Professional Documents
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INTRODUCTION TO
INTERNATIONAL
BUSINESS/MARKETING
The importance of studying
IB/IM
forces
Local employment in management, Career in
international organizations
Chapter Objectives
Understanding the dramatic internationalization of markets.
Understand the various names given to firms that have
substantial operations in more than one country.
Understanding the effect of the Internet on many international
business firms.
Understanding the drivers that are leading international firms
to the globalization of their operations.
Comprehend why international business differs from
domestic business.
Describe the three environments--domestic, foreign, and
international-- in which an international company operates.
Marketing Concepts, Principles &
Importance
Marketing is series of activities leading to an exchange
transaction between a seller and a buyer at a profit. It
centers on an organization's efforts to satisfy customer
wants and needs with products and services that offer
competitive value
Global Marketing differs from Local marketing interms
of its scope of activities and it involves understanding of
specific concepts, considerations and applying skillful
strategies to ensure success in Global markets
Marketing Concepts, Principles,
Importance & Orientations
Marketing Mix (Product, Price, Place &
Promotion) are marketer’s primary tools for
marketing activities
Other P’s like People, Process, Physical
Evidence (packing) & Probe (Research) were
added to give Customer – Value, Differential
advantage over competitor by Focusing or
concentrating resources and efforts on customer
needs and wants
History of international Business
• International business as a business
practice began as early as:
• 1600 British East India Company
• shipping routes to the east opened by
Dutch Companies in 1590
• American colonial traders of the 1700's
• Singer Sewing Machine 1868 (Scotland)
Discussion 1
A Global Company
attempts to standardize and integrate
operations worldwide in all functional areas.
International Business
Terminologies
The United Nations uses transnational
instead of multinational to describe a firm
doing business in more than one country.
Business people define a transnational as a
company formed by a merger of two firms
of approximately the same size that are
from two different countries.
International Business
Terminology
Four of the largest transnationals
Unilever (Dutch-English, food)
Shell (Dutch-English, oil)
Pharmacia & Upjohn (Swedish-American,
pharmaceuticals)
ABB (Swedish-Swiss, electrotechnical, power
generating)
Managerial Behavior Models
In international business, an
international manager can apply any of
the following to a concept or a technique
employed in domestic operations.
Transfer it intact (ethnocentrism)
Adapt it to local conditions (polycentrism)
Not use it overseas
(geocentrism/regiocentrism)
TERMINOLOGIES:
MANAGERIAL ATTITUDES
• Ethnocentrism:
preference for putting home-country people in key
positions everywhere in the world rewarding them more
handsomely for work.
Considers Home Country as Superior & sees similarities in
foreign countries
• Polycentrism:
the attitude that cultures of various countries are quite
dissimilar; it is the belief that the natives would perform
better than the people from the parent company. Each
host country is unique, sees differences in foreign
countries
TERMINOLOGIES:
MANAGERIAL ATTITUDES (CONT.)
Geocentrism/Regiocentrism:
the attitude of integrating diverse regions
through a global systems approach to
decision making. The best place of
production, distribution and management is
chosen. World view; sees similarities and
differences in home and host countries.
Regiocentrism used for countries included in
North American Free Trade Agreement
(NAFTA) – the US, Canada & Mexico
Globalization
Globalization is a process of developing an
integral market for the global customers. It is
the ultimate stage in the growth of business and
world is considered as potential market.
Globalization must be taken for granted. There
will be only one standard for corporate success
‘International market share’. The winning
corporations will win by finding markets all over
the world.
Forces behind Globalization
• Political forces
• Reduction of barriers to trade
International Factors
Domestic Environment
Composed of all the uncontrollable forces
originating in the home country that
surrounds and influences the life and
development of the firm.
Foreign Environment
Operates differently than the domestic
environment for the following reasons
Different force values
Changes difficult to assess
Forces interrelated
International Environment
The International Environment is
the interaction between the domestic
environmental forces and the foreign
environmental forces.
the interaction between the foreign
environmental forces of two countries
when an affiliate in one country does
business with customers in another.
Forces in the Environment
Environment
The sum of all forces surrounding and
influencing the life and development of
the firm.
Forces can be classified as external or
internal.
External forces are uncontrollable
Internal forces are controllable
Internal Environmental Forces
Factors of production
Capital, raw material, and people
Activities of the organization
Personnel, finance, production, and
marketing
External Environmental Forces
Competitive Physical
Distributive Political
Economic Sociocultural
Socioeconomic Labor
Financial Technological
Legal
Discussion 4
What is the Impact of
Economy, Social, Culture,
Political, Legal & Regulatory
Environment on International
Marketing/Global Business?
ENVIRONMENTAL
FORCES INFLUENCES
MARKETING DECISIONS
Economic Forces
Political, Legal, and Regulatory Forces
Technological Forces
Sociocultural Forces
Competitive Forces
For Marketing Mix – All P’s
Economic Environment – The World
Economy – An Overview
Capital Movement over Trade as driving
force
Severance of Production from employment
Supremacy of world economy over
national economies
Growth of e-commerce diminishing
national barriers
Economic Environment –Economic
Allocation system
Market Allocation system (Capitalist) –Based on
People need and want or goods of customers choice
–Triad countries – US, EU & Japan
Command Allocation system (Socialist) – Command
or Central plan allocation – economies of shortages –
Cuba, Vietnam & Laos
Mixed System –No pure market or command
allocation – India etc
Basis of Degree of Economy Freedom – Free (HK,
S’pore, UK), Mostly Free (Canada, UAE), Mostly
unfree (China) & Repressed (Iraq, N. Korea)
Economic Environment – Stages of
Market Development – Based on Per
Capita Income, (Income & PPP)
High Income Countries >$9656 –US/EU
Upper-Middle Income Countries >$3126
but<$9655 -Malaysia
Lower Middle Income countries >$785 but
<$3125 - Indonesia
Low Income countries <$785 – India
Basket Cases –Dangerous areas with socio-eco-
political problems like Ethiopia, Mozambique,
Iraq, Afghanistan
Economic Environment –Marketing &
Economic Development
Strategy based on Country to Country
Economic Risk-1997 South East Asian Currency Crisis
Balance of Trade/Payments
Trade Patterns – Merchandise Trade, Services Trade
International Trade Alliances –Degree of Economic
Cooperation through:
Free Trade Area, Customs Union, Common Market &
Economic Union
The World Trade Organization and GATT
Regional Economic Organizations- EU, NAFTA, ASEAN,
SAARC etc
Social and Cultural Environment
What is a Culture? “A Society’s programming
of the mind”
Basic aspects of Society and Culture –one
generation to next
The search for Cultural Universals:-
The Anthropologist’s Standpoint
High-and Low-context cultures
Communication and Negotiation
Social Behaviour –Intercultural socialization
Social and Cultural Environment-
contd..
Analytical approaches to cultural Factors:
Maslow’s Hierarchy of needs
Hofstede’s cultural typology
The Self-reference Criterion and Perception
Environmental Sensitivity
Social and Cultural Environments: Impact on
marketing Industrial products
Social and Cultural Environments: Impact on
marketing Consumer products
Suggested Solutions and Training in Cross-Cultural
competency
The Political, Legal and Regulatory
Environments of Global Marketing
The Political Environment:
Nation-states and sovereignty
Political Risk, Taxes
Dilution of Equity Control
Expropriation
International Law:
Common Versus Code Law
The Political, Legal and Regulatory
Environments of Global Marketing
Sidestepping Legal Problems : Important Business Issues
Establishment of Trade
Jurisdiction
Intellectual property: Patents and trademarks
Antitrust Laws
Licensing and Trade Secrets
Bribery and corruption: Legal and ethical issues
Confliction Resolution, Dispute Settlement and Litigation –
Alternatives to litigation for dispute settlement
The Political, Legal and Regulatory
Environments of Global Marketing
The Regulatory Environment
The European Union
The WTO and its role in International
Trade
Ethical Issues like child labour etc
By -
Outlandish deepak
….for
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