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INTERNATIONALBUSINESS MANAGEMENT

UNIT - I

7/29/2019 IBM - UNIT - I


INTRODUCTION• MEANING

International Business conducts business

transactions all over the world. These transactions

include the transfer of goods, services, technology,managerial knowledge, and capital to other

countries. International business involves exports

and imports.

International Business is also known, called or

referred as a Global Business or an International

Marketing .

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DEFINITION - IBM

International Management deals with themaintenance and development of a multinational

operation across national borders, whose manager

has the knowledge and the skills to manage and

handle cross-cultural processes, stakeholders and

environments in a right way.

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GLOBALIZATION

MEANING:

The process through which different economies get

inter-women by way of international trade and

investment.

They become an integral part of the world economy.

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INTERNATIONLIZATION -

ADVANTAGES• Faster growth: Economies that have in the past been open to foreign direct

investments developed at a much quicker pace than those economies closed to suchinvestment e.g. communist Russia

• Cheaper imports: This is down to the simple fact that if we reduce the barriers

imposed on imports (e.g. tariffs, quota, etc) then the imports will fall in price

• New technologies: By having an open economy we can bring in new technology as it

happens rather than trying to develop it internally

• Spur of foreign competition: Foreign competition will encourage domestic producers

to increase efficiency.

• Increase consumer income: Multination will bring up average wage levels because if

the multinationals were not there the domestic companies would pay less.

• Increased investment opportunities: With globalisation companies can move capital

to whatever country offers the most attractive investment opportunity. This prevents

capital being trapped in domestic economies earning poor returns.

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CONTND…

o Monetary gains to the respective country indulging in

trade.o More variety of goods available for consumers.

o Better quality of goods.

o Competition both at the international level as well aslocal level.

o Closer ties between nations.

o More exchange of technical know-how.

o Local producers will try to improve the quality of

their products.

o Increase in employment locally.

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FACTORS CAUSING GLOBALIZATION

• Trans Nationalization of Economic Activity: The rapid growth in

the amount of cross- border economic activity over the past twentyyears is affecting the balance of power between the state and the

market in the regulation of such activity.

• Increased Concern about the Environment: The growing

recognition that human activity is adversely affecting our physical

environment imposes on all actors whose actions will affect this

environment an obligation to account for all the costs and benefits that

their activity is likely to cause.

• Increased Attention to the Human Rights Obligations of Actors

Other Than States: The growing scale of operations of transnational

corporations is resulting in changing perceptions of the rights and

obligations of all economic actors, including in regard to human

rights.

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INTERNATIONAL BUSINESS ENVIRONMENT

• International business is a term used to collectively

describe all commercial transactions (private and

governmental, sales, investments, logistics, and

transportation) that take place between two or more

regions, countries and nations beyond their political

boundary. Usually, private companies undertake such

transactions for profit; governments undertake them for

profit and for political reasons

• It refers to all those business activities which involve

cross border transactions of goods, services, resources

between two or more nations. Transaction of economic

resources include capital, skills, people etc. for

international production of physical goods and services

such as finance, banking, insurance, construction etc…

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CONTD…

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INTERNATIONAL BUSINESS

ENVIRONMENT

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ENVIRONMENTAL FACTORSFIRST DIMENSION:

– Political

– Social

– Economical

– Cultural

SECOND DIMENSION:

– Institutional

– Business

– Technological

THIRD DIMENSION:

– Partner’s Objectives

– Characteristics

FOURTH DIMENSION:

– Collaboration Process & Stages

FIFTH DIMENSION:

– Models of Collaboration

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ENVIRONMENTAL FACTORS – I DIMENSION

• Political Environment

– History

– Government in power

– Institutions and public goods

– Government policies

• Social

– Number of official languages and their distribution

– National average level of education

– Population distribution in terms of age and territory

– Social values: democracy, family, individual freedom, entrepreneurship and private enterprise, etc.

• Economical

– Employment and unemployment rates

– GDP, growth rate and inflation rate

– Debt ratio and capital structure (debt and equity)

• Cultural

– Social orientation - individualist versus collectivist

– Roles of men and women within society

– Risk aversion in terms of social conservatism or liberalism

– Religious beliefs and practices

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ENVIRONMENTAL FACTORS – II DIMENSION

• Institutional

– Trade laws relating to brands, competition, and foreign trade

– Transfers - contracts and business collaboration

– Laws regulating property ownership, governance foreign ownership

– Property rights - patents, licenses and copyrights

– Laws dealing with citizens' rights protection of private information, electronic document identification and authentication

– Procurement laws or laws dealing with public contracts

– Level of enforcement

– Other types of government intervention, taxes, regulations, policies, grants, reforms, etc.

• Business

– Sector structure, main players, competitors, professional and community associations, the possibility of

– Transferring some assets on the basis of barriers to entry

– Available financing and level of risk

– Public service provided, its nature, universality; quality standards and criteria

–

Methods, targeted clientele.

• Technological

– Nature of the technology, level of innovation, complexity, user-friendliness and reliability, maturity, strategic

– Importance in terms of novelty and distance

– Current level of ICT use in terms of availability and frequency of use

– Existing technological infrastructure in government and industry as well as standards, compatibility, accessibility, etc.

– System security, integrity, confidentiality, authentication and pseudonomity, personal information

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ENVIRONMENTAL FACTORS – III DIMENSION

PARTNER’S OBJECTIVES:

~

Nature of objectives in terms of profit, strategic opportunities, risk reduction, costsharing, training, service quality, economic development of public and general interests

~ Level of sharing of such objectives expressed in psychological and strategic distancepresence and participation of citizen-clients and interest groups for service recipients

PARTNER’S CHARACTERISTICS:

Organisational structure, culture and environment; the decision-making process specificto each partner

Partners' ability for adaptation, absorption, and basic skills

Organisational strategy and level of alignment of the project with this strategy

Leadership, relative power or partner's level of dependency

Past experiences with collaboration, involvement in business networks and networking

Partner's technological experience and skills

Differences in partners' profiles in terms of similarities and complementarity.

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ENVIRONMENTAL FACTORS – IV DIMENSION

COLLABORATION PROCESS:

The collaboration process develops in stages that each require the presence of specific conditions to ensure success. The collaboration process

evolves in such a way as to ensure a negotiation / decision / action / evaluation process that takes into account the degree of project completion.

STAGE 1: START-UP

initiator's role, its leadership and implemented strategies

nature of the project, clarity of its definition and objectives, level of innovation, its strategic importance and

universal appeal

scope of the project, its complexity, duration, costs, and its international, local or national character.

STAGE 2: SEARCH FOR PARTNERS research process, fairness, transparency and freedom of choices

leadership demonstrated through the ability to adhere to a single vision .

STAGE 3: PROJECT CREATION AND START UP

number and type of partners selected

complementarities of partners in terms of resources and expertise

type and content of agreement, especially the formal role of each partner and measurable objectives to

Achieve

leadership demonstrated through the ability to integrate the different perspectives.

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ENVIRONMENTAL FACTORS – IV DIMENSION

• Stage 4: Implementation

– presence of a "champion“

– support of upper management

– implementation team, its members, expertise, roles and powers

– communication with clients and their participation

– employee and union involvement

– training

• State 5: Operation / management

– use of project management tools

– monitoring and co-ordination measures

– organisational and technical support

• Stage 6: Termination of the project

– opportunities and conditions for withdrawal of a partner

– conditions for termination of agreement.

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ENVIRONMENTAL FACTORS – V DIMENSION

o The governance method refers to the power structure that

governs collaboration among partners.

o nature of the collaboration

o nature and scope of activities associated with the project: Design, Build,Own, Operate, Lease, Transfer

o governance structure, description, degree of formality, level ofcentralisation and flexibility, and division of tasks

o environment, culture and relations among partners

o degree of citizen-client, employee and other interest groups'participation.

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EVOLUTION & DEVELOPMENT

• PROCESS OF EVOLUTION:

• Trade

•Assembly or Production

• Integration

• EARLY DEVELOPMENTS

• POST – WAR DEVELOPMENTS

• RECENT TRENDS

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