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. Usually, private companies undertake such transactions for profit; governments undertake them for profit and for political reasons.[1] It refers to all those business activities which involve cross border transactions of goods, services, resources between two or more nations. Transaction of economic resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc.[2] A multinational enterprise (MNE) is a company that has a worldwide approach to markets and production or one with operations in more than a country. An MNE is often called multinational corporation (MNC) or transnational company (TNC). Well known MNCs include fast food companies such as McDonald's and Yum Brands, vehicle manufacturers such as General Motors, Ford Motor Company and Toyota, consumer electronics companies like Samsung, LG and Sony, and energy companies such as ExxonMobil, Shell and BP. Most of the largest corporations operate in multiple national markets. Areas of study within this topic include differences in legal systems, political systems, economic policy, language, accounting standards, labor standards, living standards, environmental standards, local culture, corporate culture, foreign exchange market, tariffs, import and export regulations, trade agreements, climate, education and many more topics. Each of these factors requires significant changes in how individual business units operate from one country to the next. The conduct of international operations depends on companies' objectives and the means with which they carry them out. The operations affect and are affected by the physical and societal factors and the competitive environment. Operations

Objectives: sales expansion, resource acquisition, risk minimization

Means

Modes: importing and exporting, tourism and transportation, licensing and franchising, turnkey operations, management contracts, direct investment and portfolio investments. Functions: marketing, global manufacturing and supply chain management, accounting, finance, human resources Overlaying alternatives: choice of countries, organization and control mechanisms

Physical and societal factors

Political policies and legal practices Cultural factors Economic forces Geographical influences

Competitive factors

Major advantage in price, marketing, innovation, or other factors. Number and comparative capabilities of competitors Competitive differences by country Local taxes

There has been growth in globalization in recent decades due to the following eight factors:

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. 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 because:

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.

Managers in international business must understand social science disciplines and how they affect all functional business fields.

Multinational Companies in India (MNC)

ABOUT MULTINATIONAL COMPANIES As the name suggests, any company is referred to as a multinational company or corporation (M. N. C.) when that company manages its operation or production or service delivery from more than a single country. Such a company is even known as international company or corporation. As defined by I. L. O. or the International Labor Organization, a M. N. C. is one, which has its operational headquarters based in one country with several other operating branches in different other countries. The country where the head quarter is located is called the home country whereas, the other countries with operational branches are called the host countries. Apart from playing an important role in globalization and international relations, these multinational companies even have notable influence in a country's economy as well as the world economy. The budget of some of the M. N. C.s are so high that at times they even exceed the G. D. P. (Gross Domestic Product) of a nation. These are not the sole prior causes of the Nokia, Vodafone, Fiat, Ford Motors and as the list moves on- to flourish in India. As the basic economic data suggest that after the liberalization in 1991, it has brought in hosts of foreign companies in India and the share of U.S shows the highest. They account about 37% of the turnover from top 20 companies that function in India.

WHY ARE MULTINATIONAL COMPANIES IN INDIA?

There are a number of reasons why the multinational companies are coming down to India. India has got a huge market. It has also got one of the fastest growing economies in the world. Besides, the policy of the government towards FDI has also played a major role in attracting the multinational companies in India. For quite a long time, India had a restrictive policy in terms of foreign direct investment. As a result, there was lesser number of companies that showed interest in investing in Indian market. However, the scenario changed during the financial liberalization of the country, especially after 1991. Government, nowadays, makes continuous efforts to attract foreign investments by relaxing many of its policies. As a result, a number of multinational companies have shown interest in Indian market.

PROFIT OF MNCS IN INDIA

It is too specify that the companies come and settle in India to earn profit. A company

enlarges its jurisdiction of work beyond its native place when they get a wide scope to earn a profit and such is the case of the MNCs that have flourished here. More over India has wide market for different and new goods and services due to the ever increasing population and the varying consumer taste. The government FDI policies have some how benefited them and drawn their attention too. The restrictive policies that stopped the company's inflow are however withdrawn and the country has shown much interest to bring in foreign investment here. Besides the foreign directive policies the labour competitive market, market competition and the macro-economic stability are some of the key factors that magnetize the foreign MNCs here. Following are the reasons why multinational companies consider India as a preferred destination for business:

Huge market potential of the country FDI attractiveness Labor competitiveness Macro-economic stability

Advantages of the growing MNCs to India

There are certain advantages that the underdeveloped countries like and the developing countries like India derive from the foreign MNCs that establishes. They are as under:

Initiating a higher level of investment. Reducing the technological gap The natural resources are utilized in true sense. The foreign exchange gap is reduced Boosts up the basic economic structure.

Disadvantages of MNCs

Roses does not come without thrones. Disadvantages of having an MNCs in a developing country like India are as under Competition to SMSI Pollution and Environmental hazards Some MNCs come only for tax benefits only Exploitation of natural resources Lack of employment opportunities Diffusion of profits and Forex Imbalance

 Working environment and conditions Slows down decision making Economical distress

TOP MNCS IN INDIA

The country has got many M. N. C.s operating here. Following are names of some of the most famous multinational companies, who have their headquarters of operational branches based in the nation: IBM: IBM India Private Limited, a part of IBM has been operating from this country since the year 1992. This global company is known for invention and integration of software, hardware as well as services, which assist forward thinking institutions, enterprises and people, who build a smart planet. The net income of this company post completion of the financial year end of 2010 was $14.8 billion with a net profit margin of 14.9 %. With innovative technology and solutions, this company is making a constant progress in India. Present in more than 200 cities, this company is making constant progress in global markets to maintain its leading position. Microsoft: A subsidiary, named as Microsoft Corporation India Private Limited, of the U. S. (United States) based Microsoft Corporation, one of the software giants has got their headquarter in New Delhi. Starting its operation in the country from 1990, this company has got the following business units:

Microsoft Corporation India (Pvt.) Limited (Marketing Division) Microsoft Global Services India Microsoft Global Technical Support Centre Microsoft India Development Center Microsoft IT Microsoft Research India

The net income of Microsoft Corporation grew from $ 14, 569 million in 2009 to $ 18, 760 million in 2010. Working in close association with all the stakeholders including the Government of India, the company is committed towards the development of the Indian software as well as I. T. (Information Technology) industry. Nokia Corporation: Nokia Corporation was started in the year 1865. Being one of the leading mobile companies in India, their stylish product range includes the following:

Normal mobile handsets Smartphones Touch screen phones Dual sim phones Business phone

The net sales of the company increased by 4 % in the last financial year with sales of EUR 42.4 billion as compared to 2009's EUR 41 billion. Over the past few years, this company in India has been acquiring companies, which have got new and interesting competencies and technologies so as to enhance their ability of creating the mobile world. Besides new developments to fight against mineral conflicts, they are even to set up Bridge Centers in the country for supporting re-employment. Their first onsite for the installation of renewable power generation are already in place. PepsiCo: PepsiCo. Inc. entered the Indian market with the name of PepsiCo India from the year 1989. Within a short time span of 20 years, this company has emerged as one of the fast growing as well as largest beverage and food manufacturer. As per the annual report of the company in the last business year, the net revenue of PepsiCo grew by 33 %. By the year 2020, this food manufacturing company intends to triple their portfolio of enjoyable and wholesome offerings. The expansion of their Good-For-You portfolio is believed to be assisting the company in attaining the competitive advantage of the growing packaged nutrition market in the world, which is presently valued at $ 500 billion. Ranbaxy Laboratories Limited: Ranbaxy Laboratories Limited, one of the biggest pharmaceutical companies in India, started their business in the country from the year 1961. The company made its public appearance in 1973 though. Headquartered in this nation, this international, research based, integrated pharmaceutical company is the producer of a huge range of affordable cum quality medicines that are trusted by both patients and healthcare professionals all over the world. In the business year 2010, the registered global sales of the company was US $ 1, 868 Mn. Successful development of business forms the key component of their trading strategy. Apart from overseas acquisitions, this company is making a continuous endeavor to enter the new global markets, which have got high potential. For this, they are offering value adding products as well. Reebok International Limited: This global brand is a famous name in the field of sports as well as lifestyle products. Reebok International Limited, a subsidiary of Adidas AG, is based in U. S. A. (United States of America) started its operation in 1890s. During the last financial year, Adidas's currency neutralized group sales increased by 9 %. Apart from their alliance with CrossFit that is among the largest contemporary fitness movements, in the current year, Reebok's announcement of its partnership with artist, designer and producer Swizz Beatz reflects its long term future growth. Sony: Sony India is a part of the renowned brand name Sony Corporation, which started their business operation in the year 1946 in Japan. Established in India in November 1994, this company has captured one of the leading positions in the field of consumer electronics goods. By the end of the business year 2010 on 31st March, 2011, the company showed a remarkable increase in the share related to numerous categories. Sony India is planning to invest around INR. 150 crore for the marketing of the activities related to ATL and BTL. As far as Bravia TVs are concerned, they are looking forward to hold their market share of 30 %. In between the last and the current financial year, the

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Tata Consultancy Services: Commonly known as T. C. S., this multinational company is a famous name in the field of I. T. (Information Technology) services, Business Process Outsourcing (B. P. O.) as well as business solutions. This company is a subsidiary of the Tata Group. The first center for software researching was established in the country in 1981 in the city of Pune. Tata Consultancy earned a growth of 8.9 % during the latest quarter of this financial year, which ended on 30th September, 2011. This renowned company is presently looking forward to the 10 big deals that they have received besides the Credit Union Australia's contract as well as Government of Karnataka's INR. 94 crore deal for a total period of 6 years. In this current business year, they are about to employ 60, 000 people to meet their business requirement. Vodafone: Vodafone Group Plc is an international telecommunication company, which has got it's headquarter based in London in the United Kingdom (U. K.). Earlier known as Vodafone Essar and Hutchison Essar, Vodafone India is among the largest operators of mobile networking in the country. The parent company Hutchison started its business in the year 1992 along with the Max Group, which was its business partner in India. Much later in 2011, Vodafone Group Plc decided to buy out mobile operating business of Essar Group, its partner. The turnover of the Vodafone Group Plc after the completion of the last financial year grew to 44, 472 m from 41, 017 m that was the turnover of the business year 2009. Tata Motors Limited: The biggest automobile company in India, Tata Motors Limited, is among the leading commercial vehicles manufacturer in the country. They are one of the top 3 passenger vehicle manufacturers. Established in the year 1945, this company, a part of the famous Tata Group, has got its manufacturing units located in different parts of the nation. Some of their well known products of the company are categorized in the following heads:

Commercial Vehicles Defence Security Vehicles Homeland Security Vehicles Passenger Vehicles

Post completion of the financial year 2010 to 2011, the global sales of the company grew by 24.2 % with sales crossing INR. 1 million.

AMERICAN COMPANIES IN INDIA

India and U.S. have developed strong business relations with each other over the years. The United States has got great influence over Indian business. U.S. is the second largest source of FDI for India. It is also the second largest trade partner of the nation after EU. Not only that, U.S. is the largest services export destination for India as well. In fact, American companies in India form the major part of the foreign companies operating in this country.

WHY ARE AMERICAN COMPANIES IN INDIA?

The biggest reason is the high potential of Indian market and economy. Along with China, India is the only fast-growing country that can make a difference to majority of the companies' bottom lines. One can learn from a simple statistics the reason why American companies are coming down to India. The gross domestic product of U.S. is expected to come down by 0.8% in 2009. On the other hand it is expected that India will grow at 6.6%. Besides, established big brands have already impregnated the U.S. and European markets. But, the Indian market still offers a lot of scopes and spaces for those to grow. India is also a large depository of skilled yet cheap labor. Hence, it becomes easy for the American companies to optimize their productions in India.

American Companies Journey

The American companies in India started their dream runs during 1990 when they reaped huge profits. The companies have seen double digit year-on-year growth in various sectors like Technology, Colas, Agriculture, Automobiles, Equipments, Finance and Banking. According to the American Chamber of Commerce in India, their membership base has soared up from zero in 1992 to more than 300 till date. However, the major success in terms of investment and growth came in technology sector. Many of the top IT companies in India are American. In fact, out of the top 20 IT companies operating in India, 9 are from the U.S. These American companies in India account for about 37% of the turnover of the top 20 firms operating in India. However the growth of the American companies in India is not limited to IT or manufacturing only. India has a vast market of agriculture, which employs almost 70% of the population either directly or indirectly. 'Monsanto', an agro-chemical giant, is

currently working on GM modified crops and fertilizers. It has also done well in forging sector also. The American retail giant 'Wal-Mart' has gone into collaboration with Bharti enterprise in the Indian retail sector.

List of American Companies in India

There are a number of American companies in India which have been doing business successfully over the years. Following are some of the popular American companies in India:

Agilent Agro Tech American Express Amway Avaya Caltex Caterpillar CB Richard Ellis Cisco Citigroup Coca Cola Cognizant Colgate Palmolive CSC Cummins Discovery Dupont EDS Eli Lilly Emerson Electric EXL Federal Express Ford Franklin Templeton GE General Motors Gillette Honeywell India I BM Intel Johnson & Johnson JPMorgan Kellogg India Kimberly Clark

Kodak McDonalds Metlife India Microsoft Morgan Stanley New York Life Ogilvy and Mather Oracle Pepsico Pfizer Pizza Hut Sun Microsystems Texas Tecumseh Timex Tyco UPS India Visteon Whirlpool Xerox Modicorp

For further information on American Companies in India please go through the following links.

COMPANIES OUTSOURCING TO INDIA

Business outsourcing in India has gradually become one of the well known business sectors in the country. The main reasons behind the growth of the industry are the economic liberalization policies undertaken by the government and the globalization. To cater to the growing demand of consumerism and the rising market, more and more foreign companies are outsourcing to India. The availability of skilled manpower and cheap labor rates have attributed to the growth of the outsourcing business in India. The outsourcing business has also become one of the main generators of employment for the youths and the freshers. According to recent surveys, around 0.7 million people work in the business outsourcing sector with an average wage growth of around 10 to 15 % annually.

Reasons why more companies outsource to India

There are a number of reasons why more and more foreign companies are starting outsourcing businesses in India. Some of the main advantages of India as an outsourcing destination are flexibility, technological competence, quality output, cost control facilities, time-to-market and so on. According to recent surveys, around 82 of the major US companies have said that India is their first choice for outsourcing. With the development of the economy, the number is expected to rise. Renowned entrepreneurs like Bill Gates have hailed India as an IT superpower with immense expertise and competence. Some of the major segments and assignments that are outsourced by most companies to India are:

Business Process Re-engineering E-Commerce System Migration Maintaining Legacy Systems System Integration

Apart from these, other specialized jobs are also done according to the skill set and the type of output the company is looking for.

Leading companies which outsource to India

There are numerous companies which provide outsourcing assignments to India. Most of

these companies belong to the market segments and industries such as finance, banking, information technology, and analytics and so on. Some of the leading companies are: Mastek Limited: It is a premier P-CMM Level 3 and SW-CMM Level 5 company which provides outsourcing in a number of segments like finance, banking, analytics, and logistics and so on. It has been in operations since two decades. Orcim Soft, Inc.: It offers a major portion of outsourcing jobs to India in various sectors. The main areas of expertise include software development, solutions in information technology and so on. The company has offices in various countries like United Kingdom, US and so on. In addition to these, there are lots of other renowned companies outsourcing to India. Well known global banks and financial organizations like CITIBANK, JP Morgan, GE Capital and lots more are outsourcing their products and services to India. In case of software solutions, IT giants like IBM, Microsoft and others provide outsourcing solutions. These companies even have their offices in various cities of India. Some of the main domestic players in the industry of outsourcing are Wipro, Infosys and so on. Some more well known companies which outsource to India are:

Oracle Dell Computer Support Hewlett Packard Schlumberger ATT Wireless Texas Electronics TransUnion Rand McNally

All these companies have tie ups with renowned BPOs in the country or have their own offices from where the outsourcing work is done.

THE STAGES OF INTERNATIONALIZATION Stage 1: Domestic Operations The firms market is exclusively domestic.

Stage 2: Export Operations The firm expands its market to include other countries, but retains production facilities within domestic borders. Stage 3: Subsidiaries or Joint Ventures The firm physically moves some of its operations out of the home country. Stage 4: Multinational Operations The firm becomes a full-fledged multinational corp. (MNC) with assembly and production facilities in several countries and regions of the world. Some decentralization of decision making is common, but many personnel decisions are still made at corp. headquarters. Stage 5: Transnational Operations Firms that reach this stage are often called transna-tional because they owe little allegiance to their country of origin. Operations are highly decentralized, with each busi-ness unit free to make personnel decisions with very loose control from corp. headquarters

stage 1 domestic company stage 2 international company :where it adopts international strategies Stage 3 multinational company stage 4 global company stage 5 transnational company