INTERNATIONAL BUSINESS

Why do business firm of a country go to another country? Give your answers with suitable examples?

Why is IB not bed of roses? Elucidate your answers with suitable examples?

What is business environment? How does it affect IB?

How do you classify low, middle and rich income countries? Do you think that the economic status of the
country influence the global business?

Do you believe political stability leads to business development & vice-versa? If yes, state your answers
with examples.

Analyze the inflow of FDI in India.

ANSWERS

1. Business firms moves to other countries for the primary reason of profit. There are many secondary
reasons for going global as

 When the business reaches maturity stage in its home country.

 Brand popularity
 Market conditions favours for them.
 Technology
 Government support

In the food industry the firms such as KFC of Australia entered into India as the Indian market
conditions are suitable for their business in the country. People of India are fond of chicken As their
business suits for the Indian people they made success in the country.

In the industry of telecom Airtel went global when they have reached the maturity stage in India.
They are investing in Africa for going global and make their business to grow and not to decline in
the country.

The technology in the Indian market is high in the telecom sector and the docomo from Japan has
entered into the country by providing the technology to Indian people by combing with Tata.

When the government wants foreign country to enter into the country they invite foreign business to
enter Indian market the companies as Hyundai entered into the market when the government invited
them to start their business.
3. Business environment is the category of business which suits for the particular market and the
conditions which suits for the business. Business environment is the process of gathering, analyzing,
and dispensing information for tactical or strategic purposes. The environmental scanning process
obtains both factual and subjective information on the business environments in which a company is
operating or considering entering. The factors which affects the business environment are

 Economy
 Political
 Technology
 Culture
 Suppliers

The international Business mainly depends on the business environment of the particular country.
Company’s plans for their business with suitability of the business conditions. If the particular
business is not matching the requirements of the other country the business will not be having a good
market.

For example the business of Kellogg’s entry into the Indian market does not match the culture of
the people. They wanted to change the culture of Indian people by changing their traditional food
culture. For making the business successful in the international a huge analysis should be made before
entering the particular county.

When the labors are not cheap in the particular country the coat of production exceeds in the
market so the business cannot give a cheaper product to their people so this is an important factor to
match their requirements with the supplier.

4. Countries are classified as low, middle and rich income with their high gross domestic product
(GDP) per capita would thus be described as developed countries which are rich in income. Another
economic criterion is industrialization.

This category can be determined with the economy of the particular country. The country’s as US,
UK, Australia etc are countries which have high income and high status of people. The per capita
income plays a major role for making the country grow.

The growing countries need a good FDI which makes them to become a high income country as
the foreign countries can provide with a high income to the local suppliers as they grow the country
economy grow.
 IB plays a major role in making a countries economy grow as of India is concerned their economy
grows as they have many FDI in recent years and when compared to other countries India’s growth is
high because of the other countries enter into India for business.

5. Political stability of a country is very important for a foreign business to enter into the country. They
analysis of the business is mainly based on its political stability. The companies like IBM and Coke sent
out of India in 1970’s when there’s a change in the ruling party.

If one party accepts the entry of the global company, when the political party changes in the
country the business can be sent out because of the political conditions. As this political stability plays a
major role for the business by providing land and other facilities for the business. This may not be
supported by other political party in the country so this may affect the business badly in that particular
country.

6. The FDI in India has grown high in recent years as the economic liberalisation came into existence in
the year 1991. This has made a great change in the Indian economy, many direct investments has been
made into the country since then.

MNC companies entry into India has made huge opportunities in the country for employment, the
local suppliers were benefited, the technology improvement The economy of India is the eleventh largest
economy in the world by nominal GDP and the fourth largest by purchasing power parity (PPP).

India is an emerging economic power with a very large pool of human and natural resources, and
a growing large pool of skilled professionals. Agriculture is the predominant occupation in India,
accounting for about 52% of employment. The service sector makes up a further 34% and industrial sector
around 14%.

There was a huge inflow this results in the growth of the Indian economy with 8.8 % at present.

2. The IB requires a lot of analysis and to forecast a particular country and its culture. To invest into
Indian market a lot of analysis has to be made as there are different religion, language, culture and
tradition of people. This can be done only by the big companies and not the small business can enter into
the Indian market.

The forecast for this business requires a huge knowledge about the particular market.