INTERNATION Prof.

Dhaval Bhatt

AL BUSINESS Session No: 01

 Stages of Learning
 Introduction / Understand
 Discuss & Debate Deliberate
 Analysis
 Analyse
 Evaluate
 Compute
 Apply
Experience Wisdom
 What is International
Business?
 International business consists of transactions
that are devised and carried out across national
borders to satisfy the objectives of individuals,
companies, and organizations.
 Session Outline

 What is Globalization?
 When did Globalization begin?
 Which are the major forces behind Globalization?
 Economic consequences of Globalization:
 on economic growth
 on wage bargaining and income distribution
 on labour standards
 Need for International
Business
 More and more firms around the world are
going global, including:
 Manufacturing firms
 Service companies (i.e. banks, insurance, consulting
firms)
 Art, film, and music companies
 Need for International
Business
 International business:
 causes the flow of ideas, services, and capital across the
world
 offers consumers new choices
 permits the acquisition of a wider variety of products
 facilitates the mobility of labor, capital and technology
 provides challenging employment opportunities
 reallocates resources, makes preferential choices, and shifts
activities to a global level
Types of International
Business
Export-import trade
Foreign direct
investment

Licensing

Franchising

Management contracts
 International Business &
Roman Empire
 Pax Romana, or Roman Peace ensured that merchants
were able to travel safely and rapidly.
 Common coinage simplified business transactions.
 Rome developed a systematic law, central market
locations, and an effective communication system; all of
which enabled international business to flourish in the
Roman Empire.
 The growth of the Roman Empire occurred mainly through
the linkages of business
 International Business and the
Roman Empire (cont.)
 The decline of the Roman Empire can be attributed in
part to:
 infighting and increasing decadence
 the Pax Romana being no longer enforced
 the decline of use and acceptance of the common coinage
 declining levels of communication
 As a result, former Roman allies cooperated with
invaders.
Globalization :An
Overview
 What is Globalization?

 It is a market integration on a world scale.

 Because of Globalization, for the first time in history,
the availability of international products and services
can be accessed by individuals in many countries, from
diverse economic backgrounds.
 Globalization and History

1. Prehistoric 10,000BCE to 3,500BCE

2. Premodern 3,500BCE to 1500
3. Early modern 1500 to 1750
4. Modern 1750 to 1970
5. Contemporary 1970 +
3000 – 1900 • Indus Valley & Mesopotamia
BC
2000 – 1800 • Voyages of Odysseus (Greek)
BC
1894 -1595 • Babylonian Empire
BC
3rd Century • Alexander the Great (Macedonian
BC Empire)
1st Century • Roman Empire
AD
6th Century • Gupta Empire
AD
15th Century • Discovery of Americas
AD
16th Century • Colonization Wars
AD
17th Century • Asian Dominance
AD
18th Century • Mighty British Empire
AD
19th Century • Rise of Industrialization
AD
20th Century • Dominance of Information Technology
AD
 Stages of Globalization

Global Stage

Multinationa
l Stage
International
Stage
Domestic
Stage
 Stages of Globalization

1. Domestic Stage
 Market potential is limited to the home country
 Production and marketing facilities are located at home country
only
2. International Stage
 Exports increase and the company usually adopts a multi –
domestic approach
 Product design, marketing and advertising are adapted to the
specific needs of each country, requiring a high level of sensitivity
to local values and interest.
 Stages of Globalization

3. Multinational Stage
 The company has a marketing and production facilities located
in many countries with more than one third of its sales is
outside the country of origin.
 Product Design, marketing and advertising strategies are
standardized around the world.
4. Global Stage
 These corporations operate in true global fashion, making sale
and acquiring resources in whatever country offers the best
opportunities .
 Stages of Globalization

Domestic International Multinational Global

Export –
Strategic Domestically
Oriented Multinational Global
Orientation Oriented
Multi – Domestic
Explosion of
Stages of Initial Foreign Competitive
international Global
Development Involvement positioning
operation

Cultural Of Little Very Somewhat Critically

Sensitivity importance Importance important important

Manager “Many Best “The Least Cost “Many Good

“One Best Way”
Assumptions Ways” Way” Ways”
 World Trade Organisation
 The World Trade Organization (WTO) is the only global
international organization dealing with the rules of trade
between nations.
 At its heart are the WTO agreements, negotiated and
signed by the bulk of the world’s trading nations and
ratified in their parliaments.
 The goal is to help producers of goods and services,
exporters, and importers conduct their business.
World Trade Organisation

Founded: 1st January 1995

Membership: 164 Countries
Headquarter: Geneva,
Switzerland
Head: Roberto Azevedo
 Background of WTO
 General Agreement on Tariffs and Trade (GATT), which was
created in 1947 in the expectation that it would soon be replaced
by a specialized agency of the United Nations (UN) to be called the
International Trade Organization (ITO). Members: 23 Countries
 Although the ITO never materialized, the GATT proved remarkably
successful in liberalizing world trade over the next five decades.
 By the late 1980s there were calls for a stronger multilateral
organization to monitor trade and resolve trade disputes.
 Following the completion of the Uruguay Round (1986–94) of
multilateral trade negotiations, the WTO began operations on
January 1, 1995.
 Background of WTO
 Before Uruguay there were 7 rounds of Negotiations occurred
under GATT.
 Annecy Round: 1949
 Torquay Round: 1951
 Geneva Round: 1955 – 56
 Dillon Round: 1960 – 62
 Kennedy Round: 1962 - 67
 Tokyo Round:1973 - 79
 Uruguay Round: 1986 – 94
 Doha Round: 2001- Present
 Functions of WTO
 Administering WTO trade agreements
 Forum for trade negotiations
 Handling trade disputes
 Monitoring national trade policies
 Technical assistance and training for developing
countries
 Cooperation with other international organizations
 Agreement of
WTO

Preferential
Regional Trade
Trade
Agreements
Arrangements
 Agreement of WTO

 Regional trade agreements

 In the WTO, regional trade agreements (RTAs) are defined as reciprocal
trade agreements between two or more partners. They include free trade
agreements and customs unions.
 Preferential trade arrangements
 Preferential trade arrangements (PTAs) in the WTO are unilateral trade
preferences. They include Generalized System of Preferences schemes
(under which developed countries grant preferential tariffs to imports from
developing countries), as well as other non-reciprocal preferential schemes
granted a waiver by the General Council. 
 TRIPS
 TRIPS - Trade-Related Aspects of Intellectual Property
Rights
 The areas of intellectual property that it covers are: copyright and related
rights (i.e. the rights of performers, producers of sound recordings and
broadcasting organizations); trademarks including service
marks; geographical indications including appellations of origin; industrial
designs; patents including the protection of new varieties of plants;
the layout-designs of integrated circuits; and undisclosed
information including trade secrets and test data.
 Standards
 Enforcement
 Dispute settlement
 TRIMS
 TRIMS - Trade-Related Investment Measures
 The agreement recognizes that certain investment measures restrict and
distort trade. It provides that no contracting party shall apply any TRIM
inconsistent with Articles III (national treatment) and XI (prohibition of
quantitative restrictions) of the GATT.
 To this end, an illustrative list of TRIMs agreed to be inconsistent with these
articles is appended to the agreement. The list includes measures which
require particular levels of local procurement by an enterprise (“local
content requirements”) or which restrict the volume or value of imports
such an enterprise can purchase or use to an amount related to the level
of products it exports (“trade balancing requirements”).
 TBT
 TBT – Technical Barriers to Trade
 The Technical Barriers to Trade (TBT) Agreement aims to ensure that
technical regulations, standards, and conformity assessment procedures
are non-discriminatory and do not create unnecessary obstacles to trade.
 At the same time, it recognises WTO members' right to implement
measures to achieve legitimate policy objectives, such as the protection of
human health and safety, or protection of the environment.
 The TBT Agreement strongly encourages members to base their measures
on international standards as a means to facilitate trade. Through its
transparency provisions, it also aims to create a predictable trading
environment.
 Other Agreement of WTO

Goods
It has annexes dealing with specific sectors such as agriculture and textiles,
and with specific issues such as state trading, product standards, subsidies
and actions taken against dumping.

Services
Banks, insurance firms, telecommunications companies, tour operators, hotel
chains and transport companies looking to do business abroad can now enjoy
the same principles of freer and fairer trade that originally only applied to
trade in goods.
Other Agreement of WTO

Intellectual Property
The WTO’s intellectual property agreement amounts to rules for trade and investment in
ideas and creativity. The rules state how copyrights, patents, trademarks, geographical
names used to identify products, industrial designs, integrated circuit layout-designs and
undisclosed information such as trade secrets — “intellectual property” — should be
protected when trade is involved.

Dispute Settlement
The system encourages countries to settle their differences through consultation. Failing
that, they can follow a carefully mapped out, stage-by-stage procedure that includes the
possibility of a ruling by a panel of experts, and the chance to appeal the ruling on legal
grounds.