International Business

Overview of International Business (IB) :

• Definition of International Business
• Objectives of IB
• Usual pattern of IB
• Modes of IB
• Definition of Globalization
• Drivers of globalization
• The changing demographics of the global economy
• Managing in the global marketplace.

International Business is all business transactions- private & governmental that involve two or more countries. Private companies undertake such transactions for profits, government may not do the same in their transaction.

Objectives of IB :

• To expand their sales
• To acquire resources
• To diversify the sources of sales & supplies
• To minimize competitive risk

 Modes of IB :

• Merchandise Exports & Imports
• Service exports & imports  Tourism & transportation  Performance of services Use of assets.

• Investments :  1.Direct investment   2. Portfolio investment

Globalization

Globalization refers to the shift toward a more integrated & interdependent world economy. It is a process of greater integration of national economies with the world economy.

Two key facets of globalization are :

• The globalization of markets : The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace
• The globalization of production : The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (labor energy, land, and capital)

 Drivers of globalization :

What is driving the move toward greater globalization?

Declining trade & investment barriers

• International trade
• FDI

Technological change

• Telecommunications
• World wide web
• Transportation technology
• International trade occurs when a firm exports goods or services to consumers in another country
• Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country

Managing the global marketplace :

How managing in the global marketplace is different from managing a purely domestic business:

• Countries are different
• The range of problems is wider & complex
• To work within the limits set by the govt. national & foreign and the limits set by the international organizations
• Currency conversion