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8/6/2019 Chapter1 - Intt Business
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ENVIRONMENT
STUDY
International Business&
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GLOBA LISATION
y More than $1.2 Billion Foreign transaction every day.
y Trade in goods and services $4Trillion per year.
y Global Culture likeMcDonald¶s , Coca Cola, Sony,
Disney Films etc.
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Factors for Globalization
y Technology
y Government
y Institutions
y Consumers
y Competition
y Political
y Countriesy Cross-National co-operation agreements.
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The Global Business Environment
Collapse of communist economies.
Economic power of western nations.
Rise of newly industrialized nations.
Free market economies.
Belief in open markets, trade and foreigninvestments as the road to economic development.
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The Global Business Environment
Trade Agreements and stabilization of tradepolicies.
Regional trade blocks.
FreeM
arket Economie. Measures to facilitate trade. Globalization of Markets. Big EmergingMarkets.
The internet.
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The Global Bus. Env. - FreeMarket Economies
Privatization and deregulation.
Especially in financial services, transportation andcommunications.
Lower barriers to trade.
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Challenges For Globalization
1. Socio-Cultural Factors like Taste, Preferences etc.
2. Competitive Advantage.
3. Closer Look to the Economy.
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International Business
International Transactions - export-import trade, directforeign investment - wholly owned subsidiaries, joint
ventures; licensing, franchising, outsourcing, andmanagement contracts.
More than one set of environmental variables.
Interactions between countries - Trade and foreign policies,Tariffs and other barriers, and Exchange rates.
Variables which are Especially Important- Infrastructure,Market structure, and Socio/cultural variables.
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Types of International Business
y Trading
y Manufacturing and Marketing
y Sourcing andMarketing
y Global Sourcing of Production.
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External Environment
y Economic Environment.
y Political Environment.
y Human Cultural Environment.
y Technological Environment.
y Legal Environment.
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Economic Environment
y Money- Important Economic Dimension
y The World Economy ± An O verview Economic Integration
Ù10% in beginning of 20th Century
Ù50% today
ÙEU and N AFTA
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Business Success Visa versaNew Reality of Changing World like:-
A. Capital Movements
� Trade $4trillion per year
� Foreign Exchange transaction $1trillion per day
B. Productivity and Employment� Employment Declining but Production Increasing
� Manuf. Constitute 23%to 24% of GNP
C. Emerging World Economy as Dominant Economy
� Real Success -Germany and Japan- Businessleader focus on Economy
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Economic System
Types of Economic System
y Market Allocation- Delivering the goods andServices that people need. Exam-U.S , Japan
y Command Allocation -State has broad powers toserve public interest.Marketing mix is not strategic
variable. Exam- China, Former USSR, India.
y Mixed System : This is combination of both
Market and command allocation.
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Stages of Mkt. Development
y Low income Countries.(Pre Industrial Countries)
Income Less than $786 Per capita.
y Low middle income countries(Less Developed
Countries).Income between $786 to $3125
y UpperMiddle Income (Unindustrialized Country).
Income From $3125 to $9655.
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Stages of Mkt. Development Cont.
y High Income countries(Advanced Countries).
Income above $9655.
y Basket Cases(Low In come, No Growth)
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Location of Population
y 72% world income in Triad ( North America/EU/Japan).
y World Population 6 Billion
y 10 countries Account 59% of World Income
y Negative co-relation Between Population, Growthrate and Income per capita.
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Mktg and Economic Development.
y Industrialized Countries.
Satisfaction of dynamic market Place.
y Less developed countries.
Production/Output.
No customer needs & wants.
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Role of Mktg.
y To identify people Needs & Wants.
y To focus individual & organization efforts to respond
to these needs & Wants.
y Comparison in low & high income countries.
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Economic Risk.
y Economic Development
y Economic change effect
y Gratuity of economic disorder.
y Stagnation to depression.
y Few consumer buyer.
y Market Adjustment.
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Balance of Payment.
y Current Account.
Recurring trade in mercendise & service.
Private Gift.
Public Aid Between countries.
y Capital Account.
Long term Derived investment.
PortfolioMgmt.Short/Long Capital Flow.
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Trade Pattern
y FDI Increase 5 times than World Trade.
y FDI Increased 10 times than GNP.
y Merchandise Trade. 75% World Export-Industralized countries.
y Service Trade
Copyright, Patent Acts Enforced.
y Economic Co-operation
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Human cultural Environment.
y Culture.
y Language of Friendship.
y Cultural Universal.
y Social institution.
y Human & the universe belief system.
y Aesthetics/Graphics/Plasticart/Folkbre/Music/Dra
ma/Dance.y Language.
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Culture
y Conscious and Unconscious
y Characterstic of Culture:-
ÙCulture is Prescriptive
Ù
Culture is socially sharedÙCulture Facilitate communication
ÙCulture is Learned
ÙCulture is Subjective
ÙCulture is Enduring
ÙCulture is Cumulative
ÙCulture is Dynamic
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Technological environment.
y Types of technology in use.
y Level of technology developments
y Speed of new technology adoption.
y Problems of technological Environment.Labour intensive vs Technology.
Time lack.
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Political Environment.
Global marketer must attempt to comply with each setof national and in some instance regionalconstraints.
Any company doing business outside the homecountry must go through the government policy andanalyze the political problem.
Example: The German Packaging.
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Types Of Government.
Political System
Parliamentary(open).
All democratic .
Absolutist (closed).
All Monarchies & Dictatorship.
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Classification of Political Parties.
y Two parties.
U.S. and U.K.
y Multiparty System
Germany and Israel
y Single Party System
Egypt
y
DominatedO
ne Party.Cuba and Libya
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Political risk
y Confiscation
y Expropriation
y Nationalization
y Domestication
y Creeping Ex-expropriation
y General Instability risk.
y O wnership/Control risk.y Operation Risk.
y Transfer risk.
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Legal Environment
y Legal System
Common Law
Statute Law.
Common Vs Code Law.
Statutory Law.
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Side stepping Legal Problems
y Establishmenty Jurisdictiony TheMultilateral Agreement on Invt.y Intellectual Property-Patents and trade mark.
y Counterfeiting.y Antitrust.y Licensing and Trade secrety Copyrighty
Branch Vs Subsidiary y Gray Markety Conflict resolution.
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World Trade Organization
ò Created at the conclusion of the last G.A.T.T.agreement.
ò
149 countries (as of December 2005)
ò Functions:y Administering WTO trade agreements
(Exam-G ATT,
G ATS, TRIPS)y Forum for trade negotiations.
y Handling trade disputey Monitoring national trade policies
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y Ethical Issue.
y U.S.Laws and Exports:
y Nuclear Nonproliferation Treaty:
y Human Rights Policy.
y Antiboycott Regulations.
y Foreign Corrupt Practices Act(FCPA).
y Healthy, safety and Environmental Regulations.y Antitrust.
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Chapter -1
ENDS
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