lower exports, lower capital outflow and corporate restructuring. Due to
the strong position of liquidity in the market, large corporations now have
access to capital in the corporate credit markets. India is now following
different development strategies and doing better in key areas. India is
expected to become the third largest economy in the next few decades
contributing to more than half of world’s manufacturing output.