International Bussiness

Prof. C.K.Sreedharan

Introduction to I.B
No country can be totally self reliant. Interdependency is a natural phenomenon. No country has all the natural resources to produce all its requirements. Every country depends on every other country. Hence cross country exchange of goods and services are inevitable for the existence of any country.

 Hence as a punishment to a rogue country( a country which does not abide by international laws / UN resolutions), all types of foreign trade is cut off. Example- Sanctions imposed on Iraq

 Nations can be classified as: 1. Developed nations 2. Developing nations. 3. Less developed nations.

 Developed countries are finding their local markets saturated and are on the look out for foreign markets to sell their goods and services. Developing and less developed nations have realized the importance of I.B which can boost their domestic economy.They have liberalized their economies and have started permitting foreign trade / foreign investments.

 The present mantra for survival and sustained growth for any country, irrespective of their political orientation is L P G. - L Liberalize - P- Privatize - G - Globalize

 Hence Globalize or Perish has become a slogan of success for every corporate, irrespective of its size and domain of operations. Countries are becoming boundariless and entire world has become a Global Village.

 The current decade has also witnessed an innumerable development in the international arena, especially in trade and investment. Free trade agreements (FTA), Regional Trade Agreements (RTA), innovative approach by LDCs are playing a catalytic role in boosting I.B.

 It has become very difficult for any any country in the world to insulate itself from the global economy. Even the largest and most apparently, self contained economies like USA, are also now significantly affected by global economy.

 Global integration in trade, investment, technology and communication systems are binding the global economies together. Production Abroad has come into prominence as against Commodity export in world economy in recent years.

 Global corporations consider the whole of world as their production place as well as their market and move factors of production to wherever they can optimally be combined.

 The ownership is transnational, the management is transnational- transcending all national boundaries. The global corporations are domestic in every place, foreign in no place and a true Corporate Citizen of the world.

 Hence the study and understanding of IB is very important in the present scenario of liberalization and globalization. Hence the objective of the course is to study and understand various aspects of IB to enable one to do bussiness effectively.

Unit No: 1
Scope and importance of IB. Reason to enter IB. Differences between domestic bussiness and IB

Unit No: 2
IB environment: - Micro environment - Macro environment

 Micro environment immediate environment. - Suppliers - Customers. - Competitors - Marketing intermediaries - Publics

 Macro environments- More uncontrollable - Political and legal environment - Economic environment - Socio cultural environment - Technological environment. - Demographic factors.

Unit No: 3
Modes of entry / Methods of operation: 1. International licencing 2. Franchising 3. Contract manufacturing. 4. Joint ventures. 5. Collaboration. 6. Mergers and acquisitions 7. Take over.

Unit No: 4
Foreign Direct Investment. - FDI may involve creating a totally new enterprise. - FDI could be through mergers and take overs.

 Various incentives are offered for FDI: - Fiscal incentives - Financial incentives. - Market preference * Benefits of FDI

Unit No: 5
MNCs and investment Types of MNCs: - Based on orientation - Based on other factors.

 Based on orientation: - Ethnocentric - Polycentric - Reginocentric and - Geocentric

 Based on other factors: - Equity based MNCs - Non equity based MNCs * Technology based MNCs * Production sharing * Technology transfer agreements.

 Internationalization process: 1. Domestic company. 2. Direct / indirect export, licensing, franchising etc. 3. International company 4. Multinational company. 5. Global company and 6. Transnational company.

Unit No: 6
Transfer pricing , globalization concept and practices.

Unit No: 7
WTO impact in IB / Trade barriers.
Trade barriers: - Tariff barriers and - Non tariff barriers.

Unit No: 8
International risk analysis / cross cultural communication.