Professional Documents
Culture Documents
MANAGEMENT
UNIT I
Antarctica
Asia
Europe
North America
South America
IMF IBRD
Versatile Business School, Egmore, Chennai - 600 008
EVOLUTION OF INTERNATIONAL BUSINESS
Regional Integration
Declining Trade Barriers
Declining Investment Barriers
Growth in FDI
Strides in Technology
Growth of MNCs
Advantages
Domestic International
• Low Price
Business Business
• Variety of Goods
• High Living Standards
• Economic Growth
Approaches Influence • Competitive Advantages
• Ethnocentric Export
• Polycentric Direct Investment
• Regiocentric Licensing Problems
• Geocentric Franchising • Political risk
Turnkey Projects • Foreign Debt
Joint Venture • Exchange Instability
Mergers and Acquisition • High Cost
INTERNATIONAL BUSINESS MODEL Versatile Business School, Egmore, Chennai - 600 008
INFLUENCES
Ethnocentric
Polycentric
Regiocentric
Geocentric
Subsidiaries consider
Companies view the
regional environment
entire world as a single
for policy/strategy
unit
formulation
Indirect
Direct Exporting Joint Ventures
Exporting
Franchising Licensing
arrangements arrangements
with foreign with foreign
companies companies
Management Contract
Contracts Manufacturing
Wider market
Reduced risks
Large-scale economies
Cultural transformation
Political factors
Exchange instability
Entry requirements
Corruption
Technological pirating
Quality Maintenance
FEATURES:
REASONS:
REASONS:
Liberalization
Avoid restrictions
Acquisition
Joint ventures
Technological collaboration
INTERNAL EXTERNAL
Organisational
Organisational Production Finance Marketing HR R&D
Structure
Structure
CULTURE
Prescriptive
Socially Shared
Learned
Subjective
Cumulative
Dynamic
Low-context cultures
High-context culture
Monochromic
Polychromic
Communication
Culture of friendship
Buying and selling goods and services from any country to any country in the world
Establishing manufacturing and distribution facilities in any part of the world based
on the feasibility and viability rather than national consideration
Sourcing the factors of production and inputs like raw materials, machinery,
finance, human resources , technology and managerial skills from entire world
Setting the mind and attitude to view the entire globe as a single market
The foreign companies allow the companies of various other countries adopt their
technologies on royally payment basis
Tariff bargaining
Bargaining on non- tariff trade barriers
Elimination of quantum restriction
Settlement of disputes between contracting parties
Ministerial
conference
General council
Secretaria Committe
Council Council Committee Committe
t e e
For Council For trade On trade
Of the On On‘
Trade For Related And
WTO Balance Budget
In Trade Aspects of developme Of Finance
goods In Intellectua nt And
Payment
services l admin
restrcitio
rights
n
All the member countries of WTO are the representative of the ministerial
conference
Council for trade in service: This council overseas the implementation of all the
agreement relating to trade in services
Council for trade related aspects of intellectual property rights: This council
overseas the implementation
Committee on budget, finance and admin: this committee deals with the issues
relating to the budget, finance and administration of WTO
• MNC,s consider opportunities throughout the globe though they do the business
in the countries
• The international operations are integrated into the cooperation’s overall business
Protection
Tap global
Reduce cost
Overcome tariffs
Technological advantages
Market superiorities
Financial superiorities
Technological superiorities
Product innovation
Get the customer for the country’s out dated exploitation of natural resources
technology
Versatile Business School, Egmore, Chennai - 600 008
Role of MNC in developing countries
Resource available in developing countries are insufficient to develop the technology and
thereby industrialization
Local manpower, materials, capital etc cannot be optimally utilized by the developing
countries on their own
Developing countries, though they produces goods and services on their own by importing
technology and materials, they fail in marketing the product due to severe competitions
• Production area
• Marketing area
• Finance area
• Environmental issues
• Competing
Free Trade Area: Group of countries agreeing to abolish all trade restrictions
Customs Union: (i) Member countries abolish all restrictions (ii) They adopt a
uniform commercial policy of barriers and restrictions
Common Market: (i) Member countries abolish all restrictions (ii) They adopt a
uniform commercial policy of barriers and restrictions (iii) They allow free
movement of human resource and capital
Economic Union: i) Member countries abolish all restrictions (ii) They adopt a
uniform commercial policy of barriers and restrictions (iii) They allow free
movement of human resource and capital (iv)Achieve uniformity in monetary and
fiscal policy
Evolutionary stages
Abolition of all obstacles for movement of persons, services and capital among member
countries.
OBJECTIVES
FUNCTIONS
Agriculture
Environment
Rural Development
Communications
The original name of ESCAP was Economic commission for Asia and far east
West: Azerbaijan
North: Mangolia
APEC has 21 members referred as ‘Member Economies’ which accounts for more
than a third of the world’s population(2.6 billion people), approximately 60% of
world’s GDP and about 47% of world trade.
The treaty signed by Argentina, Brazil, Paraguay and Uruguay on March 26, 1991
created Mercosur.
OBJECTIVES
Free transit of transportation goods, services and factors between the member states.
Borrowers
Eurocurrency market
Eurocredit market
Eurobond market
The system for establishing exchange rates has evolved over time.
From 1876 to 1913, each currency was convertible into gold at a specified rate
This was followed by a period of instability, as World War I began and the
Great Depression followed.
The 1944 Bretton Woods Agreement called for fixed currency exchange rates.
The Eurocurrency market consists of banks (called Eurobanks) that accept deposits
and make loans in foreign currencies
The deposit can be placed in a foreign bank or in the foreign branch of a domestic
bank
In the 1960s and 70s, the Eurodollar market, or what is now referred to as the
Eurocurrency market, grew to accommodate increasing international business.
Bonds denominated in the currency of the country where they are placed but issued
by borrowers foreign to the country are called foreign bonds or parallel bonds.
Bonds that are sold in countries other than the country represented by the currency
denominating them are called Eurobonds.
In addition to issuing stock locally, MNCs can also obtain funds by issuing stock in
international markets.
This will enhance the firm’s image and name recognition, and diversify the
shareholder base. The stocks may also be more easily digested.
Note that market competition should increase the efficiency of new issues.
NASDAQ was also the first stock market in the United States to start
trading online, highlighting NASDAQ-traded companies
In 1992, it joined with the London Stock Exchange to form the first
intercontinental linkage of securities markets
The NASDAQ has over the years put in place a series of stringent standards
that companies must meet before being included in the index. Those standards
include the following:
Being listed exclusively on NASDAQ in either the Global Select or Global Market
tiers.
The Bank's functions are segmented into several operating groups including:
Project Finance / Trade Finance Group handles the entire range of export credit
services such as supplier's credit, pre-shipment Agri Business Group, to spearhead the
initiative to promote and support Agri-exports. The Group handles projects and export
transactions in the agricultural sector for financing.
Small and Medium Enterprise: The group handles credit proposals from SMEs under
various lending programmes of the Bank.
markets.
An outbreak of war or civil war may block or delay payment for goods
exported.
Negotiation
Production
Offer and of Documents Obtaining
and clearance
Receipt of and various
Preliminaries of the Shipment
confirmed realization of export
products for
orders export incentives
exports
proceeds
Registration: Register with Export promotion councils (EPC), Sales tax authorities
etc.,
Inquiry is the request made by a prospective importer regarding his wish to import
certain goods.
The forms used should be f.o.b., c and c.i.f ., f (Cost, Insurance and
Freight (CIF) vs. Free On Board (FOB)) or internationally accepted
form.
Conditions of Sale:
Escalation Clause: Prices may increase before delivery of the goods due to
increase in cost of inputs. Hence, seller may include escalation clause
Other obligations:
Confirmed Order: The buyer sends the confirmed order to the exporter by signing
the duplicate copy of the invoice which becomes the confirmed order
The exporter should arrange for packing and marking of goods as per
International standards.
Exporters Encyclopedia
AR-4 forms
Proforma Invoice
Export License
Certificate of Inspection
Versatile Business School, Egmore, Chennai - 600 008
CUSTOMS CLEARANCE
Packing list
AR-4 Form:
The clearances can be 'under claim for rebate of duty' or 'under bond.'
Form of Declaration:
Value of goods
Port of Destination
Versatile
Names ofSchool,
Business the Egmore,
ship Chennai
and -its
600 agent
008
Carting Order: Once the good for exports is ready and shipping order is
available, the superintendent of the concerned port trust gives permission
for physical movement of goods into port.
Let Ship:
Bill of lading
Submission of documents and process of getting payment through bank is called ‘Negotiating the
Documents’.
Documents include:
Bill of lading
Certificate of origin
GR-I Form
Letter of Credit
Invoice
Shipping Bill
Bill of Lading
Excise Duty Refund: Eligible for refund of paid at the beginning. Bonds can also be
executed without making payment.