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Nature,scope, need and problems for international business

Definition: International Business is the process of focusing on the resources of the globe and objectives of the organisations on global business opportunities and threats. International business defined as global trade of goods/services or investment. More comprehensive view does not focus on the “firm” but on the exchange process Free Trade occurs when a government does not attempt to influence, through quotas or duties, what its citizens can buy from another country or what they can produce and sell to another country.The Benefits of Trade allow a country to specialize in the manufacture and export of products that can be produced most efficiently in that country.The Pattern of International Trade displays patterns that are are easy to understand (Saudi Arabia/oil or Mexico/labor intensive goods). Others are not so easy to understand (Japan and cars)...

Nature of International Business

1. Accurate Information 2. Information not only accurate but should be timely 3. The size of the international business should be large 4. Market segmentation based on geographic segmentation 5. International markets have more potential than domestic markets

Scope of International Business

1. International Marketing 2. International Finance and Investments 3. Global HR 4. Foreign Exchange

Need for International Business

1. To achieve higher rate of profits 2. Expanding the production capacity beyond the demand of the domestic country 3. Severe competition in the home country 4. Limited home market 5. Political conditions 6. Availability of technology and managerial competence 7. Cost of manpower, transportation 8. Nearness to raw material 9. Liberalisation, Privatisation and Globalisation (LPG) 10. To increase market share 11. Increase in cross border business is due to falling trade barriers (WTO), decreasing costs in telecommunications and transportation; and freer capital markets

Reasons for Recent International Business Growth 1. Expansion of technology 2. Business is becoming more global because •Transportation is quicker •Communications enable control from afar •Transportation and communications costs are more conducive for international operations 3. Liberalization of cross-border movements 4. Lower Governmental barriers to the movement of goods, services, and resources enable Companies to take better advantage of international opportunities

Problems in International Business 1. Political factors 2. High foreign investments and high cost 3. Exchange instability 4. Entry requirements 5. Tariffs, quota etc. 6. Corruption and bureaucracy 7. Technological policy

international business Definitions (2) 1. The exchange of goods and services among individuals and businesses in multiple countries. 2. A specific entity, such as a multinational corporation or international business company that engages in business among multiple countries.

Main Difference Between Domestic and International Business Main Difference Between Domestic and international Business are as follows : S.No	International Business	Domestic Business 1.	It is extension of Domestic Business and Marketing Principles remain same. The Domestic Business Follow the marketing Principles 2.	Difference is customs, cultural factors	No such difference. In a large countries languages likeIndia, we have many languages. 3.	Conduct and selling procedure changes	Selling Procedures remain unaltered 4.	Working environment and management practices change to suit local conditions. No such changes are necessary 5.	Will have to face restrictions in trade practices, licenses and government rules. These have little or no impact on Domestic trade. 6.	Long Distances and hence more transaction time. Short Distances, quick business is possible. 7.	Currency, interest rates, taxation, inflation and economy have impact on trade. Currency, interest rates, taxation, inflation and economy have little or no impact on Domestic Trade. 8.	MNC’s have perfected principles, procedures and practices at international level	No such experience or exposure. 9.	MNCs take advantage of location economies wherever cheaper resources available. No such advantage once plant is built it cannot be easily shifted. 10.	Large companies enjoy benefits of experience curve	It is possible to get this benefit through collaborators. 11.	High Volume cost advantage. Cost Advantage by automation, new methods etc. 12. Global Standardization	No such advantage 13.	Global business seeks to create new values and global brand image. No such advantage 14.	Can Shift production bases to different countries whenever there are problems in taxes or markets	No such advantage and get competition from some spurious or SSI Unit who get patronage of Government.

Types of international business.. 1.	Imports 2.	Exports 3.	Foreign Direct Investment (FDI) 4.	Licensing 5.	Franchising 6.	Joint Venture 7.	Manufacturing in Foreign Country : 8.	Management Contracts 9.	Consultancy Services 10.	Strategic Partnerships 11.	Mergers 12.	Counter Trades

Differences between International Trade and Domestic Trade Scope: Scope of international business is quite wide. It includes not only merchandise exports, but also trade in services, licensing and franchising as well as foreign investments. Domestic business pertains to a limited territory. Though the firm has many business establishments in different locations all the trading activities are inside a single boundary. Benefits: International business benefits both the nations and firms. Domestic business have lesser benefits when compared to the former. •	To the nations: Through international business nations gain by way of earning foreign exchange, more efficient use of domestic resources, greater prospects of growth and creation of employment opportunities. Domestic business as it is conducted locally there would be no much involvement of foreign currency. It can create employment opportunities too and the most important part is business since carried locally and always dealt with local resources the perfection in utilisation of the same resources would obviously reap the benefits. •	To the firms: The advantages to the firms carrying business globally include prospects for higher profits, greater utilization of production capacities, way out to intense competition in domestic market and improved business vision. Profits in domestic trade are always lesser when compared to the profits of the firms dealing transactions globally.