International business deals with:-

“ the transactions that take

place between the citizens and corporate of different country”

Process of marketing goods and services in the international

market

Exploring marketing opportunities in the overseas market

International business is a term used to collectively describe all commercial transactions

(privateand governmental, sales, investments, logistics,and transportation) that take place between two or
more regions, countries and nations beyond their political boundery. Usually, private companies
undertake such transactions for profit; governments undertake them for profit and for politicalreasons.[1] It
refers to all those business activities which involves 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.
International Business in India
International Business in India looks really lucrative and every passing day, it is coming up with only more
possibilities. The growth in the international business sector in India is more than 7% annually. There is scope for
more improvement if only the relations with the neighboring countries are stabilized. The mind-blowing performance
of the stock market in India has gathered all the more attention (in comparison to the other international bourses).
India definitely stands as an opportune place to explore business possibilities, with its high-skilled manpower and
budding middle class segment.

With the diverse cultural setup, it is advisable not to formulate a uniform business strategy in India. Different parts of
the country are well-known for its different traits. The eastern part of India is known as the 'Land of the intellectuals',
whereas the southern part is known for its 'technology acumen'. On the other hand, the western part is known as the
'commercial-capital of the country', with the northern part being the �hub of political power'. With such diversities in
all the four segments of the country, international business opportunity in India is surely huge.
Sectors having potential for International business in India

1. Information Technology and Electronics Hardware.

2. Telecommunication.
3. Pharmaceuticals and Biotechnology.
4. R&D.
5. Banking, Financial Institutions and Insurance & Pensions.
6. Capital Market.
7. Chemicals and Hydrocarbons.
8. Infrastructure.
9. Agriculture and Food Processing.
10. Retailing.
11. Logistics.
12. Manufacturing.
13. Power and Non-conventional Energy.

Sectors like Health, Education, Housing, Resource Conservation & Management Group, Water Resources,
Environment, Rural Development, Small and Medium Enterprises (SME) and Urban Development are still not tapped
properly and thus the huge scope should be exploited.

To foster the international business scenario in India, bodies like CII, FICCI and the various Chambers of Commerce,
have a host of services like

1. These bodies work closely with the Government and the different business promotion organizations to infuse
more business development in India.
2. They help to build strong relationships with the different international business organizations and the
multinational corporations.
3. These bodies help to identify the bilateral business co-operation potential and thereafter make apt policy
recommendations to the different overseas Governments.
4. With opportunities huge, the International Business trend in India is mind boggling. India International
Business community along with the domestic business community is striving towards a steady path to be the
Knowledge Capital of the world.

It was evident till a few years back that India had a marginal role in the international affairs. The image was not bright
enough to be the cynosure among the shining stars. The credit rating agencies had radically brought down the
country's ratings. But, as of now, after liberalization process and the concept of an open economy - international
business in India grew manifold. Future definitely has more to offer to the entire world. 

Globalization
What is Globalization?
 
Globalization is a term that includes a wide range of social and economic variations. It can encompass topics like the
cultural changes, economics, finance trends, and global market expansion. There ought to be positive and negative
effects of globalization - it all comes as a package. Globalization helps in creating new markets and wealth, at the
same time it is responsible for extensive suffering, disorder, and unrest. The great financial crisis that just happened
is the biggest example of how negative globalization can turn. It clearly reveals the dangers of an unstable,
deregulated, global economy. At the same time, this gave rise to important global initiatives, striving towards
betterment. Globalization is a factor responsible for both repression and the social boom. 

What happens when there is a growing integration of economies across the globe? Majorly there have been positive
impacts of this global phenomenon - through liberalization, privatization and globalization (LPG). Due to globalization,
there has been significant flow of inward foreign direct investment. MNCs are getting a chance to explore various
different markets across economies and explore the untapped potential. 

Globalization and India

India's economy opened up during the early nineties. The policy measures on the domestic front demanded that
there was a requirement of multinational organizations to set up their offices here. The market became more open
and the economy started responding to the external (global) market. Due to globalization, contacts have been
developed all across the globe, with the pace of integration dramatically increasing. 

Impact of Globalization

It was in July 1991, when foreign currency reserves had tumbled down to almost $1 billion; inflation was at a soaring
high of 17%, highest level of fiscal deficit, and foreign investors loosing confidence in Indian Economy. With all these
coupling factors, capital was on the verge of flying out of the country and we were on the brink of become loan
defaulters. It was at this time that with so many bottlenecks at bay, a complete overhauling of the economic system
was required. Policies and programs changed accordingly. This was the best time for us to realize the importance of
globalization. 

Measures of Globalization

1. Devaluation: The first initiative towards globalization had been taken the moment there was an
announcement of devaluating the Indian currency by a hoping 18-19% against all the major global
currencies. This was a major initiative in the international foreign exchange arena. The Balance of payment
crisis could also be resolved by this measure.
2. Disinvestment: The core elements of globalization are privatization and liberalization. Under the
privatization scheme, bulk of the public sector undertakings have been/ and are still being sold to the private
sector. Thus the concept of PPP (public private partnership) came up.
 3. Allowing Foreign Direct Investment (FDI): Allowing FDI inflows is a major step of globalization. The
foreign investment regime has been quite transparent and thus the economy is getting boosted up. Various
sectors were opened up for liberalizing the FDI regime.

Is globalization delivering all the desired results to the masses? Or only a few can feel the benefits of globalization?
Figures have out rightly proved that the global average per capita income showed a strong surge throughout the 20th
century but the income gap between rich and poor countries have not been bridged for many decades now. The
ultimate inference being that globalization hasn't shown positive results. 

History of Globalization
Globalization is mainly a socio-economic term which is nowadays synonymous with the economic
development of a country. In simple terms, it is a continuous process through which different societies,
economies, traditions and culture integrate with each other on a global scale through the means of
communication and interchange of ideas. By having an idea of the history of globalization, one will be able
to properly understand the causes which led to such social and economic change. 
Alexander the Great forges eastward link with Chandragupta Maurya for overland routes between the
Mediterranean, Persia, India, and Central Asia. During the 1st century CE the trans-world trade makes its
first major appearance in China under the Han dynasty and successfully established trade relations with
Asian and European countries. The period from 650-850 AD records the expansion of Islam and trade
relations with the west Mediterranean region with the Indian sub-continent. The Rise of Genghis Khan during
1100 AD gave rise to the integration of overland routes across Eurasia. The 1650s marks the expansion of
the slave trade and it sustained the expansion of Atlantic Economy, giving birth to integrated economic and
industrial systems across the Ocean. The period from 1776 to 1789 AD marks the US and French
Revolutions and the creation of modern state as a fall-out of military and business interests. These
integrated empires expand during the industrial revolution. The eighteenth century marks the merging of
the modernity with globalization and it also marks the foundation for the creation of international trade law.

Early history of globalization

According to most scholars and researchers, it is the modern age which led to the origin of globalization.
In this age, wide spread development took place in the field of infrastructure and connectivity. This led
to more interaction between the nations and sharing of ideas, culture and tradition took place. All these
put a direct impact on the process of globalization. In the economic scenario, more trade links started
taking place between countries on a global scale which influenced global as well as domestic economies
to a great extent. 

However, there are some scholars who point out that the origins of the history of globalization can be
traced back to the ancient civilizations. Scholars who advocate this theory say that the example of the
earliest forms of globalization is the trade links between the Sumerian civilization and the Indus Valley
Civilization in third millennium B.C. In fact, after this age, there are numerous instances where trade
links were established between various countries like India, Egypt, Greece, and Roman Empire and so
on. There were regular business links between the Parthian Empire, Roman Empire and Han Dynasty.
The popularity of the trade relations led to the development of various trade routes like Silk Road and so
on.

Globalization in the medieval age

The Islamic period in the medieval era is an important epoch in the history of globalization. This was
when the Jewish and the Muslim traders started going to various parts of the world to sell various items.
This led to a blend of ideas, traditions and customs. 

In China, the first postal service was introduced and paper was invented. This led to better knowledge
sharing. As more and more people started traveling to various countries across the world, it led to more
communication between people and intermingling of languages. Explorers like Columbus and Vasco Da
Gama sailed through the oceans in search of new countries and establish trade links with them or to
make other countries their colonies. All these factors were a major cause for the development of the pre-
globalization era. 

The medieval period was the age of discovery. It was in this period that Africa and Eurasia engaged in
cultural and economic exchange between them. Gradually, this led to the growth of colonies in various
parts of Africa, Asia and Latin America. As a result, there was constant blend of the ideas, languages,
rituals and customs between the natives and the foreign inhabitants. In fact, this system of colonization
put a deep impact on agriculture, trade, ecology and culture on a global scale.

Globalization between the pre modern periods to modern period

The industrial revolution in the 19th century was one of the major periods in the history of globalization.
Due to the industrial revolution, there was a significant increase in the quantity and quality of the
products. This led to higher exports and better trade and business relations. Due to better products and
colonization, lots of countries across the world became the consumers of the European market. 

The phase of pre globalization perhaps came to an end after the First World War was fought. The war put
a significant adverse effect on the economic scenario and it led to the Great Depression and gold
standard crisis in the later part of the 1920s and early 1930s.

Globalization in the modern era

Globalization, in the modern sense of the term, came into existence after the Second World War. One of
the main factors for this was the plan by the world leaders to break down the borders for fostering trade
relations between nations. It was also in this period that major countries like India, Sri Lanka, Indonesia
and some countries in South America gained independence. As a result, these countries too started
having their own economic systems and made established trade relations with the rest of the world. The
establishment of the United Nations Organization (UNO) was also a major step in this regard. 

Gradually, the economic scenario of the world strengthened and it led to better trade relations and
communication. Some other factors which have put a positive impact on globalization are:

 Promotion of free commerce and trade

 Abolition of various double taxes, tariffs, and capital controls
 Reduction of transport cost and development of infrastructure
 Creation of global corporations
 Blend of culture and tradition across the countries

Another milestone in the history of globalization is the creation of the World Trade Organization which
led to the growth of a uniform platform to settle trade and commercial disputes. According to economic
surveys, the world exports improved significantly from 8.5% to around 16.2% due to globalization.

India and globalization

The wake of globalization was first felt in the 1990s in India when the then finance minister, Dr
Manmohan Singh initiated the economic liberalization plan. Since then, India has gradually become one
of the economic giants in the world. Today, it has become one of the fastest growing economies in the
world with an average growth rate of around 6-7 %. There has also been a significant rise in the per
capita income and the standard of living. Poverty has also reduced by around 10 %. 

The service industry has a share of around 54% of the annual Gross Domestic Product while the
industrial and agricultural sectors share around 29% and 17% respectively. Due to the process of
globalization, the exports have also improved significantly. 
 Globalization has really out a positive impact on today's economy and it is expected to develop in the
years to come.

Impact of Globalization
Positive impacts of Globalization
 

Globalization is the new catchphrase in the world economy, dominating the globe since the nineties of the

last century. People relied more on the market economy, had more faith in private capital and resources,

international organizations started playing a vital role in the development of developing countries. The

impact of globalization has been fair enough on the developing economies to a certain extent. It brought

along with it varied opportunities for the developing countries. It gave a fillip for better access to the

developed markets. The technology transfer promised better productivity and thus improved standard of

living. 

Negative impacts of Globalization 

Globalization has also thrown open varied challenges such as inequality across and within different nations, volatility
in financial market spurt open and there were worsening in the environmental situation. Another negative aspect of
globalization was that a majority of third world countries stayed away from the entire limelight. Till the nineties, the
process of globalization in the Indian economy had been guarded by trade, investment and financial barriers. Due to
this, the liberalization process took time to hasten up. The pace of globalization did not start that smoothly. 

Economic integration by 'globalization' enabled the cross country free flow of information, ideas, technologies, goods,
services, capital, finance and people. This cross border integration had different dimensions - cultural, social, political
and economic. More or less the economic integration happened through four channels -

1. Trade in goods and services

2. Movement of capital
3. Flow of finance
4. Movement of people

Advantages of globalization 

The gains from globalization can be cited in the context of economic globalization:

 Trade in Goods and Services - From the theoretical aspect, international trade ensures allocating
different resources and that has to be consistent. This specialization in the processes leads to better
productivity. We all know from the economic perspective that restrictive trade barriers in emerging economies
only impede growth. Emerging economies can reap the benefits of international trade if only all the resources
are utilized in full potential. This is where the importance of reducing the tariff and non-tariff barriers crop up.
 Movement of Capital - The production base of a developing economy gets enhanced due to capital
flows across countries. It was very much true in the 19th and 20th centuries. The mobility of capital only
enabled savings for the entire globe and exhibited high investment potential. A country's economic growth
doesn't, however, get barred by domestic savings. Foreign capital inflow does play an important role in the
development of an economy. To be specific, capital flows either can take the form of foreign direct investment
or portfolio investment. Developing countries would definitely prefer foreign direct investment because
portfolio investment doesn't have a direct impact on the productive capacity expansion.

 Financial Flows - The capital market development is one of the major features of the process of
globalization. We all know that the growth in capital and mobility of the foreign exchange markets enabled
better transfer of resources cross borders and by large the global foreign exchange markets improved. It is
mandatory to go in for the expansion of foreign exchange markets and thus facilitate international transfer of
capital. The major example of such international transfer of funds led to the financial crisis - which has by now
become a worrying phenomenon. 

Thus, globalization has the fair and rough share of its impacts and thus we can surely hope for more
advancement in the global economy due to this process. 
Globalization and Liberalization
 Globalization and liberation are directly linked with each other. The first wake of globalization started in
India when the economic liberalization policies were undertaken in the 1990s by Dr Manmohan Singh, the
then Finance Minister of the country. Since then, the economy of India has improved to a great extent and
has significantly led to the rise in the standard of living of the citizens. 

Pre liberalization period and globalization

From independence till the later part of the 1980s, India economic approach was mainly based on
government control and a centrally operated market. The country did not have a proper consumer
oriented market and foreign investments were also not coming in. This did not do anything good to the
economic condition of the country and as such the standard of living did not go up. 

In the 1980s, stress has given on globalization and liberalization of the market by the Congress
government under Rajiv Gandhi. In his government tenure, plenty of restrictions were abolished on a
number of sectors and the regulations on pricing were also put off. Effort was also put to increase the
condition of the GDP of the country and to increase exports. 

Even if the economic liberalization policies were undertaken, it did not find much support and the country
remained in its backward economic state. The imports started exceeding the exports and the India
suffered huge balance of payment problems. The IMF asked the country for the bailout loan. The fall of
the Soviet Union, a main overseas business market of India, also aggravated the problem. The country
at this stage was in need of an immediate economic reform.

Liberalization in the 1990s

It was in the 1990s that the first initiation towards globalization and economic liberalization was
undertaken by Dr Manmohan Singh, who was the Finance Minister of India under the Congress
government headed by P.V. Narasimha Rao. This is perhaps the milestone in the economic growth if
India and it aimed towards welcoming globalization. Since, the liberalization plan, the economic condition
gradually started improving and today India is one of the fastest growing economies in the world with an
average yearly growth rate of around 6-7%.
 Impact of globalization and liberalization
Globalization and liberalization has greatly influenced the Indian economy and made it a huge consumer
market. Today, most of the economic changes in the country are based on the demand supply cycle and
other economic factors. Today, India is the world’s 12th largest economy in terms of market exchange
rate and 4th largest in terms of the Purchasing Power Parity. According to a report by the World Bank,
the Indian market is expected to grow at around 8% in the year 2010. 

Globalization and liberalization has also made a positive impact on various important economic
segments. Today, the service sectors, industrial sectors and the agriculture sector have really grown to a
great extent. Around 54% of the annual Gross Domestic Product (GDP) of India comes from the service
industry while the industrial and agriculture sector contributes around 29% and 17% respectively. With
the improvement of the market, more and more new sectors are coming up and reaping profits such as
IT services, chemical, textiles, cement industry and so on. With the increase in the supply level, the rate
of employment is also increasing considerably. 

There has been an improvement in the manufacturing sector as well which grew from 8.98% in 2005 to
around 12%. The communication segment has grown up to around 16.64%. The condition is expected to
improve further with more demand and increase in customer base. The yearly growth of the industrial
sector has been around 6.8 % which will rise more in the future. India is one of the well known industrial
markets in the Asia-Pacific region.

Globalization and foreign investment

One of the main aspects of globalization is foreign investment. India today has emerged as one of the
perfect markets for foreign investors due to its vast market base. More and more foreign companies are
investing in the Indian market to get more returns. The foreign institutional investments (FII) amounts
to around US$ 10 billion in FY 2008-09, while the rate of Foreign direct investments (FDI) has grown
around 85.1% in 2009 to US$ 46.5 billion from US$ 25.1 billion (2008). 

Effects of Globalization on Indian Industry

Effects of Globalization on Indian Industry started when the government opened the country's markets to foreign
investments in the early 1990s. Globalization of the Indian Industry took place in its various sectors such as steel,
pharmaceutical, petroleum, chemical, textile, cement, retail, and BPO. 
Globalization means the dismantling of trade barriers between nations and the integration of the nations economies
through financial flow, trade in goods and services, and corporate investments between nations. Globalization has
increased across the world in recent years due to the fast progress that has been made in the field of technology
especially in communications and transport. The government of India made changes in its economic policy in 1991 by
which it allowed direct foreign investments in the country. As a result of this, globalization of the Indian Industry took
place on a major scale.

The various beneficial effects of globalization in Indian Industry are that it brought in huge amounts of foreign
investments into the industry especially in the BPO, pharmaceutical, petroleum, and manufacturing industries. As
huge amounts of foreign direct investments were coming to the Indian Industry, they boosted the Indian economy
quite significantly. The benefits of the effects of globalization in the Indian Industry are that many foreign companies
set up industries in India, especially in the pharmaceutical, BPO, petroleum, manufacturing, and chemical sectors and
this helped to provide employment to many people in the country. This helped reduce the level of unemployment and
poverty in the country. Also the benefit of the Effects of Globalization on Indian Industry are that the foreign
companies brought in highly advanced technology with them and this helped to make the Indian Industry more
technologically advanced. 

The various negative Effects of Globalization on Indian Industry are that it increased competition in the Indian market
between the foreign companies and domestic companies. With the foreign goods being better than the Indian goods,
the consumer preferred to buy the foreign goods. This reduced the amount of profit of the Indian Industry companies.
This happened mainly in the pharmaceutical, manufacturing, chemical, and steel industries. The negative Effects of
Globalization on Indian Industry are that with the coming of technology the number of labor required decreased and
this resulted in many people being removed from their jobs. This happened mainly in the pharmaceutical, chemical,
manufacturing, and cement industries. 

The effects of globalization on Indian Industry have proved to be positive as well as negative. The government of
India must try to make such economic policies with regard to Indian Industry's Globalization that are beneficial and
not harmful.

International business is defined as ‘any commercial transaction taking place across boundary lines of
a sovereign entity.

Importance of international business

Every company is trying to expand its business by entering foreign markets. International business
helps in the following ways:-
1. Helps as growth strategy: -Geographic expansion may be used as a business strategy. Even though
companies may expand their business at home.
2. Helps in managing product life cycle: - every product has to pass through different stages of
product life cycle-when the product reaches the last stages of life cycle in present market, it may get
proper response at other markets.
3. Technology advantages: - some companies have outstanding technology advantages through which
they enjoy core competency. This technology helps the company in capturing other markets.
4. New business opportunities: - business opportunities in overseas markets help in expansion of
many companies. They might have reached a saturation point in domestic market.
5. Proper use of resources: -Sometimes industrial resources like labor, minerals etc. are available in a
country but are not productively utilized.
6. Availability of quality products: - when markets are open, better quality goods will be available
every where. Foreign companies will market latest products at reasonable prices. Good product will be
available in the markets.
7. Earning foreign exchange: - international business helps in earning foreign exchange which may be
used for strategic imports .India needs foreign exchange to import crude oil, deface equipment, raw
material and machinery.
8. Helps in mutual growth: - countries depend upon each other for meeting their requirements. India
depends on gulf countries for its crude oil supplies.
9. Investment in infrastructure:  - international business necessitates proper development of
infrastructure. A company entering international business must invest in roads.

Complexities involved in international business

International business by multinational so the complexities are also related to their working. Some of
these complexities are discussed as follow:-
1. Controlling the market:- multinational try to control the market of the host country. Whenever they
enter a new country, the first strategy is to eliminate the competitors either by taking over their
business or forcing them out of market by following price reduction policies.
2. Exhausting natural resources: - multinational corporations set up their production facilities in those
countries where natural resources are available in sufficient quantities.
3. Importance to luxuries: - multinational corporations enter those areas where margin of profits is
high. 
4. Trade practices:- since multinational corporations have their head office in one country and the
trade practices followed there are adhered to.
5. Economic development: - it is generally felt that the entry of businessmen from outside may help in
the economic development of that country . The actual practice in many countries is different.
6. Shifting of investment: - international business is related to profitability of its operations. If a
business is getting sufficient profits in a particular country then the investment remain there.