INTERNATIONAL BUSINESS

DRIVERS OF IB

Expansion of technology . Technology is truly stateless. It crosses national or cultural boundaries. Transportation and communication improvements in speed , reliability, cost factors etc. World economic trend:- Liberalization of cross border movement, Deregulation, reduction in tariffs. Trend towards privatization and market allocation economy. - WTO initiatives. Common market needs promotes globalization Leverages / advantages possessed by global companies such as economy of scale, experience transfer, improved resource utilization etc.

TYPES OF IB
1.

2. 3. 4. 5.

6.

Trading: Import & export of goods & services Manufacturing and Marketing Sourcing and marketing Global sourcing for production Services Investments

DIMENSIONS OF IB
Globalization of Capital Base

Globalization of Corporate Mindset

Globalization of Supply Chain

Globalization of Market presence

COMPARISON OF INTERNATIONAL BUSINESS AND DOMESTIC BUSINESS

1.

2.
3. 4. 5. 6.

Currency Interest rates Inflation Taxation systems Government regulations Language & Culture

ROUTES OF GLOBALIZATION
Foreign Investment High

Direct Investments Performance of Services Uses of Assets Tourism & Transportation Exports & Imports

Low Low High

Presence in Foreign Markets

INTERNATIONAL BUSINESS ORIENTATION

1.

Ethnocentric Approach:
Extension strategy is adopted for international marketing. Plans are made in home country and by its personnel and generally operate through agents. Export is viewed as a means of disposing the surplus in the domestic market. Believes home country practices to be superior and so can be successful everywhere. Only sees the similarities in the markets. Does not conduct any systematic International market research The approach does not allow a company to be a major player in International Business. Many call these types of companies International companies

2. POLYCENTRIC APPROACH
Assumes each country is unique Only sees dissimilarities Each subsidiary develops its own unique business and marketing strategies ( that is decentralized) Focus is on local conditions, laws, culture etc. Adaptation strategy is followed in marketing. These are called Multinational companies/ Multi-domestic companies / Locally responsive companies.

3. REGIONCENTRIC AND GEOCENTRIC

Pursues both extension and adaptation strategies in global markets. Lies between the extremes of polycentrism and ethnocentrism it is a hybrid approach Views the entire world/global market to be a single market but sees both similarities and dissimilarities within it. Adopts a policy of blending of cultures. strategy adopted at region/global level However it does not adapt just for the sake of adapting only does when it adds value. Thinks globally, acts locally These are called Transnational Companies ( TNC)