Description
A comprehensive PPT about Introduction to international business. It covers a lot of concepts, examples, importance, limitations of IB.
Computers- Produced in USA ? Television- Produced in Japan ? Electronic Items- From Japan ? Beverages (Coca-Cola, Amul Cool, Etc.) ? Bikes & Cars- From Other Countries ? Perfumes- Manufactured in France. ? Buying products from internet. ? Clothing's- Footwear, Casuals, Capri, Bermuda, etc.
?
First began in the year 1870 and ended in 1919 (end of World War-I). ? Main objective was to import raw materials and export finished goods. GDP was 22.1. ? Drawbacks: Imposition of trade barriers by the government, to protect domestic producers. GDP fell to 9.1. ? This phase has been described as “BEGGAR-MY-NEIGHBOUR”.
?
? ? ? ?
?
Growth Strategy- Leads to geographical expansion. Managing Product life-cycle- Shifting of the market. Technology Advantages- Core competencies. New business opportunity- entering new market. Proper use of resources- proper utilization of natural resources of countries (material, labor, etc.)
? Conti.
?
Availability of quality product- Foreign
companies market latest products at reasonable price. ? Earning foreign exchange- Foreign exchange may be required for importing many products (crude oil, equipments, etc.) ? Helps in Mutual growth- India depends on gulf countries for its crude oil supplies. ? Investment in infrastructure- Investment in roads, etc.
? ? ?
?
?
?
?
Advanced countries felt a severe set back. Production increased more than Demand. Decline in International Trade. Breakdown of Gold Standard (Bretton Woods System). Decline in trade/investment barriers. Increase in FDI. Technology changes and growth of MNC’s.
? ? ? ? ?
Due to the above limitations, a need for the international co-operation was felt. It led to the establishment of institutions such as: IMF, IBRD, ITO,GATT/ WTO, etc. Establishment of these institutions led to globalization, and many new trends took place. Shifting from exporting & importing to international marketing. Shifting from international marketing to international business.
Establishment of WTO, IMF and IBRD. ? Regional integration (NAFTA, SAARC, ASEAN, APEC, EFTA, etc.) ? Decline in trade/investment barriers. ? Increase in FDI/FII/QDII. ? Technology changes and growth of MNC’s.
?
Stage 1Domestic Company
Stage 5Transnational Company
Stage 2International Company
Stage 4Global Company
Stage 3Multinational Company
Focus on domestic market/suppliers/financial companies/customers/etc. ? Motto- if it is not happening in home country, it is not happening. ? Selects diversification strategy for domestic market. ? Does not select the strategy of expansion/penetrating into international market.
?
Growth of domestic company leads to internationalization. ? Exploits the opportunities outside the domestic country. ? These are Ethnocentric- domestic country oriented. ? Extends the domestic product/price/promotion/practice to the foreign market.
?
International company turn MNC when they start responding to the needs of the different country. ? They shift from ethnocentric to polycentric (i.e. company establishes foreign subsidiary). ? They manufacture product as per the demand of the specific country. ? Example: Toyota’s Toyopet car’s in USA.
?
Produces in a home/single country. ? Markets the same product globally. ? They have global marketing strategy. ? Produces for the global market but focuses domestically. ? Example: Harley Davidson- Produced in USA, Focused globally. ? Dr. Reddy’s Lab- Produces in India but market globally.
?
Produces in almost all countries. ? Markets the product in all countries. ? Operates across world. ? Example: Coca-cola.
?
Step 1
• Analysis of existing mission and goal. • Example- GE: Attracting & Developing people.
Step 2
• Organizational analysis of a global business firm • Example: Org’n structure; Marketing; Finance; HR.
Step 3
• Analysis of International Environment • Political; Economic; Technological; Social; etc.
Step 4
• Formulation of alternative corporate level strategy • Stability; Growth; Retrenchment; Combination; Turnaround
Step 5
• Formulation of alternative business level strategy • Low cost leadership; Niche strategy; Differentiation.
Step 6
• Selection of best among the alternative strategies • BCG matrix; Directional policy; 9 cell matrix.
Step 7
• Strategy Implementation • Partner selection, Behavioral implementation, market, finance.
Step 8
• Strategy evaluation and control
International business firms either perform their business operations on their own or collaborate with other countries/companies. ? Sometimes, companies collaborate with their competitors also. ? Factors affecting collaboration: physical, economical, scale of operation, make or buy, or competitive environment.
?
Spread and reduced cost- reducing the start up cost and reducing the time by outsourcing. ? Specialize in core competency: companies perform the activities concerning core competencies most efficiently compared to other activities. ? Avoid or counter competencies: Some market are not large enough to accommodate competitors. ? Minimize exposure in risky environment: Political/economic and security factors create risky business environment in different countries.
?
?
?
? ? ?
Vertical or horizontal integration: Linkage or integration allow companies to concentrate on the core-competencies, operate on small scale and emphasize on a portion of supply chain. Sharing capacities: Companies can jointly share their production/service/HR and other capacities in order to operate on optimum scale. Gain location: Sometimes it is difficult for MNC’s to conduct business in some countries on their own. Overcome governmental constraint: Imposing limit on foreign ownership or prohibit exclusive foreign companies. Diversify globally: Diverse culture and geographical location temp companies to collaborate.
FRANCHISING
LICENSING
OUTSOURCING
JOINT VENTURE
Management contracting
Turnkey contracts
Strategic Alliance
Joint Venture
Merger & Acquisition
Firm providing management know-how may not have any equity stake in the enterprise. ? Low-risk, and starts yielding income from the very beginning. ? Helps in commercializing he existing know-how built up with significant investment. ? Supports in reducing fluctuations in business volume. ? Brings additional benefit for managing company. ? Example: Tata tea, Harrison malayalam and AVT have contract to manage the number of plantations in Sri Lanka.
?
Mostly fund in supply, erection and commissioning of plants. ? Example: Oil refinery, steel mills, cement and fertilizer plant, etc. ? Agreement by the seller to supply a buyer with a facility fully equipped and ready to be operated by the buyer’s personnel. ? Fast-food franchising- when a franchiser agrees to select a store site, build the store, equip it, train the franchisee and employees and sometimes arrange the finance.
?
? ?
?
?
?
Also known as “entete & coalition”. Enhances the long term competitive advantage by forming alliance with its competitors (existing or potential). Example: A firm may enter the foreign market by forming alliance with a firm in te foreign market for marketing or distributing the former’s products. A US pharmaceutical company may use the promotion and distribution infrastructure of Japanese pharmaceuticals to sell its product in Japan. It is a type of competitive strategy rather than an entry strategy.
Technological development alliance: research consortia, simultaneous engineering agreement, liasioning or joint venture. ? Marketing, sales and service alliance. ? Multiple activity alliance. ? Cross-Border alliance ? Examples: ? Tata & TFR, Tata & Tetley,
?
Tariff Barriers- Specific Tariffs and Valorem Tariffs. ? Non-Tariff Barriers- Quotas, Licensing, Voluntary Export Restraint (VER), Subsidies, Local Content Requirement.
?
Tariff is the tax imposed on imports. ? Specific tariff- it refers to a fixed charge levied on the units of the product imported. ? Example: Rs. 1000/- levied on each T.V. imported. ? Ad-Valorem tariff- Tariff levied as a proportion of the value of the imported goods (30% on the Total value).
?
Protect domestic industries. ? Increasing cost of imported goods. ? Automobile/sugar/cement industry.
?
Govt. of importing country (revenue in the form of import duty). ? Industries of importing country (Market share). ? Jobs are saved of domestic country. ? Protection of business- ancillary industry, servicing, market intermediaries, etc.
?
Consumer pay higher price (due to the inefficiency of domestic producers). ? Exporting country looses the demand, sales and profit for its product.
?
Motive is to encourage domestic production and to protect domestic producers from foreign competitors. ? Govt. pays to domestic producers by reducing their operation cost. ? Forms of subsidies- cash grants, loan and advances, tax holidays, govt. procurement of output at a higher rate, equity participation and supply of input at lower prices.
?
Merits:
? ? ?
?
? Demerits:
International competitiveness of domestic industry. Provide large scale economies. Low cost production. Early entry to foreign market. First mover advantage.
Protect inefficiency & lethargy of the domestic firms ? Do not enhance international competitiveness.
?
Direct restriction on quantity of goods imported. ? License are issued to certain firms and individuals. ? License are issued for importing certain quantity of goods. ? Example: Car, Bikes, Milk, etc.
?
Merits
?
Protect domestic produces from foreign competition.
Opposite form of import quotas. ? It is a quota on exports of the domestic firms, imposed by the exporting country. ? Imposed on the request of the imorting country. Merits: ? Its violation leads to imposition of tariff. ? Protect from foreign competitors. ? Makes domestic goods cheap.
?
Some specific portion/fraction of a product imported to be produced domestically. ? Requirements can be (50% of the component should be from the domestic country). ? In value terms (50% of the value of the product should be produced domestically). Merits: ? Employment opportunities ? Utilization of local resources and economic activities
?
It is a type of inter-governmental arrangement. ? Concerned with the production of , and trade in, certain primary products. ? Objective was to stabilizing the prices. It takes place in three forms: ? Quota ? Buffer stock and ? Bilateral or Multilateral contract.
?
Objective is to prevent a fall in commodity prices by regulating the supply. ? Countries undertake to restrict export or production by a certain percentage of the basic quota decided by the central committee or council. ? Example: ? Coffee agreement among the major producers of Latin America and Africa, limited the amount that could be exported by each country.
?
Seeks to stabilize commodity prices by maintaining accurate demand and supply. ? Stabilizes the prices by increasing the market supply. ? When the price tends to rise and absorbing the excess supply to prevent a fall in the prices.
?
Bilateral? Purchase & sale certain quantities of a commodity at agreed prices (between major importer & exporter). ? Upper & lower prices are specified. ? If the market price remain within this limit, agreement becomes inoperative.
doc_528398200.pptx
A comprehensive PPT about Introduction to international business. It covers a lot of concepts, examples, importance, limitations of IB.
Computers- Produced in USA ? Television- Produced in Japan ? Electronic Items- From Japan ? Beverages (Coca-Cola, Amul Cool, Etc.) ? Bikes & Cars- From Other Countries ? Perfumes- Manufactured in France. ? Buying products from internet. ? Clothing's- Footwear, Casuals, Capri, Bermuda, etc.
?
First began in the year 1870 and ended in 1919 (end of World War-I). ? Main objective was to import raw materials and export finished goods. GDP was 22.1. ? Drawbacks: Imposition of trade barriers by the government, to protect domestic producers. GDP fell to 9.1. ? This phase has been described as “BEGGAR-MY-NEIGHBOUR”.
?
? ? ? ?
?
Growth Strategy- Leads to geographical expansion. Managing Product life-cycle- Shifting of the market. Technology Advantages- Core competencies. New business opportunity- entering new market. Proper use of resources- proper utilization of natural resources of countries (material, labor, etc.)
? Conti.
?
Availability of quality product- Foreign
companies market latest products at reasonable price. ? Earning foreign exchange- Foreign exchange may be required for importing many products (crude oil, equipments, etc.) ? Helps in Mutual growth- India depends on gulf countries for its crude oil supplies. ? Investment in infrastructure- Investment in roads, etc.
? ? ?
?
?
?
?
Advanced countries felt a severe set back. Production increased more than Demand. Decline in International Trade. Breakdown of Gold Standard (Bretton Woods System). Decline in trade/investment barriers. Increase in FDI. Technology changes and growth of MNC’s.
? ? ? ? ?
Due to the above limitations, a need for the international co-operation was felt. It led to the establishment of institutions such as: IMF, IBRD, ITO,GATT/ WTO, etc. Establishment of these institutions led to globalization, and many new trends took place. Shifting from exporting & importing to international marketing. Shifting from international marketing to international business.
Establishment of WTO, IMF and IBRD. ? Regional integration (NAFTA, SAARC, ASEAN, APEC, EFTA, etc.) ? Decline in trade/investment barriers. ? Increase in FDI/FII/QDII. ? Technology changes and growth of MNC’s.
?
Stage 1Domestic Company
Stage 5Transnational Company
Stage 2International Company
Stage 4Global Company
Stage 3Multinational Company
Focus on domestic market/suppliers/financial companies/customers/etc. ? Motto- if it is not happening in home country, it is not happening. ? Selects diversification strategy for domestic market. ? Does not select the strategy of expansion/penetrating into international market.
?
Growth of domestic company leads to internationalization. ? Exploits the opportunities outside the domestic country. ? These are Ethnocentric- domestic country oriented. ? Extends the domestic product/price/promotion/practice to the foreign market.
?
International company turn MNC when they start responding to the needs of the different country. ? They shift from ethnocentric to polycentric (i.e. company establishes foreign subsidiary). ? They manufacture product as per the demand of the specific country. ? Example: Toyota’s Toyopet car’s in USA.
?
Produces in a home/single country. ? Markets the same product globally. ? They have global marketing strategy. ? Produces for the global market but focuses domestically. ? Example: Harley Davidson- Produced in USA, Focused globally. ? Dr. Reddy’s Lab- Produces in India but market globally.
?
Produces in almost all countries. ? Markets the product in all countries. ? Operates across world. ? Example: Coca-cola.
?
Step 1
• Analysis of existing mission and goal. • Example- GE: Attracting & Developing people.
Step 2
• Organizational analysis of a global business firm • Example: Org’n structure; Marketing; Finance; HR.
Step 3
• Analysis of International Environment • Political; Economic; Technological; Social; etc.
Step 4
• Formulation of alternative corporate level strategy • Stability; Growth; Retrenchment; Combination; Turnaround
Step 5
• Formulation of alternative business level strategy • Low cost leadership; Niche strategy; Differentiation.
Step 6
• Selection of best among the alternative strategies • BCG matrix; Directional policy; 9 cell matrix.
Step 7
• Strategy Implementation • Partner selection, Behavioral implementation, market, finance.
Step 8
• Strategy evaluation and control
International business firms either perform their business operations on their own or collaborate with other countries/companies. ? Sometimes, companies collaborate with their competitors also. ? Factors affecting collaboration: physical, economical, scale of operation, make or buy, or competitive environment.
?
Spread and reduced cost- reducing the start up cost and reducing the time by outsourcing. ? Specialize in core competency: companies perform the activities concerning core competencies most efficiently compared to other activities. ? Avoid or counter competencies: Some market are not large enough to accommodate competitors. ? Minimize exposure in risky environment: Political/economic and security factors create risky business environment in different countries.
?
?
?
? ? ?
Vertical or horizontal integration: Linkage or integration allow companies to concentrate on the core-competencies, operate on small scale and emphasize on a portion of supply chain. Sharing capacities: Companies can jointly share their production/service/HR and other capacities in order to operate on optimum scale. Gain location: Sometimes it is difficult for MNC’s to conduct business in some countries on their own. Overcome governmental constraint: Imposing limit on foreign ownership or prohibit exclusive foreign companies. Diversify globally: Diverse culture and geographical location temp companies to collaborate.
FRANCHISING
LICENSING
OUTSOURCING
JOINT VENTURE
Management contracting
Turnkey contracts
Strategic Alliance
Joint Venture
Merger & Acquisition
Firm providing management know-how may not have any equity stake in the enterprise. ? Low-risk, and starts yielding income from the very beginning. ? Helps in commercializing he existing know-how built up with significant investment. ? Supports in reducing fluctuations in business volume. ? Brings additional benefit for managing company. ? Example: Tata tea, Harrison malayalam and AVT have contract to manage the number of plantations in Sri Lanka.
?
Mostly fund in supply, erection and commissioning of plants. ? Example: Oil refinery, steel mills, cement and fertilizer plant, etc. ? Agreement by the seller to supply a buyer with a facility fully equipped and ready to be operated by the buyer’s personnel. ? Fast-food franchising- when a franchiser agrees to select a store site, build the store, equip it, train the franchisee and employees and sometimes arrange the finance.
?
? ?
?
?
?
Also known as “entete & coalition”. Enhances the long term competitive advantage by forming alliance with its competitors (existing or potential). Example: A firm may enter the foreign market by forming alliance with a firm in te foreign market for marketing or distributing the former’s products. A US pharmaceutical company may use the promotion and distribution infrastructure of Japanese pharmaceuticals to sell its product in Japan. It is a type of competitive strategy rather than an entry strategy.
Technological development alliance: research consortia, simultaneous engineering agreement, liasioning or joint venture. ? Marketing, sales and service alliance. ? Multiple activity alliance. ? Cross-Border alliance ? Examples: ? Tata & TFR, Tata & Tetley,
?
Tariff Barriers- Specific Tariffs and Valorem Tariffs. ? Non-Tariff Barriers- Quotas, Licensing, Voluntary Export Restraint (VER), Subsidies, Local Content Requirement.
?
Tariff is the tax imposed on imports. ? Specific tariff- it refers to a fixed charge levied on the units of the product imported. ? Example: Rs. 1000/- levied on each T.V. imported. ? Ad-Valorem tariff- Tariff levied as a proportion of the value of the imported goods (30% on the Total value).
?
Protect domestic industries. ? Increasing cost of imported goods. ? Automobile/sugar/cement industry.
?
Govt. of importing country (revenue in the form of import duty). ? Industries of importing country (Market share). ? Jobs are saved of domestic country. ? Protection of business- ancillary industry, servicing, market intermediaries, etc.
?
Consumer pay higher price (due to the inefficiency of domestic producers). ? Exporting country looses the demand, sales and profit for its product.
?
Motive is to encourage domestic production and to protect domestic producers from foreign competitors. ? Govt. pays to domestic producers by reducing their operation cost. ? Forms of subsidies- cash grants, loan and advances, tax holidays, govt. procurement of output at a higher rate, equity participation and supply of input at lower prices.
?
Merits:
? ? ?
?
? Demerits:
International competitiveness of domestic industry. Provide large scale economies. Low cost production. Early entry to foreign market. First mover advantage.
Protect inefficiency & lethargy of the domestic firms ? Do not enhance international competitiveness.
?
Direct restriction on quantity of goods imported. ? License are issued to certain firms and individuals. ? License are issued for importing certain quantity of goods. ? Example: Car, Bikes, Milk, etc.
?
Merits
?
Protect domestic produces from foreign competition.
Opposite form of import quotas. ? It is a quota on exports of the domestic firms, imposed by the exporting country. ? Imposed on the request of the imorting country. Merits: ? Its violation leads to imposition of tariff. ? Protect from foreign competitors. ? Makes domestic goods cheap.
?
Some specific portion/fraction of a product imported to be produced domestically. ? Requirements can be (50% of the component should be from the domestic country). ? In value terms (50% of the value of the product should be produced domestically). Merits: ? Employment opportunities ? Utilization of local resources and economic activities
?
It is a type of inter-governmental arrangement. ? Concerned with the production of , and trade in, certain primary products. ? Objective was to stabilizing the prices. It takes place in three forms: ? Quota ? Buffer stock and ? Bilateral or Multilateral contract.
?
Objective is to prevent a fall in commodity prices by regulating the supply. ? Countries undertake to restrict export or production by a certain percentage of the basic quota decided by the central committee or council. ? Example: ? Coffee agreement among the major producers of Latin America and Africa, limited the amount that could be exported by each country.
?
Seeks to stabilize commodity prices by maintaining accurate demand and supply. ? Stabilizes the prices by increasing the market supply. ? When the price tends to rise and absorbing the excess supply to prevent a fall in the prices.
?
Bilateral? Purchase & sale certain quantities of a commodity at agreed prices (between major importer & exporter). ? Upper & lower prices are specified. ? If the market price remain within this limit, agreement becomes inoperative.
doc_528398200.pptx