International & Global Business:

Principles, Insights & Challenges

Syed Ferhat Anwar
Professor, IBA
University of Dhaka

Insights
In Hong Kong, a German businessperson

is driving a Lexus made in Brazil;

wearing Bruno Magli shoes made in India;
wearing Irish cashmere socks made in Cambodia;
With Calvin Klein undergarment made in China;
an Armani suit, with a Gucci belt made in Italy;
he has a Mont Blanc pen made in Thailand;
in his Italian shirt made in Bangladesh.
Hes going to meet an American investor at a McDonald
restaurant, working on a Samsung Note Pad made in Korea.
--- OK, thats a stretch.

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Challenges

Huge Foreign indebtedness

Unstable governments
Foreign-exchange problems
Foreign entry and government bureaucracy
Tariffs and other trade barriers
Corruption
E-commerce inefficiencies
Technological pirating
High cost of product and communication adaptations
Political and economic power brokerage
Human and other capital scarcity or under productivity
Lack of knowledge and innovation management
Etc. etc

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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
nations.
Usually, private companies undertake such transactions for
profit; governments undertake them for profit and for
political reasons.
International marketing is the act of marketing in more than
one society across boarders by keeping the spirit of
international business intact

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International Business
Means

Modes: importing and exporting, tourism and

transportation, licensing and franchising, management
contracts, production contracts, direct investment,
outsourcing etc.
Functions: marketing, global manufacturing and value
chain management, accounting, finance, human resources
Overlaying alternatives: choice of countries, organization
and control mechanisms

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International Business 1

Objectives:
sales expansion, resource acquisition,
risk minimization

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International Business 2
Physical and societal factors
Political policies and legal practices
Cultural & social factors
Economic forces
Geographical influences
Global Climate factors
Technology issues
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International Business 3
Economic System
Resource Allocation
Market

Private
Resource

Ownership

State
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Command

Market
Capitalism

Centrally
Planned
Capitalism

Market
Socialism

Centrally
Planned
Socialism

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International Business 4

Rankings of economic freedom among countries

free mostly free mostly unfree repressed

Variables considered include such things as:

Trade policy
Taxation policy
Capital flows and foreign investment
Banking policy
Wage and price controls
Property rights
Black market

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International Business 5
Competitive factors
Major advantage in price, marketing,
innovation, or other factors.
Number and comparative capabilities
of competitors
Competitive differences by country

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International Operations 6

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.

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Standardization and Adaptation 1

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Standardization and Adaptation 2

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Global Business Outlook 1

Mistaken assumptions about LDC
1.
2.

3.

4.
5.

The poor have no money.

The poor will not waste money on nonessential goods.
Entering developing markets is fruitless
because goods there are too cheap to make a
profit.
People in BOP (bottom of the pyramid)
countries cannot use technology.
Global companies doing business in BOP
countries will be seen as exploiting the poor.

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Global Business Outlook 2

Theory of International Product Life Cycle (IPLC)
(0) Local innovation, (1) Overseas innovation, (2) Maturity,
(3) Worldwide imitation, (4) - Reversal

Exporting
0

Other advanced nations

LDCs

USA (initiating country)

Importing
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Source: Sak Onkvist and John J, Shaw, An Examination of the International Product Life
Cycle and Its Application within Marketing, Columbia Journal of World Business 18 (Fall,
1983)

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Global Business Outlook 3

Acquisition of Wealth the ultimate
Show AV 1. Rise of new global rich

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Globalization 1
Growth to a global or worldwide
scale due to "the globalization of the
communication industry.
The tendency of world investment
and business to move from national
and domestic markets to a worldwide
environment.

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Globalization 2

Worldwide economic integration of

many formerly separate national
economies into one global economy,
mainly through free trade and free
movement of capital as by
multinational companies, but also by
easy or uncontrolled migration and
single technology frame.

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Globalization 3

Show AV 2. One World One Company

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Globalization 4

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 global 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.
Governance and legal issues are being standardized

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Global Integration Forces 1

Driving Forces

Technology
Culture
Market Needs
Costs
Free Markets
Economic Integration
Peace
Strategic Intent
Management Vision, Strategy and Action

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Global Integration Forces 2

Restraining Forces

Culture
Market Differences
Costs
National Controls
Nationalism
Peace vs. War/ Stability
Management Myopia
Organization History
Domestic Focus

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Challenges 1

Markets can present higher profit

opportunities than present markets.
Markets can offer size but not profits.
Company needs a larger customer base
for economies of scale.
Present customers are needing service
and products as they go international.

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Challenges 2
Global Standardization or Adaptation
Toyota built the Corolla on a world platform. Ford
with its Focus. McDonalds uses chili sauce
(salsa) on its hamburgers in Mexico. Coca-Cola is
can be sweeter, or less carbonated.
Adaptation elements: Product features, brand
name, labeling, packaging, colors, materials,
prices, sales promotion, advertising themes,
media, execution.
Marketing programs do work best when they are
tailored to each target group.
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Challenges 3
Principle of Anticipation and Being Proactive. Not
Reactive.
Are you ready for change? Being adaptive to the
marketplace.
Macro environment Changes. The high income
growth country has shifted from Japan to US.
Low to medium has been concentrated in
Southeast Asia and southern Asia with China and
India to a certain extent as a unique, high-growth,
large country in the region and the world.

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Challenges 4
Principle of the Growth of Internet and
Information Technology.
Principles of:
Marketing Mix
11Ps

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Challenges 5

11 Ps of Global marketing
Purpose
Positioning

Planet

Physical
Evidence

Product

Consumers

Price

Process

Place

People

Packagin
g

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Promotio
n

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Challenges 6

The old trade model is just old.

It stated that as a product matures, production
would shift to low-wage countries.
Today, must look at transportation costs,
availability of skilled labor, market
responsiveness, market access and innovation in
product design and manufacturing. Especially of
products with less than 15% of labor in total cost.

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Challenges 7
Principle of Service:
Service before, during and after sale.
Create long-term value and connect with
customer.
Both products and services. Its creating more
value.

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Challenges 8
Principle of Future:

Manage todays products by managing a profit

and by servicing customers of today and
tomorrow.
Develop tomorrows products.
There is no such thing as permanent advantage.
Governance in societal norms leads to total
sustainability.

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Challenges 9
Principle of Global Experience
Counts for companies
Counts in the job market for employees.
Marketing Audits.
Marketing is not a destination, or a goal. Its a
process. A moving target.

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Political Window 1

World economic development and well being are

linked to freedom and democracy.
This correlation is the key that explains our world society:

Freedom => Knowledge => Technical progress =

Economic development
This trilogy is the basic equation for development.
Global leaders have to repeat again and again this golden rule.

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Political Window 2
We have 10 criteria by which to measure
knowledge:

Education rate,
Number of scientists,
Illiteracy rate,
Number of internet users,
Proportion of exports,
Population parameters,
Health status,
Purchasing and spending powers,
Geopolitical maturity,
International relations.

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The People in Global Business 1

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.
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The People in Global Business 2

Factors contributing to the need for

international managers
Increased internationalization of operations
Recognition that poor overseas performance can be
costly
Perceived shortage of international managers
Recognition of differing national culture/institutional
arrangements within which firms operate
Firms operate in increasingly internationally regulated
business environments

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The People in Global Business 3

1.
2.
3.
4.

The Ideal International Manager

Four major variables:
technical competence
personal traits or relational abilities
ability to cope with environmental variables
family situation

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The People in Global Business 4

The Ideal International Manager (Continued)

Technical ability
Managerial skills
Cultural empathy and crosscultural communication
skills
Adaptability and an active
desire to adjust to living and
learning in the local culture
Nonjudgemental
Diplomacy and tolerance
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Language ability
Positive attitude
Emotional stability and
maturity
Adaptability of family
Negotiating ability

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Wrap-up 1

Companies cannot stay domestic and expect to

maintain their markets.
Companies need to define their global policies
and objectives.
Companies need to decide on how much to adapt
marketing mix.
Companies must be manned properly
There is no such thing as cheap labor!
Selection of types of markets and countries are
interlinked
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Wrap-up 2

Market entry and market control costs can be

high which could be politically motivated.
Product and communication adaptation costs can
be high.
Dominant foreign firms can establish high
barriers of entry.
Technology has created a big shift of the
markets.
Growth in Asia and Africa is a reality
End dictates the means
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Wrap-up 3

Ultimate goal of project

Relationship to other projects
High-level timing goals
Attractiveness influenced by the product,
geography, income, population, political
climate and more factors.

Key Strategic Outlook:

---Driving and Stabilizing

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