INTERNATIONAL BUSINESS

International business consists of all commercial

transactions between two or more countries. Today global events and competition affect almost all companies large and small because most sell output to and secure supplies from foreign countries. Many companies also compete against products and services that come from abroad Thus most managers, regardless of industry or company size, need to approach their operating strategies from an international standpoint.

It refers to the integration of world economies through the reduction of barriers to the movement of trade, capital, technology and people

Forces driving globalisation

Increase in and expansion of technology
Liberalisation of cross border trade and resource

movement. Development of services that support international business Growing consumer pressures Increased global competition Changing political situations Expanded cross national cooperation.

Arguments against globalization

Threats to national sovereignty
Economic growth and environmental stress Growing income inequality

Threats to national sovereignty

Harm to the local objectives and policies
Local overdependence Threat to cultural homogeneity

Economic growth and environmental stress

As globalisation brings in growth, it consumes more

non renewable resources and increases environ mental damage. Water pollution through toxic and pesticide runoffs into rivers and oceans Air pollution from factory and vehicle emissions Deforestation

Growing income inequality

GDP rising but the benefits do not percolate to level of

the ordinary masses.

Why international business

To create value for their organisation
Expanding sales Acquiring resources

Minimising risk

Modes of operation in international business

Merchandise exports and imports
Service exports and imports Investments

Merchandise exports and imports

Merchandise exports are tangible products that are

sent out of a country Merchandise imports are goods bought in a country Because we can actually see these goods as they leave and enter the country, we sometimes call them visible exports and imports.

Service exports and imports

When we refer to non product international earnings

we use the term service exports and imports. The company or individual that provides the service and receives payments makes a service export. The company or individual that receives the service and pays for it makes a service import. It can be of three forms :- Tourism and transportation, Service performance , Asset use.

Investments
Foreign investment means ownership of foreign

property in exchange for a financial return such as interest and dividends. It can be of two forms :- Direct investment & Portfolio investments.

How international business differs from domestic business

Physical and social factors
Geographic influences Political policies

Legal policies
Behavioral factors Economic forces

 The competitive environment

Competitive strategy for products Company resource and experience

Competitors faced in each market