INTERNATIONAL BUSINESS ENVIRONMENT Unit I Introduction to International Business-Importance, Nature and scope of international business-Modes of Entry into international

Business-Internationalization process and managerial implications. Environmental context of international Business-Framework for analyzing

international Business Environment-Domestic, foreign and global environments and their impact on international decisions. INTERNATIONAL BUSINESS-MEANING International business is business whose activities are carried out across national borders. This definition includes not only international trade and foreign manufacturing but also the growing service industry in areas such as transportation, tourism, advertising, construction, retailing, wholesaling, and mass communications. INTERNATIONAL BUSINESS-DEFINITION Definition: International Business is the process of focusing on the resources of the globe and objectives of the organizations 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. An international business has many options for doing business. It includes, Exporting goods and services. Giving license to produce goods in the host country. Starting a joint venture with a company. Opening a branch for producing & distributing goods in the host country. Providing managerial services to companies in the host country.

FEATURES OF INTERNATIONAL BUSINESS The Characteristic features of international business are:-

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 MODES OF ENTRY INTO AN INTERNATIONAL BUSINESS
There are some basic decisions that the firm must take before foreign expansion like:

Which markets to enter? When to enter those markets? And on what scale? Modes of Entry 1. Exporting 2. Licensing 3. Franchising 4. Turnkey Project 5. Mergers & Acquisitions 6. Joint Venture 7. Acquisitions & Mergers 8. Wholly Owned Subsidiary Importance of International Business Every company is trying to expand its business by entering foreign markets. International business helps in the following ways:-

1. Helps as growth strategy: - Geographic expansion may be used as a business strategy. Even though companies may expand their business at home. 2. Helps in managing product life cycle: - every product has to pass through different stages of product life cycle-when the product reaches the last stages of life cycle in present market, it may get proper response at other markets. 3. Technology advantages: - some companies have outstanding technology advantages through which they enjoy core competency. This technology helps the company in capturing other markets. 4. New business opportunities: - business opportunities in overseas markets help in expansion of many companies. They might have reached a saturation point in domestic market. 5. Proper use of resources: -Sometimes industrial resources like labor, minerals etc. are available in a country but are not productively utilized. 6. Availability of quality products: - when markets are open, better quality goods will be available everywhere. Foreign companies will market latest products at reasonable prices. Good product will be available in the markets. 7. Earning foreign exchange: - international business helps in earning foreign exchange which may be used for strategic imports .India needs foreign exchange to import crude oil, deface equipment, raw material and machinery. 8. Helps in mutual growth: - countries depend upon each other for meeting their requirements. India depends on gulf countries for its crude oil supplies. 9. Investment in infrastructure: - international business necessitates proper development of infrastructure. A company entering international business must invest in roads.

Internalization Process

Analyzing aspects of international business environment Environmental analysis is defined as "the process by which strategists monitor the economic, governmental, legal, market, competitive, supplier, technological, geographical and social settings to determine opportunities and threats to the firm." Framework for Analyzing international business environment Environmental analysis is defined as the process by which strategists monitor the economic, governmental/legal, market/competitive, supplier/technological, geographic, and social settings to determine opportunities and threats to their firms. Environmental diagnosis consists of managerial decisions made by analyzing the significance of the data (opportunities and threats) of the environmental analysis.