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The size of the international business should be large in orderto have impact on the foreign Economies. Most of themultinational companies are significantly large in size. In fact,the Capital of some of the MNCs is more than our annualbudget and GDPs of the some of the
Most of the international business houses segment theirmarkets based on the geographic market segmentation.Daewoo segmented its market as North America, Europe,Africa, Indian subcontinent and Pacific markets.
International Business Opportunities
Y2k & Euro
India appears to be well positioned to take advantage of theopportunities by capitalizing on its reputation of being a globalcentre for development of commercial applications andoutsourced software services. But despite these advantages,companies have not been able to cash in on the opportunitieseven though software firms collectively have the potential, Inthe Y2K opportunities, a substantial part of the cost involvedin initial analysis, finalizing the strategy, testing and implemen-tation. While most of the resources services by companies toaddress the Y2K business are like “fast chicken,” capable of addressing only the code-correction phase, the real testingrequires not pseudo programmers who have entered the field,but genuine software professionals who have considerableexperience.The European Union has decided to go for a single currencynamed Euro. And for this, currency and conversion relatedchanges are to be incorporated within the software. Thisopportunity is much bigger than the Y2K one, but softwaredevelopers are not geared well enough to tap the sizeablepotential that it holds for them. It is much more a difficultopportunity. The impact of Euro on the application systemrequires more knowledge. Some software companies areaddressing this, particularly by extending their Y2K services totake part in euro projects also.International markets present more potentials than thedomestic markets. This is due to the fact that internationalmarkets wide in scope, varied in consumer tastes, preferencesand Purchasing abilities, size of the population etc. Forexample, the IBM’s sales are more in foreign countries than inUSA. Similarly, Coca-Cola’s sales, Procter and Gamble’s salesand Satyam Computer’s sales are more in foreign countries thanin their respective home countries.The population for the year 2000 indicates that: USA’s popula-tion would be 300 million, Mexico’s 126 million, Brazil’s 205million, Indonesia’s 223 million, Pakistan’s 138 million,Nigeria’s 154 million and Bangladesh’s 146 million.The size of the population, sometimes, may not determine thesize of the market. This is due to the backwardness of theeconomy and low purchasing power of the people, In fact, thesize of Eritrea an African country is roughly equal to that of the United Kingdom in terms of land area and size of thepopulation. But, in terms of per capita income it is one of thepoorest countries in the world with estimated per capita incomeof US $ 150 per annum.Therefore, the international business houses should considerthe consumers’ willingness to buy and also ability to buy theproducts In fact, most of the multinational companies, whichentered Indian market after 1991, failed in this respect. Theyviewed that almost the entire Indian population would be thecustomers. Therefore, they estimated that the demand forconsumer durable goods would be increasing in India afterglobalisation. And they entered the Indian market. The heavyinflow of these goods and decline in the size of Indian middleclass resulted in a slump in the demand for consumer durablegoods.Wider Scope: Foreign trade refers to the flow of goods acrossnational political borders. Therefore, it refers to exporting andimporting by international marketing companies plus creationof demand, promotion, pricing etc. As stated earlier, interna-tional business is much broader in scope. It involvesinternational marketing, international investments, manage-ment of foreign exchange, procuring international finance fromIMF, IBRD, IFC, IDA etc., management of internationalhuman resources, management of cultural diversity, interna-tional marketing, management of international production andlogistics, international strategic management and the like. Thus,international business is broader in scope and covers all aspectsof the system.Intercountry Comparative Study: International business studiesthe business opportunities, threats, consumers’ preferences,behavior, cultures of the societies, employees, businessenvironmental factors, manufacturing locations, managementstyles, inputs and human resource management practices invarious countries. International business seeks to identify,classify and interpret the similarities and dissimilarities amongthe systems used to anticipate demand and market products’.The system presents intercountry comparison and interconti-nental comparison/comparative analysis helps the managementto evaluate the markets, finances, human resources, consumersetc. of various countries. The comparative study also helps themanagement to evaluate the market potentials of variouscountries.The study also indicates the degree of consumer acceptance of the product, product changes and developments in differentcountries. Managements of international business houses cangroup the countries with similar features and design the sameproducts, fix similar price and formulate the same marketingstrategies. For example, Prentice Hall grouped India, Nepal,Pakistan Bangladesh, Sri Lanka etc. into one category based onthe customers’ ability to pay and designed the same qualityproduct and sell them at the same price in all these countries.Similarly, Dr. Reddy’s Lab does the same for its products to sellin the African countries.
Differences in Government Policies,Regulatory Framework
Sovereign governments enact and implement the laws, andformulate and implement policies and regulations. Theinternational business houses should follow these laws, policiesand regulations. MNCs operating in India follow our labor