International business

An Overview
An Overview
• International business refers to the trade of goods, services,
technology, capital and/or knowledge across national borders and at a
global or transnational scale.
• It involves cross-border transactions of goods and services between
two or more countries.
• Transactions of economic resources include capital, skills, and people
for the purpose of the international production of physical goods and
services such as finance, banking, insurance, and construction.
• International business is also known as globalization.
To be cont..
• To conduct business overseas, multinational companies need to
bridge separate national markets into one global marketplace.
• There are two macro-scale factors that underline the trend of greater
globalization.
• The first consists of eliminating barriers to make cross-border trade
easier (e.g. free flow of goods and services, and capital, referred to as
"free trade").
• The second is technological change, particularly developments in
communication, information processing,and transportation
 technologies.
To be cont..
• International management is the management of business operations
in an organisation serving markets and operating in more than one
country.
• It requires knowledge and skills beyond normal business
expectations, such as familiarity with local market and competitive
conditions, the legal and financial environment, the capability to do
multicurrency transactions and managing across borders.
To be cont..
• This definition stresses the need for a much more advanced set of
skills than managing within national borders.
• It demands extensive knowledge of local conditions and adaptability.
• As with strategic management and management theories, one might
visualise international management as running across the more
functional areas like marketing, finance and people/organisation.
To be cont..
• International management can mean a number of things: exporting
sporadically to other countries; having a more established export
strategy; having international agents, partners, or perhaps a direct
sales force in a number of countries; even having supply and/or
production facilities overseas
Globalization
• Globalization means the speedup of movements and exchanges (of
human beings, goods, and services, capital, technologies or cultural
practices) all over the planet.
• One of the effects of globalization is that it promotes and increases
interactions between different regions and populations around the
globe.
To be cont..
• Globalization is the process by which ideas, goods and services spread
throughout the world.
• In business, the term is often used in an economic context to
describe an integrated economy marked by free trade, the free flow
of capital and corporate use of foreign labor markets to maximize
returns and benefit the common good.
How globalization works

• Globalization is driven by the convergence of political, cultural and

economic systems that ultimately promote -- and often necessitate --
increased interaction, integration and dependency amongst nations.
• The more that disparate regions of the world become intertwined
politically, culturally and economically, the more globalized the world
becomes.
To be cont..
• These international interactions and dependencies are enabled and
accelerated by advances in technology, especially in transportation
and telecommunications.
• In general, money, technology, materials and even people flow more
swiftly across national boundaries today than they ever have in the
past.
• The flow of knowledge, ideas and cultures is expedited (an action or
process happen sooner)through internet communications.
National Differences In Political Economy

• The Political Economy

• A country’s political economy plays a HUGE role in international
business, for several reasons:
Political and economic systems differ widely across countries, making
it difficult to make generalizations or have a uniform strategy.
Countries, represented by their governments, are sovereign entities.
• Different nations advance their economy at dissimilar rates and thus
yield varying economic growth as well development. Political systems
and legal structures in a given country determine how successful and
healthy the economy ranks.
To be cont…
• Collectivism and Individualism
Collectivism
Concerned with the needs of the overall society or group, rather than those of the
individual Socialism, existence of welfare states System is concerned about the needs of the
entire society
No one should be left behind or treated differently
Individualism
Guarantee individual freedom and expression People can pursue own economic self-
interest
Not that there is no care for society, but they operate with a different set of assumptions If
given freedom to work hard and prosper, it will influence people to be better to get what
they want Some people are left behind
Want people to try harder: emphasis of individual
To be cont..
• Democracy vs Totalitarianism
Cannot have these two together at once

Democracy
Government by people exercised directly or through elected
representatives.

Totalitarianism
One person or party exercises control over all spheres of human life.
Opposing political parties are prohibited.
To be cont..
• Different Types of Economic Systems
Who owns productive resources? Determines how decisions are going to be
made (government or private)

Economic systems can be classified by property ownership

private: individuals own the resources
public: government owns the resources
Capitalist or market (consumer-oriented)
Socialist (society-oriented)
Command (production-oriented)
Decisions made for production purposes
Mixed
To be cont…
• A Market Economys
Free hand of the economy (market) determines how much is
produced/bought...Involves an interrelationship of price, quantity, supply and demand
 individuals supply labor for wages by company
wages are set on basis of available labor prices based on scarcity of resources, labor
and productivity
products are consumed if price is acceptable Consumers influence production by
exercising their power of choice
Legal and institutional frameworks to safeguard economic choice
Allows the market to function efficiently
US has strong contract law (low risk related to getting into contracts)
To be cont..
• A Command Economy
• Government is KING, in lieu (instead)of the market
The government sets goals and determines the price and quantity of what is produced

• Typically, large bureaucratic firms Firms have no competition (monopoly positions)

Guaranteed employment, housing, health care and other benefits Wages are typically the
sameShortage economy
Not following demand, and government decides what to produce so people may not be able to get
enough of what is demanded

• Investment and R&D effects?

No market, no need to reinvest (in R&D, specialized equipment, etc)
Don’t bother, and become stagnant
Guaranteed sales, no incentive to innovate, upgrade (don’t care to give consumers what they want)
After a while, the economy system crumbles and eventually they will be in the worst shape
To be cont..
• A Mixed Economy
• Different mixtures of market and central planning
Example of central planning and market: China
45% government directed (planned/owned)
55% market
Britain: # of government owned enterprises that compete
Combination of private and public ownership
Private and public ownership
ownership of means of production
high social welfare spending
Varies by industry or sector
Designed to maximize power of the state in certain areas
To be cont..
• State-Directed Economy
• Government involvement/intervention
No government ownership
Involves governmental planning and intervention into the economy
Based on goals and objectives of an established industrial policy
To be cont..
• Classifying Countries
• Two most common measures of categorizing countries are per capital
GNP or GDP:
Gross national product (GNP)
Gross domestic product (GDP)

• Can see how country is creating value by comparing these

Classify into high, low-middle, high-middle, low-income categories
Can find average income of each person to classify the country
To be cont..
• Gross national product (GNP)
• the market value of final goods and services newly produced by
domestic factors of production (KNOW), whether at home or abroad
domestic factors of production

• Domestic firms
how much value is created by a specific countries firms at home or
away
How cultural differences impact international business

• Multinational and cross-cultural teams are likewise becoming ever

more common, meaning businesses can benefit from an increasingly
diverse knowledge base and new, insightful approaches to business
problems.
• However, along with the benefits of insight and expertise, global
organizations also face potential stumbling blocks when it comes
to culture and international business.
To be cont..
• While there are a number of ways to define culture, put simply it is a
set of common and accepted norms shared by a society.
• But in an international business context, what is common and
accepted for a professional from one country, could be very different
for a colleague from overseas.
• Recognizing and understanding how culture affects 
international business in three core areas: communication,
etiquette, and organizational hierarchy can help you to avoid
misunderstandings with colleagues and clients from abroad and excel
in a globalized business environment.
1. Communication

• Effective communication is essential to the success of any business

venture, but it is particularly critical when there is a real risk of your
message getting “lost in translation.”
• In many international companies, English is the de facto language of
business. But more than just the language you speak, it’s how you
convey your message that’s important.
To be cont..
• What might be commonplace in your culture — be it a firm
handshake, making direct eye contact, or kiss on the cheek — could
be unusual or even offensive to a foreign colleague or client.
• Where possible, do your research in advance of professional
interactions with individuals from a different culture.
• Remember to be perceptive to body language.
• While navigating cross-cultural communication can be a challenge,
approaching cultural differences with sensitivity, openness, and
curiosity can help to put everyone at ease.
2. Workplace etiquette

• https://www.hult.edu/blog/cultural-differences-impact-international-
business/
• Different approaches to professional communication are just one of
the innumerable differences in workplace norms from around the
world.
To be cont..
• For instance, the formality of address is a big consideration when
dealing with colleagues and business partners from different
countries.
• Do they prefer titles and surnames or is being on the first-name basis
acceptable? While it can vary across organizations, Asian countries
such as South Korea, China, and Singapore tend to use formal
“Mr./Ms. Surname,” while Americans and Canadians tend to use first
names.
• When in doubt, erring on the side of formality is generally safest.
To be cont..
• The concept of punctuality can also differ between cultures in an
international business environment. Different ideas of what
constitutes being “on time” can often lead to misunderstandings or
negative cultural perceptions.
• For example, where an American may arrive at a meeting a few
minutes early, an Italian or Mexican colleague may arrive several
minutes — or more — after the scheduled start-time (and still be
considered “on time”).
To be cont..
• Along with differences in etiquette, come differences in attitude,
particularly towards things like workplace confrontation, rules and
regulations, and assumed working hours.
• While some may consider working long hours a sign of commitment
and achievement, others may consider these extra hours a
demonstration of a lack of efficiency or the deprioritization of 
essential family or personal time.
 3.Organizational hierarchy

• Organizational hierarchy and attitudes towards management roles

can also vary widely between cultures.
• Whether or not those in junior or middle-management positions feel
comfortable speaking up in meetings, questioning senior decisions, or
expressing a differing opinion can be dictated by cultural norms.
• Often these attitudes can be a reflection of a country’s societal values
or level of social equality.
To be cont..
• For instance, a country such as Japan, which traditionally values social
hierarchy, relative status, and respect for seniority, brings this
approach into the workplace.
• This hierarchy helps to define roles and responsibilities across the
organization.
• This also means that those in senior management positions command
respect and expect a certain level of formality and deference from
junior team members.
Impact of Ethics on Global Business

• At first, it may seem relatively easy to identify unethical behavior. When the topic
of business ethics is raised, most people immediately focus on corruption and
bribery.
• While this is a critical result of unethical behavior, the concept of business ethics
and—in the context of this book—global business ethics is much broader.
• It impacts human resources, social responsibility, and the environment. The areas
of business impacted by global perceptions of ethical, moral, and socially
responsible behavior include the following:
• Ethics and management
• Ethics and corruption
• Corporate social responsibility
Ethics and Management Practices

• Ethics impacts various aspects of management and operations, including human

resources, marketing, research and development, and even the corporate mission.
• The role of ethics in management practices, particularly those practices involving
human resources and employment, differs from culture to culture.
• Local culture impacts the way people view the employee-employer relationship.
• In many cultures, there are no clear social rules preventing discrimination against
people based on age, race, gender, sexual preference, handicap, and so on.
• Even when there are formal rules or laws against discrimination, they may not be
enforced, as normal practice may allow people and companies to act in accordance
with local cultural and social practices.
To be cont..
• Culture can impact how people see the role of one another in the workplace. For
example, gender issues are at times impacted by local perceptions of women in the
workplace.
• So how do companies handle local customs and values for the treatment of women in
the workplace?
• If you’re a senior officer of an American company, do you send a woman to Saudi Arabia
or Afghanistan to negotiate with government officials or manage the local office?
• Does it matter what your industry is or if your firm is the seller or buyer? In theory, most
global firms have clear guidelines articulating antidiscrimination policies. In reality,
global businesses routinely self-censor. Companies often determine whether a person—
based on their gender, ethnicity, or race—can be effective in a specific culture based on
the prevailing values in that culture. 
To be cont..
• The largest and most respected global companies, typically
the Fortune Global 500, can often make management and employment
decisions regardless of local practices. Most people in each country will
want to deal with these large and well-respected companies.
• The person representing the larger company brings the clout of their
company to any business interaction. In contrast, lesser-known, midsize,
and smaller companies may find that who their representative is will be
more important.
• Often lacking business recognition in the marketplace, these smaller and
midsize companies have to rely on their corporate representatives to create
the professional image and bond with their in-country counterparts.
To be cont..
• Global corporations are increasingly trying to market their products
based not only on the desirability of the goods but also on their social
and environmental merits.
• Companies whose practices are considered unethical may find their
global performance impacted when people boycott their products.
• Most corporations understand this risk.
• However, ethical questions have grown increasingly complicated, and
the “correct” or ethical choice has, in some cases, become difficult to
define.
To be cont..
• For example, the pharmaceutical industry is involved in a number of issues
that have medical ethicists squirming. First, there’s the well-publicized issue
of cloning.
• No matter what choice the companies make about cloning, they are sure to
offend a great many consumers.
• At the same time, pharmaceutical companies must decide whether to forfeit
profits and give away free drugs or cheaper medicines to impoverished
African nations.
• Pharmaceutical companies that do donate medicines often promote this
practice in their corporate marketing campaigns in hopes that consumers
see the companies in a favorable light.
To be cont..
• Tobacco companies are similarly embroiled in a long-term ethical debate.
Health advocates around the world agree that smoking is bad for a person’s
long-term health.
• Yet in many countries, smoking is not only acceptable but can even confer
social status.
• The United States has banned tobacco companies from adopting marketing
practices that target young consumers by exploiting tobacco’s social cache.
• However, many other countries don’t have such regulations. Should
tobacco companies be held responsible for knowingly marketing harmful
products to younger audiences in other countries?
Ethics and Corruption

• Corruption is “giving or obtaining advantage through means which are

illegitimate, immoral, and/or inconsistent with one’s duty or the rights of others.
Corruption often results from patronage.
• Our modern understanding of business ethics notes that following culturally
accepted norms is not always the ethical choice. What may be acceptable at
certain points in history, such as racism or sexism, became unacceptable with the
further development of society’s mind-set.
• What happens when cultures change but business practices don’t? Does that
behavior become unethical, and is the person engaged in the behavior
unethical? In some cultures, there may be conflicts with global business
practices, such as in the area of gift giving, which has evolved into bribery—a
form of corruption.
Ethics in Action

• Each year Transparency International analyzes trends in global

corruption. The following is an excerpt from their 2010 Global
Corruption Barometer report.
• “Corruption has increased over the last three years, say six out of 10
people around the world. One in four people report paying bribes in
the last year. These are the findings of the 2010 Global Corruption
Barometer.
To be cont..
• In the past 12 months one in four people reported paying a bribe to one
of nine institutions and services, from health to education to tax
authorities.
• The police are cited as being the most frequent recipient of bribes,
according to those surveyed. About 30 per cent of those who had contact
with the police reported having paid a bribe.
• More than 20 countries have reported significant increases in petty
bribery since 2006. The biggest increases were in Chile, Colombia, Kenya,
FYR Macedonia, Nigeria, Poland, Russia, Senegal and Thailand. More than
one in two people in Sub-Saharan Africa reported paying a bribe—more
than anywhere else in the world.
To be cont..
• Companies and their employees routinely try to balance ethical behavior with business
interests.
• While corruption is now widely viewed as unethical, firms still lose business to companies
that may be less diligent in adhering to this principle.
• While the media covers stories of firms that have breached this ethical conduct, the
misconduct of many more companies goes undetected.
• Businesses, business schools, and governments are increasingly making efforts to deter
firms and professionals from making and taking bribes.
• There are still countless less visible gestures that some would argue are also unethical. For
example, imagine that an employee works at a firm that wants to land a contract in China.
A key government official in China finds out that you went to the business school that his
daughter really wants to attend. He asks you to help her in the admission process. 
Corporate Social Responsibility

• Corporate social responsibility (CSR) is defined in Wikipedia as “the

corporate conscience, citizenship, social performance, or sustainable
responsible business, and is a form of corporate self-regulation
integrated into a business model. CSR policy functions as a built-in,
self-regulating mechanism whereby business monitors and ensures its
active compliance with the spirit of the law, ethical standards, and
international norms.”
To be cont..
• Coca-Cola is an example of global corporation with a long-term
commitment to CSR. In many developing countries, Coca-Cola promotes
local economic development through a combination of philanthropy
and social and economic development.
• Whether by using environmentally friendly containers or supporting
local education initiatives through its foundation, Coca-Cola is only one
of many global companies that seek to increase their commitment to
local markets while enhancing their brand, corporate image, and
reputation by engaging in socially responsible business practices.
• https://courses.lumenlearning.com/suny-internationalbusiness/chapter
/reading-global-business-ethics/
What Is International Trade?

• International trade theories are simply different theories to explain

international trade.
• Trade is the concept of exchanging goods and services between two
people or entities. 
• International trade is then the concept of this exchange between
people or entities in two different countries.
To be cont…
• People or entities trade because they believe that they benefit from
the exchange.
• They may need or want the goods or services.
• While at the surface, this many sound very simple, there is a great
deal of theory, policy, and business strategy that constitutes
international trade.
To be cont…
• International trade, economic transactions that are made between
countries.
• Among the items commonly traded are consumer goods, such as
television sets and clothing; capital goods, such as machinery; and
raw materials and food.
• Other transactions involve services, such as travel services and
payments for foreign patents ( service industry).
• International trade transactions are facilitated by international
financial payments, in which the private banking system and the 
central banks of the trading nations play important roles.
To be cont..
• International trade and the accompanying financial transactions are
generally conducted for the purpose of providing a nation with
commodities it lacks in exchange for those that it produces in
abundance; such transactions, functioning with other economic
policies, tend to improve a nation’s standard of living.
• Much of the modern history of international relations concerns
efforts to promote freer trade between nations.
The Theory Of International Trade

• Comparative-advantage analysis
• The British school of classical economics began in no small measure
as a reaction against the inconsistencies of mercantilist thought. 
Adam Smith was the 18th-century founder of this school
To be cont..
• In the book, Smith emphasized the importance of specialization as a
source of increased output, and he treated international trade as a
particular instance of specialization: in a world where productive
resources are scarce and human wants cannot be completely
satisfied, each nation should specialize in the production of goods it is
particularly well equipped to produce; it should export part of this
production, taking in exchange other goods that it cannot so readily
turn out. 
Simplified theory of comparative
advantage
• For clarity of exposition, the theory of comparative advantage is
usually first outlined as though only two countries and only two 
commodities were involved, although the principles are by no means
limited to such cases.
• Again for clarity, the cost of production is usually measured only in
terms of labour time and effort; the cost of a unit of cloth, for
example, might be given as two hours of work.
• The two countries will be called A and B; and the two commodities
produced, wine and cloth. The labour time required to produce a unit
of either commodity in either country is as follows:
To be cont..
• cost of production (labour time)
country Acountry B
• wine (1 unit)1 hour 2 hours
• cloth (1 unit) 2 hours 6 hours
To be cont…
• As compared with country A, country B is productively inefficient. Its
workers need more time to turn out a unit of wine or a unit of cloth.
• This relative inefficiency may result from differences in climate, in
worker training or skill, in the amount of available tools and
equipment, or from numerous other reasons.
• Ricardo took it for granted that such differences do exist, and he was
not concerned with their origins.
To be cont..
• Country A is said to have an absolute advantage in the production of both wine
and cloth because it is more efficient in the production of both goods.
• Accordingly, A’s absolute advantage seemingly invites the conclusion that
country B could not possibly compete with country A, and indeed that if trade
were to be opened up between them, country B would be competitively
overwhelmed.
• Ricardo, who focused chiefly on labour costs, insisted that this conclusion is false.
• The critical factor is that country B’s disadvantage is less pronounced in wine
production, in which its workers require only twice as much time for a single unit
as do the workers in A, than it is in cloth production, in which the required time
is three times as great.
To be cont..
• This means, Ricardo pointed out, that country B will have a
comparative advantage in wine production.
• Both countries will profit, in terms of the real income they enjoy, if
country B specializes in wine production, exporting part of its output
to country A, and if country A specializes in cloth production,
exporting part of its output to country B.
• Paradoxical though it may seem, it is preferable for country A to leave
wine production to country B, despite the fact that A’s workers can
produce wine of equal quality in half the time that B’s workers can do
so.
To be cont..
• The incentive to export and to import can be explained in price terms.
• In country A (before international trade), the price of cloth ought to be twice
that of wine, since a unit of cloth requires twice as much labour effort.
• If this price ratio is not satisfied, one of the two commodities will be overpriced
and the other underpriced.
• Labour will then move out of the underpriced occupation and into the other,
until the resulting shortage of the underpriced commodity drives up its price.
• In country B (again, before trade), a cloth unit should cost three times as much
as a wine unit, since a unit of cloth requires three times as much labour effort.
Hence, a typical before-trade price relationship, matching the underlying real
cost ratio in each country, might be as follows:
To be cont..
• country A country B
• Price of wine per unit $ 5£1
• Price of cloth per unit $10 £3
• The absolute levels of price do not matter.
• All that is necessary is that in each country the ratio of the two prices
should match the labour–cost ratio.
Amplification of the theory

• At a later stage in the history of comparative-advantage theory, English

philosopher and political economist John Stuart Mill showed that the
determination of the exact after-trade price ratio was a 
supply-and-demand problem.
• At each possible intermediate ratio (within the range of 1:2 and 1:3),
country A would want to import a particular quantity of wine and export
a particular quantity of cloth.
• At that same possible ratio, country B would also wish to import and
export particular amounts of cloth and of wine. For any intermediate ratio
taken at random, however, A’s export-import quantities are unlikely to
match those of B.
To be cont..
• Ordinarily, there will be just one intermediate ratio at which the
quantities correspond; that is the final trading ratio at which
quantities exchanged will stabilize. Indeed, once they have stabilized,
there is no further profit in exchanging goods.
• Even with such profits eliminated, however, there is no reason why A
producers should want to stop selling part of their cloth in B, since the
return there is as good as that obtained from domestic sales.
• Furthermore, any falloff in the amounts exported and imported would
reintroduce profit opportunities.
To be cont..
• In this simple example, based on labour costs, the result is complete (and unrealistic) specialization:
country A’s entire labour force will move to cloth production and country B’s to wine production.
• More elaborate comparative-advantage models recognize production costs other than labour (that
is, the costs of land and of capital).
• In such models, part of country A’s wine industry may survive and compete effectively against
imports, as may also part of B’s cloth industry.
• The models can be expanded in other ways—for example, by involving more than two countries or
products, by adding transport costs, or by accommodating a number of other variables such as
labour conditions and product quality.
• The essential conclusions, however, come from the elementary model used above, so that this
model, despite its simplicity, still provides a workable outline of the theory. (It should be noted that
even the most elaborate comparative-advantage models continue to rely on certain simplifying
assumptions without which the basic conclusions do not necessarily hold. These assumptions are
discussed below.)
To be cont..
• As noted earlier, the effect of this analysis is to correct any false first impression that low-productivity countries are at a hopeless
disadvantage in trading with high-productivity ones.
• The impression is false, that is, if one assumes, as comparative-advantage theory does, that international trade is an exchange of goods
between countries.
• It is pointless for country A to sell goods to country B, whatever its labour-cost advantages, if there is nothing that it can profitably take
back in exchange for its sales.
• With one exception, there will always be at least one commodity that a low-productivity country such as B can successfully export.
• Country B must of course pay a price for its low productivity, as compared with A; but that price is a lower per capita domestic income
and not a disadvantage in international trading.
• For trading purposes, absolute productivity levels are unimportant; country B will always find one or more commodities in which it
enjoys a comparative advantage (that is, a commodity in the production of which its absolute disadvantage is least).
• The one exception is that case in which productivity ratios, and consequently pretrade price ratios, happen to match one another in two
countries.
• This would have been the case had country B required four labour hours (instead of six) to produce a unit of cloth. In such a
circumstance, there would be no incentive for either country to engage in trade, nor would there be any gain from trading.
• In a two-commodity example such as that employed, it might not be unusual to find matching productivity and price ratios. But as soon
as one moves on to cases of three and more commodities, the statistical probability of encountering precisely equal ratios becomes very
small indeed.
To be cont..
• The major purpose of the theory of comparative advantage is to illustrate the
gains from international trade.
• Each country benefits by specializing in those occupations in which it is
relatively efficient; each should export part of that production and take, in
exchange, those goods in whose production it is, for whatever reason, at a
comparative disadvantage.
• The theory of comparative advantage thus provides a strong argument for 
free trade—and indeed for more of a laissez-faire attitude with respect to trade.
• Based on this uncomplicated example, the supporting argument is simple:
specialization and free exchange among nations yield higher real income for the
participants.
To be cont..
• The fact that a country will enjoy higher real income as a consequence of the opening up of
trade does not mean, of course, that every family or individual within the country will share in
that benefit.
• Producer groups affected by import competition obviously will suffer, to at least some degree.
• Individuals are at risk of losing their jobs if the items they make can be produced more
cheaply elsewhere.
• Comparative-advantage theorists concede that free trade would affect the relative income
position of such groups—and perhaps even their absolute income level.
• But they insist that the special interests of these groups clash with the total national interest,
and the most that comparative-advantage proponents are usually willing to concede is the
possible need for temporary protection against import competition (i.e., to allow those who
lose their jobs to international competition to find new occupations).
• https://www.britannica.com/topic/international-trade/Sources-of-comparative-advantage
What Is a Foreign Direct Investment (FDI)?

• A foreign direct investment (FDI) is an investment made by a firm or

individual in one country into business interests located in another
country.
• Generally, FDI takes place when an investor establishes foreign
business operations or acquires foreign business assets in a foreign
company.
• However, FDIs are distinguished from portfolio investments in which
an investor merely purchases equities of foreign-based companies.
• https://www.investopedia.com/terms/f/fdi.asp#:~:text=A%20foreign
%20direct%20investment%20(FDI)%20is%20an%20investment%20ma
de%20by,assets%20in%20a%20foreign%20company
.
To be cont..
• Foreign direct investments (FDI) are investments made by one
company into another located in another country.
• FDIs are actively utilized in open markets rather than closed markets
for investors.
To be cont..
• Horizontal, vertical, and conglomerate are types of FDI’s. Horizontal is
establishing the same type of business in another country, while
vertical is related but different, and conglomerate is an unrelated
business venture. 
• The Bureau of Economic Analysis continuously tracks FDIs into the
U.S.
• Apple’s investment in China is an example of an FDI. 
How a Foreign Direct Investment Works

• Foreign direct investments are commonly made in open economies

that offer a skilled workforce and above-average growth prospects for
the investor, as opposed to tightly regulated economies.
• Foreign direct investment frequently involves more than just a capital
investment.
• It may include provisions of management or technology as well.
• The key feature of foreign direct investment is that it establishes
either effective control of or at least substantial influence over the
decision-making of a foreign business.
To be cont..
• It is called direct investment as the investor is seeking control or
influence over a company or entity of a country.
• The foreign direct investment is usually made into countries which
have open economies, high growth prospects and skilled workforce at
relatively cheap rates.
Benefits of FDI

• It generates employment in the country

• It brings fresh capital in the country
• It improves forex position of the country
• It brings new skills and technologies into a country
• It promotes exports and increases tax revenues
• It gives the investor company access to foreign market of a country
• The investor company can reduce the cost of production if labor is cheap in
the target foreign market.
• The investor company can utilize the natural resources of a country like
metals, fossil fuel etc.
Types and Examples of Foreign Direct Investment

• Typically, there are two main types of FDI: horizontal and vertical FDI.
• Horizontal: a business expands its domestic operations to a foreign
country. In this case, the business conducts the same activities but in
a foreign country. For example, McDonald’s opening restaurants in
Japan would be considered horizontal FDI.
• Vertical: a business expands into a foreign country by moving to a
different level of the supply chain. In other words, a firm conducts
different activities abroad but these activities are still related to the
main business. Using the same example, McDonald’s could purchase a
large-scale farm in Canada to produce meat for their restaurants.
To be cont..
• However, two other forms of FDI have also been observed: conglomerate and platform FDI.
• Conglomerate: a business acquires an unrelated business in a foreign country. This is
uncommon, as it requires overcoming two barriers to entry: entering a foreign country and
entering a new industry or market. An example of this would be if Virgin Group, which is based
in the United Kingdom, acquired a clothing line in France.
• Platform: a business expands into a foreign country but the output from the foreign operations
is exported to a third country. This is also referred to as export-platform FDI. Platform FDI
commonly happens in low-cost locations inside free-trade areas. For example, if Ford purchased
manufacturing plants in Ireland with the primary purpose of exporting cars to other countries
in the EU.
• https://www.javatpoint.com/fdi-full-form

 
To be cont..
Regional Economic Integration
• https://www.investopedia.com/terms/e/economic-integration.asp
• Economic integration is an arrangement among nations that
typically includes the reduction or elimination of trade barriers and
the coordination of monetary and fiscal policies(Fiscal policy refers to
the use of government spending and tax policies to
influence economic conditions). Economic integration aims to reduce
costs for both consumers and producers and to increase trade
between the countries involved in the agreement.
• Economic integration is sometimes referred to as regional integration
as it often occurs among neighbouring nations.
To be cont..
• Fiscal policy in India: Fiscal policy in India is the guiding force that helps
the government decide how much money it should spend to support
the economic activity, and how much revenue it must earn from the
system, to keep the wheels of the economy running smoothly.
• In recent times, the importance of fiscal policy has been increasing to
achieve economic growth swiftly, both in India and across the world.
Attaining rapid economic growth is one of the key goals of fiscal policy
formulated by the Government of India.
• Fiscal policy, along with monetary policy, plays a crucial role in managing
a country’s economy.
To be cont..
• Regional economic integration has enabled countries to focus on
issues that are relevant to their stage of development as well as
encourage trade between neighbours.
• There are four main types of regional economic integration.
1.Free trade area. This is the most basic form of economic cooperation.
Member countries remove all barriers to trade between themselves
but are free to independently determine trade policies with
nonmember nations. An example is the North American Free Trade
Agreement (NAFTA).
To be cont..
2.Customs union. This type provides for economic cooperation as in a
free-trade zone. Barriers to trade are removed between member
countries. The primary difference from the free trade area is that
members agree to treat trade with nonmember countries in a similar
manner.
To be cont…
• 3.Common market. This type allows for the creation of economically
integrated markets between member countries.
• Trade barriers are removed, as are any restrictions on the movement
of labor and capital between member countries.
• Like customs unions, there is a common trade policy for trade with
nonmember nations.
• The primary advantage to workers is that they no longer need a visa
or work permit to work in another member country of a common
market. An example is the Common Market for Eastern and Southern
Africa (COMESA).
To be cont..
• Economic union. This type is created when countries enter into an
economic agreement to remove barriers to trade and adopt common
economic policies. An example is the European Union(EU).
To be cont..
• Pros
• The pros of creating regional agreements include the following:
• Trade creation. These agreements create more opportunities for
countries to trade with one another by removing the barriers to trade
and investment.
• Due to a reduction or removal of tariffs, cooperation results in cheaper
prices for consumers in the bloc countries.
• Studies indicate that regional economic integration significantly
contributes to the relatively high growth rates in the less-developed
countries.
To be cont..
• Employment opportunities. By removing restrictions on labor
movement, economic integration can help expand job opportunities.
• Consensus and cooperation. Member nations may find it easier to
agree with smaller numbers of countries. Regional understanding and
similarities may also facilitate closer political cooperation.
To be cont..
• Cons
• The cons involved in creating regional agreements include the following:
• Trade diversion. The flip side to trade creation is trade diversion.
• Member countries may trade more with each other than with nonmember nations.
• This may mean increased trade with a less efficient or more expensive producer because it is in
a member country.
• In this sense, weaker companies can be protected inadvertently(without knowledge)with the
bloc agreement(An agreement between countries intended to reduce or remove barriers to
trade within member countries. Frequently, but not always, those countries are geographically
close. Examples of trade blocs are the European Economic Community and the North American
Free Trade Agreement (NAFTA).)acting as a trade barrier.
• In essence, regional agreements have formed new trade barriers with countries outside of the
trading bloc.
To be cont..
• Employment shifts and reductions. Countries may move production
to cheaper labor markets in member countries.
• Similarly, workers may move to gain access to better jobs and wages.
Sudden shifts in employment can tax the resources of member
countries.
• Loss of national sovereignty. With each new round of discussions and
agreements within a regional bloc, nations may find that they have to
give up more of their political and economic rights.
International monetary system
•  International monetary system refers to the system and rules that
govern the use and exchange of money around the world and
between countries.
• Each country has its own currency as money and the international
monetary system governs the rules for valuing and exchanging these
currencies.
To be cont..
• International monetary system refers to a system that forms rules and
standards for facilitating international trade among the nations.
• It helps in reallocating the capital and investment from one nation to
another.
• It is the global network of the government and financial institutions
that determine the exchange rate of different currencies for
international trade. It is a governing body that sets rules and
regulations by which different nations exchange currencies with each
other.
Foreign Exchange Market in India

• The market in which international currency trade takes place i.e.

where foreign currencies are bought and sold simultaneously is called
the Foreign Exchange (Forex) Market.
• It is the organisational framework within which banks, merchants,
firms, investors, individuals and government exchange foreign
currencies for one another.
To be cont..
• For example, in India the currency in circulation is called the rupee INR and
in the United States, the currency in circulation is called the US Dollar (USD).
• An example of a Forex trade is to sell the Indian rupee while simultaneously
buying the US Dollar.
• Forex market has no geographical location, it is electronically linked
network  and is open 24 hours a day.
• The value for which one currency is exchanged for another or the value of
one currency in terms of another currency is called exchange rate. For
example, US dollar can be bought for 63 INR rupees. This is the exchange
rate for Indian rupees in US dollars.
To be cont..
• The foreign exchange market in India started when in 1978 the
government allowed banks to trade foreign exchange with one
another.
• Foreign Exchange Market in India operates under the Central
Government of India and executes wide powers to control
transactions in foreign exchange.
Nature of foreign exchange market
• https://theintactone.com/2018/07/20/ifm-u2-topic-1-foreign-
exchange-market-nature-structure-types-of-
transactions/#:~:text=Credit%20Function%3A%20FOREX%20provides
%20a,to%20finance%20the%20foreign%20purchases.&text=Hedging
%20Function%3A%20The%20third%20function,to%20hedge
%20foreign%20exchange%20risks.
• https://businessjargons.com/functions-of-foreign-exchange-market.ht
ml
• https://theinvestorsbook.com/foreign-exchange-market.html
INTERNATIONAL MONETARY SYSTEM

• An international monetary system is a set of internationally agreed

rules, conventions and supporting institutions that facilitate
international trade, cross border investment and generally the
reallocation of capital between nation states.
CHARACTERISTICS OF
INTERNATIONAL MONETARY SYSTEM
• Flow of international trade and investment according to comparative
advantage.
• Stability in foreign exchange and should be stable.
• Promoting Balance of Payments adjustments to prevent disruptions
associated with temporary or chronic imbalances.
• Providing countries with sufficient liquidity to finance temporary
balance of payments deficits
• Should at least try avoid adding further uncertainty.
TO BE CONT..
• Allowing member countries to pursue independent monetary and fiscal policies.
• Provision of adequate liquidity:This provision takes the form of adequate units of
official reserves held bygovernments of countries involved in foreign trade. It
also requires incentives forcommercial banks operating as foreign exchange
dealers to hold sufficient foreignexchange reserves to satisfy the requirements of
the private sector.
• Operation of a smooth adjustment mechanism:This objective requires that
individual nations carry out economic and financialpolicies conducive to
maintaining reasonable well balanced international paymentsystems, or that
financial mechanisms operate to provide payments adjustment, or
thatgovernments act to preserve equilibrium in the foreign exchange markets.
TO BE CONT..
• Confidence in the system:If private sector business firms and investors
believe that governments will followpolicies conducive to a well-
balances international payments system, they will haveconfidence in
the system.
• International organizations such as the InternationalMonetary Fund
(IMF) seek to promote such policies on the part of governments.
• Inaddition, governments undertake cooperative arrangements with
one another to buildconfidence in the existing system.
3. ROLE OF INTERNATIONAL
MONETARY SYSTEM
• The international monetary system (IMS) is analogous to the domestic monetary
system. It carries out similar functions. In the domestic monetary system the
functions that must be carried out include :
• 1) providing for the transfer of the purchasing power, that is, money payments to
cover transactions,
• 2) providing a stable unit of value, and
• 3) providing a standard for deferred payments.
• The IMS operates in a manner analogous to the domestic system. The same basic
functions must be served by the IMS, namely, making payments to cover transactions,
providing a stable unit of account, and providing a standard of deferred payments.
The major difference in the IMS is that cross-border payments generally involve a
foreign currency transaction for at least one of the parties involved in the transaction.
International Monetary Fund (IMF)

• https://www.investopedia.com/terms/i/imf.asp
Crises Management by IMF
• https://www.coursehero.com/file/p1sui8l/CRISIS-MANAGEMENT-BY-T
HE-IMF-FINANCIAL-CRISES-IN-THE-POSTBRETTON-WOODS-ERA/
• https://www.odi.org/events/113-solving-international-monetary-fund
s-imfs-crisis
International Business Strategy

• Due to increasing globalisation the past decades, even smaller

companies have been able to cross national borders and do business
abroad. Consequently, many terms have been given to companies
operating in multiple countries: multinationals, global businesses,
transnational companies, international firms.
TO BE CONT…
• Businesses that are highly globally integrated have the objective to reduce
costs as much as possible by creating economies of scale through a more
standarized product offering worldwide.
• Business that are highly locally responsive have as extra objective to adapt
products and services to specific local needs.
• It seems that these strategic options are mutually exclusive, but there are
companies trying to be both globally integrated and locally responsive as
can be seen in some examples below.
• Together these two factors generate four types of strategies that
internationally operating businesses can
pursue: Multidomestic, Global, Transnational and International strategies.
Four types of Strategies
Multidomestic: Low Integration and High
Responsiveness
• Companies with a multi domestic strategy have as aim to meet the
needs and requirements of the local markets worldwide by
customizing and tailoring their products and services extensively.
• In addition, they have little pressure for global integration.
Consequently, multidomestic firms often have a very decentralized
and loosely coupled structure where subsidiaries worldwide are
operating relatively autonomously and independent from the
headquarter.
• A great example of a multidomestic company is Nestlé. Nestlé uses a
unique marketing and sales approach for each of the markets in which it
operates. Furthermore, it adapts its products to local tastes by offering
different products in different markets.
Global: High Integration and Low Responsiveness

• Global companies are the opposite of multidomestic companies.

• They offer a standarized product worldwide and have the goal to
maximize efficiencies in order to reduce costs as much as possible.
• Global companies are highly centralized and subsidiaries are often
very dependent on the HQ.
To be cont..
• Their main role is to implement the parent company’s decisions and
to act as pipelines of products and strategies. This model is also
known as the hub-and-spoke model. Pharmaceutical companies such
as Pfizer can be considered global companies.
Transnational: High Integration and High Responsiveness

• The transnational company has characteristics of both the global and

multidomestic firm.
• Its aim is to maximize local responsiveness but also to gain benefits
from global integration.
• Even though this seems impossible, it is actually perfectly doable
when taking the whole value chain into considerations.
To be cont..
• Transnational companies often try to create economies of scale more
upstream in the value chain and be more flexible and locally adaptive
in downstream activities such as marketing and sales.
• In terms of organizational design, a transnational company is
characterised by an integrated and interdependent network of
subsidiaries all over the world.
• These subsidiaries have strategic roles and act as centres of
excellence.
To be cont..
• Due to efficient knowledge and expertise exchange between
subsidiaries, the company in general is able to meet both strategic
objectives.
• A great example of a transnational company is Unilever.
International: Low Integration and Low Responsiveness

• Bartlett and Ghoshal originally didn’t include this type in their

typologies. Other authors on the other hand have attributed the
name to the lower left corner of the matrix.
• An international company therefore has little need for local adaption
and global integration.
• The majority of the value chain activities will be maintained at the
headquarter.
To be cont..
• This strategy is also often referred to as an exporting strategy.
Products are produced in the company’s home country and send to
customers all over the world.
• Subsidiaries, if any, are functioning in this case more like local
channels through which the products are being sold to the end-
consumer.
• Large wine producers from countries such as France and Italy are
great examples of international companies.
Organizational structures of the Bartlett and Ghoshal’s MNC Typology:
Global, Transnational, International and Multidomestic Strategy
To be cont..
• https://www.business-to-you.com/international-business-strategy/#:~
:text=Together%20these%20two%20factors%20generate,Global%2C%
20Transnational%20and%20International%20strategies
.
• https://online.norwich.edu/academic-programs/resources/internatio
nal-business-strategies-globalizing-world
Case Study on Nike and Lenovo
• https://www.icmrindia.org/casestudies/catalogue/Business%20Enviro
nment/Nike%20in%20China-Case%20Study.htm
• https://www.icmrindia.org/casestudies/catalogue/Business%20Strate
gy/BSTR449.htm
THE ORGANISATION OF INTERNATIONAL BUSINESS

• VERTICAL DIFFERENTIATION :- a firms vertical differentiation

determines where in its hierarcy the decision-making power is
concentrated. There are arguments for centralization and
decentralization.
TO BE CONT..
• CENTRALISATION :-
ADVANTAGES

1. Can facilitate co-ordination e.g. a firm has its component manufacture in Taiwan and its
assembly in India then there is a need to co-ordinate the activities of these two locations.
This can be achieved by a centralized production scheduling done at the head office.
2. Can help ensure that decisions are consistent with organizational objectives. If decision
making is decentralized it may lead to a variance with top management goals.
3. Concentration of authority with the top management can give them the means to bring
about needed major organizational changes.
4. Centralisation can avoid duplication of activities e.g. R & D functions are centralization to
avoid duplication of work . Similarly product designing, advertisement etc.
TO BE CONT..
• DECENTRALISATION :-
ADVANTAGES

1. Top management can become over burdened when decision making authorities are
centralized which can result in poor decisions. Thus decentralization gives top
management time to focus on critical issues by delegating more routine issues to lower-
level managers.
2. Behavioral scientists argue that people are willing to give more to their jobs when they
have a greater degree of individual freedom and control over their work.
3. Permits greater flexibility – more rapid response to environment change.
4. Can result in better decision making since decisions are made more closer to the spot
by managers who have better information on the issue.
5. Decentralisation can increase control it can be used to establish relatively autonomous
self contained sub-units within an organization.
TO BE CONT..
• STRATEGY & CENTRALISATION IN IB

The choice between centralization and decentralization cannot be absolute. It makes sense to
centralize some decisions and decentralize some depending on the type of decision and the
firms strategy.
• Firms pursuing global strategies must decide how to disperse various value-creation activities.
• The head office must take decisions on the location of R & D, production, marketing and so on.
• In addition the global web must be co-ordinated. Centralisation of some operating decisions may
become necessary. In contrast emphasis on local responsiveness may create strong pressures for
decentralization.

Thus international firms tend to maintain centralized control over their core competencies like R
& D and decentralize operating decisions to foreign subsidiaries.
TO BE CONT..
• HORIZONTAL DIFFERENTIATION

Is basically concerned with how the firm decides to divide itself into submits. The decision is
mainly made on the basis of function, types of business or geographical area.

THE STRUCTURE OF DOMESTIC FIRMS

Most firms have no formal structure but as they grow the demands of management become
too great for one individual to handle. At this point the organization is split into functions
reflecting the firms value-creation. These functions are typically co-ordinated and controlled
by a top-management team.
• https://www.managementpedia.com/threads/the-organisation-of-international-business.724
43/
• https://www.slideshare.net/MunarbekKaarov/chap014-47658157
Organization structure in international business

• https://www.slideshare.net/jatinmaims/organization-structure-in-inte
rnational-business#:~:text=Organization%20Structure%EF%82%97%2
0Organization%20is,and%20relationships%20within%20an%20organiz
ation
.
• https://slideplayer.com/slide/9274842/
Entry Strategy and Strategic Alliances

• https://www.slideshare.net/devu7421/entry-strategy-and-strategic-
alliances#:~:text=%EF%82%A1%20Strategic%20alliance%20refers
%20to,between%20firms%20from%20different%20countries.&text=
%EF%82%A1%20Strategic%20alliance%20may%20facilitate%20entry
%20into%20foreign%20market.
• https://www.investopedia.com/terms/s/strategicalliance.asp
• https://www.abacademies.org/articles/an-empirical-study-on-
strategic-alliances-of-multinational-companies-in-the-modern-global-
eraa-select-case-study-7467.html
What are Strategic Alliances?

• Strategic alliances are agreements between two or more independent

companies to cooperate in the manufacturing, development, or 
sale of products and services, or other business objectives.
• For example, in a strategic alliance, Company A and Company B
combine their respective resources, capabilities, and core
competencies to generate mutual interests in designing,
manufacturing, or distributing goods or services.
Example of a Strategic Alliance

• The deal between Starbucks and Barnes&Noble is a classic example of a

strategic alliance. Starbucks brews the coffee. Barnes&Noble stocks the books.
Both companies do what they do best while sharing the costs of space to the
benefit of both companies.
• Strategic alliances can come in many sizes and forms:
• An oil and natural gas company might form a strategic alliance with a research
laboratory to develop more commercially viable recovery processes.
• A clothing retailer might form a strategic alliance with a single manufacturer to
ensure consistent quality and sizing.
• A website could form a strategic alliance with an analytics company to improve
its marketing efforts.
Exporting and Importing
• Exporting refers to sending of goods and services from the home country to
a foreign country.
• In International Trade, “exports” refers to selling goods and services
produced in the home country to other markets. In a similar vein, importing
is purchase of foreign products and bringing them into one’s home country.
• There are two important ways in which a firm can export or import
products: direct and indirect exporting/importing.
• In the case of direct exporting/importing, a firm itself approaches the
overseas buyers/ suppliers and looks after all the formalities related to
exporting/ importing activities including those related to shipment and
financing of goods and services.
Benefits of importing

• When people talk about importing in terms of trade, they refer to

purchasing products or services from another country.
• These products or services are then offered to customers by the
importing business or individual, broadening their choice of purchase.
• However, this is not the only benefit of importing; there are many
more to consider. Here are some of them.
1. INTRODUCING NEW PRODUCTS TO THE MARKET

• Many businesses in India and China tend to produce goods for the European
and American market. This is mostly due to the size of these markets and
the purchasing power of the population there. But once a new product is
introduced to these two markets, it may take a year or more before the
product is introduced to other, smaller markets.
• If a product produced in China seems attractive/useful to entrepreneurs in
Australia, they can import it and introduce it to their potential consumers.
Thanks to the internet expansion, entrepreneurs can conduct market
research prior to importing a certain product. This will help them determine
if there is an actual need on the market for such an imported product, so
they can develop an effective marketing strategy in advance.
To be cont…
• 2. REDUCING COSTS
• Another major benefit of importing is the reduce in manufacturing
costs. Many businesses today find importing products, parts of
products and resources more affordable than producing them locally.
• There are numerous cases when entrepreneurs find products of good
quality which are inexpensive even when the overall import expenses
are included. So instead of investing in modern, expensive machinery,
entrepreneurs choose to import goods and reduce their costs. In most
cases, they end up ordering large quantities in order to get a better
price and minimize the costs.
To be cont..
• 3. BECOMING A LEADER IN THE INDUSTRY
• One of the key benefits of importing products is the opportunity to 
become a market leader in the industry of interest.
• Since manufacturing new and improved products is a never-ending
process, many businesses worldwide use the chance to import new
and unique products before their competitors do.
• Being the first to import a fresh product can easily lead you to
becoming a leader in a certain industry.
To be cont…
• 4. PROVIDING HIGH QUALITY PRODUCTS
• Another benefit of importing is related to the ability to market
products of high quality.
• Lots of successful entrepreneurs travel abroad, visit factories and
other highly professional sellers in order to find high quality products
and import them into their own country.
• Moreover, manufacturers may provide informative courses and
training, as well as introduce standards and practices to ensure the
company abroad is well prepared to sell their products.
To be cont…
• If you choose to base your business on importing products, chances
are you are going to get high quality products.
• This is due to the fact that manufacturing businesses are very aware
that their reputation largely depends on the quality of the items they
produce.
• This is a reason more to consider importing the essence of your new
business.
Benefits of exporting

• Just as there is a variety of benefits of importing products and services, there

are numerous reasons for exporting, too. Here are the two key benefits of
exporting products to other countries:
• 1. INCREASING YOUR SALES POTENTIAL
• While importing products can help businesses reduce costs, 
exporting products can ensure increasing sales and sales potential in general.
• Businesses that focus on exporting expand their vision and markets regionally,
internationally or even globally.
• Instead of earning money by selling their offerings on the local market, these
businesses are focused on discovering new opportunities to present their
work abroad.
To be cont…
• Exporting products is especially good for medium and large
businesses – the ones that have already expanded within the local
market.
• Once they have saturated the market in their country, exporting
products abroad can be a great opportunity for these businesses to
increase the sales potential.
• Additionally, exporting can be one way of scanning opportunities for
overseas franchising or even production.
To be cont…
• 2. INCREASING PROFITS
• Exporting products can largely contribute to increasing your profits.
This is mainly due to the foreign orders, as they are usually larger than
those placed by the local buyers.
• While local customers buy a few products or a pallet, businesses
abroad oftentimes order a container of products which inevitably
leads to increased profits.
• Moreover, if your products are considered unique or innovative
abroad, your profits can increase rapidly in no time.
What Is Countertrade?

• Countertrade is a reciprocal form of international trade in which

goods or services are exchanged for other goods or services rather
than for hard currency.
• This type of international trade is more common in developing
countries with limited foreign exchange or credit facilities.
Countertrade can be classified into three broad categories: barter,
counterpurchase, and offset.
To be cont..
• Countertrade Explained
• In any form, countertrade provides a mechanism for countries with
limited access to liquid funds to exchange goods and services with
other nations.
• Countertrade is part of an overall import and export strategy that
ensures a country with limited domestic resources has access to
needed items and raw materials. Additionally, it provides the
exporting nation with an opportunity to offer goods and services in a
larger international market, promoting growth within its industries.
To be cont…
• Barter
• Bartering is the oldest countertrade arrangement. It is the direct
exchange of goods and services with an equivalent value but with no 
cash settlement. The bartering transaction is referred to as a trade.
For example, a bag of nuts might be exchanged for coffee beans or
meat.
• https://www.investopedia.com/terms/c/countertrade.asp#:~:text=In
%20any%20form%2C%20countertrade%20provides,needed%20items
%20and%20raw%20materials
.
GLOBAL PRODUCTION STRATEGIES:
 

• Multi-domestic. Concerns operations where each market is serviced

independently. Can relate to simple products that are easy to replicate but costly
to transport over long distances.
• Production can be integrated globally, while the marketing is Multi-domestic,
reflecting cultural and consumer preferences differences.
• The goal is therefore to better answer the needs of every market.
• This implies an independency in productivity, meaning that the efficiencies and
productivities achieved in each market are unrelated to those taking place in
other markets.
To be cont..
• Globally integrated. Systems of production located in several
countries and commonly involving complex products.
• Logistics activities are highly important as production and distribution
capabilities need to be effectively reconciled.
• This implies an interdependency in productivity, as each component
of the supply chain directly impacts the cost and the quality of the
final product.
• Four major location strategies for Global Production Networks can be
identified:
Global Production Networks

• https://transportgeography.org/contents/chapter7/freight-
transportation-value-chains/prodspecia-2/#:~:text=Each%20element
%20of%20the%20manufacturing%20sector%20has%20a%20different
%20production%20network.&text=For%20instance%2C
%20manufacturing%20a%20television,%2C%20and%20Germany%2C
%20provide%20components.
• https://www.slideshare.net/leanhoang1184/chap016-presentation
Global Marketing
• https://marketbusinessnews.com/financial-glossary/global-marketing
/
• https://www.cleverism.com/global-marketing-strategies/
• https://verloop.io/blog/the-best-global-marketing-strategies-for-2020
/#:~:text=So%2C%20fast%2Dmoving%20consumer%20goods,themsel
ves%20in%20the%20internet%20economy
.
Global HRM
• https://www.managementstudyguide.com/global-hrm.htm
• https://smallbusiness.chron.com/global-hrrelated-issues-business-se
ttings-62258.html
IBM Case Study
• https://grow.exim.gov/blog/case-study-exporting-fruits-and-
vegetables-around-the-world