INTRODUCTION OF BUSINESS

Mr. Gerry Suryosukmono, S.E., M.S.M.

BY:
1. AMIRAH MUMTAZ (C1C019117)
2. MUHAMMAD RIDWAN ALWALIYYU (C1C019050)
3. NUR IZZATI JANNAH (C1C019026)
According to well-known professors William Pride,
Robert Hughes, and Jack Kapoor, business is the
organized effort of individuals to produce and sell,
for a profit, the goods and services that satisfy
society's needs.
International business encompasses all commercial
activities that take place to promote the transfer of
goods, services, resources, people, ideas, and
technologies across national boundaries.
A. FREE TRADE

B. INTERNATIONAL BUSINESS

C. MULTINATIONAL CORPORATION

D. DOMESTIC CORPORATION
 Free trade is a process of economic
activity carried out in the absence of artificial
obstacles (barriers imposed by the
government) in trade between individuals
and companies in different countries.
 The government regulation on free trade is
regulated in the regulation of the Minister of Trade of the
Republic of Indonesia number: 20/m-dag/per/7/2011
concerning the second amendment to the regulation of
the minister of trade number 45/m-dag /per/9/2009
concerning importer identification numbers (api ).
1. Trade in goods without taxes (including tariffs)
2. The absence of "trade convoluted" basics
3. Free access to the market
4. Free access to market information
5. Free movement of labor between outside and
within the country
6. Free movement of capital between outside and
within the State
Positive Negative
impact impact
1. Imported goods can freely enter the country.
2. Besides that there is an increasingly open
international relations between countries.
3. Then the products - domestic products can
easily gain popularity abroad.
4. Then the country's foreign exchange will be
stronger
5. Increase the initiative and creativity of the
community in producing a quality product,
high efficiency and effectiveness because their
actions are always based on economic
principles.
 Negative Impact

1. To be a consumptive person of imported goods,

2. The number of unemployed
3. Then a lot of factories went failed
4. The flight of investors
5. Losses for undeveloped countries
6. The existence of exploitation of weak economic
communities
7. the emergence of an economic gap between strong
economic groups and weak economic groups
E. Types of Trade Barriers

1. Tariffs or customs.
2. Quota for imported goods
3. Subsidies.
4. Local content
5. Administrative regulations
6. Anti-dumping regulations
 F. Example of Free Trade Activities

1) Agreement between the Central American

countries Central America Free Trade area
(CAFTA) consisting of ex savador, guatemala etc.
2) Agreements between ASEAN countries , AFTA
(ASEAN Free Trade Area) agreements between
ASEAN members so between members must waive
the cost of trade between members
3) The agreement between asean and china (the
asean china free trade area) "if I am not mistaken"
that is where every product exported to china will
be free of import duty and vice versa to countries
of ASEAN members
International business occurs in many different formats:

1 The movement of goods from country to another

(exporting, importing, trade)

Contractual agreements that allow foreign firms to use

2 products, services, and processes from other nations
(licensing, franchising)

The formation and operations of sales, manufacturing,

3 research and development, and distribution facilities in
foreign markets
An international businesses strategy, organization, and/or
functional decisions categorize it as:

A multi-domestic company with

1 independent subsidiaries that act as
domestic firms; OR

2 Global operations with integrated

subsidiaries; OR

3
A combination of the two
The challenging aspect of international business, however, is
that many firms combine aspects of both multi-domestic and
global operations:

Multi-domestic – A strategic business model that involves promoting

products and services in various markets around the world and
adapting the product/service to the cultural norms, taste preferences
and religious customs of the various markets.

Multinational – A business strategy that involves selling products

and services in different foreign markets without changing the
characteristics of the product/service to accommodate the cultural
norms or customs of the various markets.
 The Benefits of International Business and
the Concept of Comparative Advantage

Participation in international business allows countries to

take advantage of their comparative advantage.

The concept of comparative advantage means that a

nation has an advantage over other nations in terms of access to
affordable land, resources, labor, and capital. In other words, a
country will export those products or services that utilize
abundant factors of production. Further, companies with
sufficient capital may seek another country that is abundant in
land or labor, or companies may seek to invest internationally
when their home market becomes saturated.
 The Benefits of International Business and
the Concept of Comparative Advantage

Participation in international business allows

countries to take advantage of specialized expertise
and abundant factors of production to deliver goods
and services into the international marketplace. This
has the benefit of increasing the variety of goods and
services available in the marketplace.
 The Growth of
International Business

The prevalence of international business has increased significantly during the

last part of the 20th century, thanks to the liberalization of trade and investment
and the development of technology. Some of the significant elements that have
advanced international business include:

The formation of the World Trade Organization (WTO) in 1995

The inception of electronic funds transfers

The introduction of the euro to the European Union

Technological innovation that facilitates global communication and transportation

The dissolution of a number of communist markets, thus opening up many economies to

private business
 The Challenges and Considerations of
International Business

The major task of international business involves understanding the

sheer size of the global marketplace. There are currently more than 200 national
markets in the world, presenting a seemingly endless supply of international
business opportunities. However, the diversity between nations presents unique
considerations and a plethora of hurdles, such as:

• National wealth disparities: Wealth disparities among nations remain vast.

1
• Regional diversity according to wealth and population: North
2 America is home to just 5 percent of the world’s population, yet it controls
almost one-third of the world’s gross domestic product.

• Cultural/linguistic diversity: There are more than 10,000 linguistic/cultural

3 groups in the world.

• Country size and population diversity: There were about 60 countries at the
4 start of the twentieth century; by 2000, this number grew to more than 200.
Some of the challenges considered by companies
and professionals involved in international
business include:

Economic Environment

Political Environment

Cultural Environment

Competitive Environment
 The economic environment may be very different from one country to
the next. The economy of countries may be industrialized (developed),
emerging (newly industrializing), or less developed (third world). Further,
within each of these economies are a vast array of variations, which have a
major effect on everything from education and infrastructure to technology and
healthcare.

The political environment of international business refers to the

relationship between government and business, as well as the political risk of a
nation. Therefore, companies involved in international business must expect to
deal with different types of governments, such as multi-party democracies,
one-party states, dictatorships, and constitutional monarchies.
 The cultural environment of a foreign nation remains a critical
component of the international business environment, yet it is one of the most
difficult to understand. The cultural environment of a foreign nation involves
commonly shared beliefs and values, formed by factors such as language,
religion, geographic location, government, history, and education.

COMPETITIVE ENVIRONMENT

The competitive environment is constantly changing according to the

economic, political, and cultural environments. Competition may exist from a
variety of sources, and the nature of competition may change from place to
place. It may be encouraged or discouraged in favor of cooperation, and the
relationship between buyers and sellers may be friendly or hostile. The level of
technological innovation is also an important aspect of the competitive
environment as firms compete for access to the newest technology.
Multinational
What will we discuss
Corporation about Multinational
Corporation??
The
definition
Technical MC

The The Motive

Characteristic
The impact

Examplar
 What is Multinational
Corporation?

A Multinational Corporation (MNC) or worldwide

enterprise is a corporate organization that owns or
controls production of goods or services in at least one
country other than its home country.
 Technical Multinational
Corporation

EXPORT

Give licenses and establish

production facilities to local

Foreign direct
investmnet
Characteristic of
multinational corporation

Income generating beyond Have subcontract for

national border production activity

Place affilation in good

Have global management
countries

Have control to Vision and strategy based

technology & asset on global

Have some system that

beyond national border
 Motive and Purpose of
Multinational Porporation

Raw Minimum
Market
materials cost

Vetical Horizontal
expansion expantion
 The Impact of Multinational
Corporation
POSITIVE NEGATIVE

• The country get income • Enviromental damage

from the corporation • Increased rivalry for local
• Provide job vacancy corporation
• Rise national reputation • Impact to social & culture
• Technology transfer • etc
• etc
 A domestic corporation is a company that conducts
its affairs in its home country. It is often taxed differently
than a foreign corporation, and may be required to pay
duties or fees on the importation of its products. Typically, a
domestic corporation is able to conduct business in other
states or other parts of the country where it has filed its
articles of incorporation.
Businesses that are incorporated in a different
country from which they originate are referred to as foreign
corporations.
 Corporations are formed under state law. The
basic requirements include filing the appropriate form -
- usually called the articles of incorporation -- with the
proper state agency -- usually the secretary of state.
Complying with these requirements forms a
domestic corporation under that state's law. The
conduct of the corporation's internal affairs, such as
election of officers and directors, will be subject to the
state law where it was formed, regardless of where the
corporation may be conducting its business.
 Domestic corporations typically have different annual
registration, taxation and reporting requirements in their home
states than foreign corporations. In addition, if you allow your
corporation to lapse by not adhering to you state’s annual
taxation and reporting requirements, many states will allow a
domestic corporation to reinstate its corporate status within a
specified time frame. However, these same states often do not
allow reinstatement for administratively dissolved foreign
corporations.