001- Globalisationl- NOTES.ppt

8/11/2019 001- Globalisationl- NOTES.ppt

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INTRODUCTION TO

INTERNATIONAL BUSINESS

UNIT - 1


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Learning Objectives:

Meaning of International Business

Importance of International Business

Problems in IB Need for IB

Theories of IB


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It cover--------

Export and Import of goods and Services

InvestmentsFDI, FII

Human resources IPR- Intellectual Property Rights-

Licensing, Franchising.

Manufacturing Commercial Borrowings


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IB is the whole gamut of business

activities that crosses national

borders:

IB can effect people in many broad wayssuch as,

People's economic well being,

Political status Skill level or knowledge


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Definition:

IB is a field of study and practice that

encompasses public and private business

activity affecting the persons or institutions

of more than one national state, territory orcolony


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Problems or Challenges in

International Business:

Language, law, customs and regulations

Country information may be difficult toobtain

Foreign Exchange transactions

Cultural differences


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Broader range of managerial skills

required

Need to take help from intermediaries

Monitoring trends in foreign market may

be difficult.

Control & communication systems Market risks


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Why Firms engage in IB ?

To expand sales/ marketPLC

To acquire resources

To diversify sources of sales and supplies

To minimise competitive risk

Rapid increase in and expansion of technology

Development of the institutions needed to

support and facilitate international trade Increased global competition


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What is globalization?

The shift towards a more integrated and

interdependent world economy

Two components: The globalization of markets

The globalization of production


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Globalization of markets

The merging of distinctly separate national

markets into a global marketplace

Tastes and preferences converge onto a global

norm

Firms offer standardized products worldwide

creating a world market


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Significant differences still exist between

national markets on many relevant dimensions

These differences require that marketing and

operating strategies and product features be

customized to best match conditions in a

country.


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Countries are different

Range of problems are wider and more

complex Government intervention in trade and

investment creates problems

International investment is impacted bydifferent currencies


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Globalization of production

Refers to sourcing of goods and services fromlocations around the world to take advantage

of Differences in cost or quality of the factors of

production

Labor

LandCapital


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Emergence of global institutions

Globalization has created the need forinstitutions to help manage, regulate and

police the global marketplace GATT

WTO

IMF World bank

United Nations


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Global drivers

Macro factors that underlie trend towards

greater globalization

Decline in trade barriers

Technological change


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WORLD TRADE ORGANISATION

Successor to GATT in 1995

GATT established in 1947

Headquartered in Geneva.


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IMFs objectives :

Promote exchange rate stability

Maintain orderly exchange arrangements

Avoid competitive currency devaluations Establish multilateral system of payments

Eliminate exchange restrictions

Create standby resources


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UNITED NATIONS CONFERENCE

ON TRADE AND DEVELOPMENT

Formed in 1964 as a permanent body

attached to UNO

To bridge the gap between developing and

developed nations.

Conferences held once in 4 years.


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Functions of UNCTAD

Promote international trade

Speed up economic development of

developing nations

Negotiate multilateral trade agreements.

Co-ordinate the activities of other

insitutions.


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Declining barriers to trade

Globalization of markets and production has

been facilitated by

Reduction in trade barriers

Removal of restrictions to foreign direct

investment


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Globalization debate-Pro

Lower prices for goods and services

Economic growth stimulation

Increase in consumer income

Creates jobs

Countries specialize in production of goodsand services that are produced most efficiently


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Globalization debate-Con

Destroys manufacturing jobs in wealthy,

advanced countries

Wage rates of unskilled workers in advancedcountries declines

Companies move to countries with fewer

labor and environment regulations Loss of sovereignty

Th d i f l b li ti


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The drivers of globalisationMarket drivers

Per capita income converging among industrialisednations

Convergence of lifestyles and tastes

Organisations beginning to behave as global customers

Increasing travel creating global consumers

Growth of global and regional channels

Establishment of world brands

Push to develop global advertising

Cost drivers

Continuing push for economies of scale

Accelerating technological innovation

Advances in transportationEmergence of newly industrialised countries with

productive capability and low labour costs.

Increasing cost of product development relative tomarket life

Government driversReduction of tariff barriers

Reduction of non-tariff barriers

Creation of blocs

Decline in role of governments as producers andcustomers

Privatisation in previously state-dominated economiesShift to open market economies from closed communist

systems in eastern Europe

Increasing participation of China and India in the globaleconomy

Competitive driversContinuing increases in the level of world trade

Increased ownership of corporations by foreignacquirors

Rise of new competitors intent upon becoming globalcompetitors

Growth of global networks making countriesinterdependent in particular industries

More companies becoming globally centred rather thannationally centred

Increased formation of global strategic alliances

Other drivers

Revolution in information and communication

Globalisation of financial markets

Improvements in business travel

Th d i f l b li ti


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Market drivers








Cost drivers








Creation of blocs











Other drivers




The drivers of globalisation

The dri ers of globalisation


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Market drivers








Cost drivers








Creation of blocs











Other drivers







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Cost drivers








Creation of blocs











Other drivers







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Cost drivers








Creation of blocs











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Market drivers








Cost drivers








Creation of blocs











Other drivers





001- Globalisationl- NOTES.ppt

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