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Prof.

Junaid Alam

Nature of international Business


Globalization Of capital

Globalizatio n of corporate mindset

Globalization of supply chain

Globalization of market presence

Drivers of International business


Opportunities to expand sales and profits Changing demographics Low wage and low cost Regional trading blocks, WTO,EU,NAFTA Declining trade and investment barrier

Globalization
Meaning:

Routes of globalization Exports and imports


Tourism and transports
Performance of services Use of assets Licensing and franchising

Direct investment -

Joint venture wholly owned subsidiary portfolio investments

High

Direct investments

Foreign investments

Performance of service

Use of assets

Tourism and transports low Exports/imports

low

Presence in Foreign Markets

High

Multinational Corporations
Definition:

Worlds Largest Corporations


1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Exxon Mobil Walmart stores Royal Dutch shell BP General motors Chevron Diamler Chrysler Toyota motor Ford motor Conoco Phillips

U.S U.S Netherlands Britain U.S U.S Germany Japan U.S U.S

Some common brands mistaken as Indian Brands


BATA
Moserbear HUL

Goals of MNCs
Manufacture in those countries where it gets max. competitive

advantage. Buy and sell anywhere in the world to take advantage of the favorable price. Take advantage ,throughout the world ,of changes in labor cost ,productivity, trade agreement and currency fluctuations. Expand or contract based on worldwide competitive advantage Obtain a high and rising return on capital Achieve greater sales Hold risks within reasonable limits in relation to profits. Maintain and improve technology Maintain control of important decisions Encounter fewer barriers in host countries.

Goals of host government

Achieve economic growth. Achieve full employment of people and resources. Improve managerial and works skills. Maintain price stability. Develop a favorable balance of trade. Improve technological development. Improve worker productivity. Protect the nations physical environment. Advance the quality of life of its people. Control national security decisions. Develop and maintain social and political stability .

Criticisms of MNCs
Costly damages inflicted with impunity

- e.g. Union carbide , Bhopal Gas tragedy were let off with a paltry fine of $500 per person Self interests are primary Bribes adds to the bottom-line . Small firms are the worst hit. Interference with economic objectives. Social disruptions Environmental degradation Imperialism

In Defense of MNCs
Provide employment.
Train managers. Provide products and service.

Introduce and develop new skills.


Introduce new managerial techniques. Raise the GNP. Increase productivity. Help build foreign exchange reserves. Use of local resources.

The End