GLOBALIZATION FACTORS

International business

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

Factors For Globalization

Technology is expanding, especially in transportation and communications.

Governments are removing international business restrictions.

Institutions provide services to ease the conduct of international business.

Consumers know about and want foreign goods and services.

Factors For Globalization

Competition has become more global.Political relationships have improved among some

major economic powers.Countries cooperate more on transnational issues.Cross-national cooperation and agreements.

Studying international business is important Most companies are either international or compete

with international companies.Modes of operation may differ from those used

domestically.The best way of conducting business may differ

by country.An understanding helps you make

better career decisions.An understanding helps you decide

what governmental policies to support.

Factors in choice of which overseas market(s) to enter

Size of the market (population, income)Economic factors (state of the economy)Cultural linguistic factors (e.g. preference for

countries with similar cultural background)Political stability (there is usually a preference for

stable areas)Technological factors (these affect demand and the

ease of trading)

Constraints and difficulties in entering overseas markets• Resources• Time• Market uncertainty• Marketing costs• Cultural differences• Linguistic differences• Trade barriers• Regulations and

administrative procedures

• Political uncertainties• Exchange rates

(transactions costs & risks)• Problems of financing• Working capital

problems• Cost of insurance• Distribution networks

Fast Moving Consumer Goods (FMCG)

Fast Moving Consumer Goods (FMCG), also known a

Consumer Packaged Goods (CPG), are products that

have a quick turnover and relatively low cost. Though

the absolute profit made on FMCG products is

relatively small, they generally sell in large numbers

and so the cumulative profit on such products can be

large.

International Standard Industrial Classification (ISIC) :

Supplier industries for FMCGs include 1511 meat and

meat products, 1512 fish and fish products, 1513 fruit

and vegetables, 1514 vegetable and animal oils and

fats, 1520 dairy products, 1531 grain mill products,

1532 starches and starch products, 1533 animal feeds,

1541 bakery products, 1542 sugar, 1543 cocoa,

chocolate and sugar confectionery,

International Standard Industrial Classification (ISIC)

1544 macaroni, noodles, couscous, 1549 other food

products, 1551 spirits; ethyl alcohol, 1552 wines, 1553

malt liquors and malt, 1554 soft drinks, mineral waters,

1600 tobacco products, 2101 pulp, paper and

paperboard, 2102 corrugated paper, containers, 2109

other articles of paper and paperboard, 2424 soap and

detergents, cleaning preparations, perfumes.

Main Characteristics Of Fmcgs

From the consumers' perspective:• Frequent purchase• Low involvement (little or no effort to choose the item –

products with strong brand loyalty are exceptions to this rule)

Low price

Main Characteristics Of Fmcg

From the marketers' angle:• High volumes• Low contribution margins• Extensive distribution networks• High stock turnover.

Exporting

Exporting is one method of doing business

Internationally

We normally think of overseas trade in terms of exporting and importing goods and services

This involves transporting goods and selling them across national boundaries.

Exporting

Direct exporting implies that the domestic firm is actively involved in selling the goods abroad.

Indirect exporting means that the marketing of goods is delegated to export agents and the UK manufacturer concentrates on production.

But exporting involving the movement of goods is only one method of engaging in international business.

Other methods of market entry Overseas product an/or assembly (producing goods

abroad) International alliances and joint ventures (working

with foreign companies) International M&A (mergers and acquisitions across

frontiers) International franchising and licensing allowing

foreign based firms to produce, market and distribute goods in specified areas abroad)

Exporting meat

India ranks top in animal and cattle population. The meat and meat processing industry is still to come

up.Some top players in the meat processing industry like

Venkateswara Hatcheries, Godrej Agrovet, Vista

Processed Food, Al Kabeer, Allanasons etc., with

modern state-of-the-art slaughter and processing plants,have changed the entire scenario, making the industry grow at almost 10%.

Frame A Right Strategy Urgent need to frame a right strategy for the

development of meat and poultry production in the

country this will certainly bring prosperity to millions of

our rural citizens and create employment in rural India.Having achieved the Green Revolution, the White

Revolution and the Blue Revolution, it a question “can

the Pink Revolution be far behind?” Certainly this will

require large investment in infrastructure, mainly in

cold storages, and modern meat processing plants.

Exports Of MeatExport of sheep and goat meat in terms of quantity

is very small.

Export is restricted to countries primarily

in the Middle East, with large ethnic Indian population who prefer it.

Poultry products export is also not quite

good.

Exports Of Meat

India's poultry product exports are mainly confined to

eggs and egg powder, which are growing due to cost

competitiveness and logistical advantages. Poultry meat

exports are negligible due to high costs, inadequate

meat processing facilities and infrastructure bottlenecks.

In recent years, some South India-based integrators

have been exploring the possibility of exporting poultry

meat to the Middle East and South-East Asian markets.

Exports Of Meat

Meat exports have been growing at close to 30% per

annum in terms of quantity, which is largely driven by

poultry, buffalo, sheep and goat meat. Exports of value

added meat products are insignificant. In the domestic

market, the growing number of fast food outlets in the

country has had a significant impact on the meat

processing industry.

Major markets

Sheep/goat Meat - Saudi Arabia, UAE, Oman, Bahrain, Kuwait

Animal Products - Portugual, France, UK, Spain, Netherlands

Processed Meat - Seychelles, Germany, Oman, Congo, Sri Lanka

Future Market: India can predominantly play a major role in South East Asia, Africa and East Europe.

Exports Of Basmati RiceIndia is the leading exporter of the Basmati Rice to the

global market. The country has exported 21,83,501

MT of Basmati Rice to the world for the worth of Rs.

10578.68 crores during the year 2010-11.

Areas of Cultivation:The areas of Basmati Rice production in India are in

the states of J & K, Himanchal Pradesh, Punjab, Haryana, Delhi, uttarakhand and western Uttar Pradesh.

PROBLEMS OF RICE EXPORT FROM INDIA

1.As per the state Govt. policy, various taxes are imposed

on rice exports, such as the states are imposing Purchase

Tax (on indirect export), Market Fees, Rural

Development Fund, Administrative Charges etc. These

taxes are rendering the pricing of rice internationally in

Competitive.

2.There is lack of proper infrastructural facilities.

3. The major rice producing nations have decreased the price to capture the international markets .

PROBLEMS OF RICE EXPORT FROM INDIA4.Rice production meant for export purpose is having

subsidy in other countries, which reduces the cost of

production and thereby reducing the cost of rice. 5.Rice mills have not been fully modernized to ensure

high milling recovery and reduce the percentage of

broken rice.

6.Lack of proper arrangements for production of

sufficient quantity of quality seeds needed for

cultivation of rice for export purposes.

EXPORT PROMOTION POLICY

1. Production of quality seeds and ensuring its availability to farmers at subsidized rates.

2. Low cost production technology may be developed to reduce the cost of production and making Indian rice more competitive in the international markets.

3. Survey may be conducted to identify contiguous zones for cultivation of export quality rice.

EXPORT PROMOTION POLICY

• Quality of rice may be maintained keeping in view the requirements of the international markets.

• Breeding programme may be initiated to develop high yielding export quality rice both for basmati and non-basmati rice to enable the exporters to compete in the world's markets.

• Production, procurement and processing of basmati rice may be organized in a systematic manner for maintaining its quality for export purposes.

SUGGESTIONS FOR SUSTAINING RICE EXPORT

• Survey may be conducted to identify export quality belts/zones for production of rice to meet the requirement of exports.

• Extension activities may be strengthened to educate the cultivators for production of quality rice to match the standards of international markets.

• Low cost production technology may be developed to bring down the cost of production to enable the exporters to compete with competing countries in the international markets.

SUGGESTIONS FOR SUSTAINING RICE EXPORT

• Proper arrangements may be made for procurement and processing of rice export purpose as per the requirement of international markets.

• Proper arrangements may be made for production of pure quality seeds and making them available to the farmers at subsidized rates.

• In case of basmati varieties, there should be proper water management in the field.

Major Export Destinations

Saudi Arabia, United Arab Emirates, Iran,

Kuwait, United Kingdom, Yemen Republic,

United States, Iraq, Jordan, Netherland and

Canada.