INTERNATIONAL BUSINESS

MANAGEMENT

Binayak Malla
Assistant Professor
Kathmandu University School of Management

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 Class Introduction to the topic

• What comes to your mind when you hear the

word “International Business” ?

• How do you think it can help you in your

future profession?

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 COURSE PLAN

Assessment plan is as follows:

• Assignments (3 assignment in group) 15 %
• Attendance and 5%
• class participation: Debate 10 %
• Class Presentation (group topic ) 10 %
• Project work and presentation 30%
• End-term Examination 30 %

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 Chapter 1
1.1 Concept of International business and its terminology
1.2 How international business differs from domestic
business?,
1.3 Concept of globalization and its forces
1.4 Trade Liberalization ,
1.5 Movement of labor and capital across borders;
opportunities and threats to LDCs

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INTERNATIONAL BUSINESS MANAGEMENT

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 Brands

Organizational architecture
Organizational strategies
Human resources management
Financial management
Marketing management

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 https://www.youtube.com/watch?
v=Mx1dMvbT5Fw

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 Nepal vs. Switzerland

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• Population: 28.2 M • Population: 8.9 M
• GDP = 19.6 B • GDP = 685 B
• GDP per capita = $701 • GDP per capita =$ 85’594
• Inflation = 8.4 CPI • Inflation = 0.00
• Current account balance =$284 • Current account balance=63.8
million billion
• Trade to % of GDP = 48% • Trade to % of GDP = 132%
• Merchandise export = 1 B • Merchandise export = 332 B
• Merchandise import = 5.95 B • Merchandise import = 296 B

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 How international business
differs from domestic business?

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 Why entry in foreign market should be done
very carefully?
….. because business
pioneers can certainly fail.
Example:
• Walmart in Germany
– After opening 85 stores
over the course of eight
years, the U.S. retail giant
abandoned the German
market in 2006 at an
estimated cost of US$1
billion.

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• Ford in Europe

Between 1988 and 2000, U.S.-

based Ford Motor Company
acquired European boutique
brands Aston Martin, Jaguar,
Volvo and Land Rover.

But the automotive mammoth

struggled with the luxury brands
and in 2007 and 2008 sold them
all off.

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 Why entry in foreign market should be done
very carefully?
• Coke in India

– In 1977, Coca-Cola left

India and so lost out on
one of the world's
biggest markets for 16
years and return back to
India in 1993

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 Why entry in foreign market should be done
very carefully?
• Nestlé in Africa
•
Nestlé was hit with a
boycott in Africa that
started in 1977 because
of its baby product and
continues to this day in
various regions around
the world

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 In Foreign environment forces affecting business are
perceived in different ways than in domestic market:

• Forces Have different values - Political forces

• Forces Can be difficult to assess–Legal Forces
• Forces are interrelated –Market and labor forces
• Decision making is complex – Market

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 International Business and
terminologies used it it:
Multinational Companies (MNCs),
Global firms & Trans-national
Companies (TNCs)

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 MNCs -a kind of holding company with a number of
overseas operations, each of which is left to adapt
its products and marketing strategy to what local
managers perceive to be unique aspects of their
individual markets.

Global firm as one that attempts to standardize

operations in all functional areas but that responds
to national market differences when necessary.

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 Transnational Company
• It is used by UN and developing nations as a synonymous to
Multinational enterprise. United Nation Conference on Trade
and Development (UNCTAD) has defined it as :

“A transnational corporation is generally regarded as an

enterprise comprising entities in more than one country
which operate under a system of decision-making that
permits coherent policies and a common strategy. The
entities are so linked, by ownership or otherwise, that one or
more of them may be able to exercise a significant influence
over the other and in particular to share knowledge,
resources and responsibilities with the other”.
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• Combines the characteristics of global and
multinational firms:

– (1) trying to achieve economics of sale through

global integration of its functional areas and,

– (2) being highly responsive to different local

environment (a newer name is multicultural
multinational)

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 Globalization and its Forces

What is Globalization?

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 Artificial World

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 Natural World

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 Globalization and its Forces

• What is Globalization? How is it related with

International business?

Perspective;
– Social scientists discuss in terms of political, social,
environmental, historical, geographical and cultural
implications of globalization.

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In International business:
• We speak more in terms of economic
globalization which means-

– “The tendencies towards an international

integration of goods, technology, information,
labor, capital or the process of making this
integration happen.”

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“Globalization” in an economic sense was popularized by
Theodore Levitt when he published an article titled
“Globalization of Market” in Harvard Business Review
(1983) , where he mentioned that

“…future belonged to global corporations that

did not cater to local differences in taste but
instead adopted strategies that operated as
if the entire world (or major regions of it)
were a single entity….”

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 Political
forces

Technological
Competition
forces

Globalization
forces

Cost Market

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 Trade liberalization

What are its Advantages and Disadvantages??

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 Trade Liberalization

It involves removing barriers to trade between

different countries and encouraging free trade.

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 Advantages of Trade Liberalization
• Allows countries to specialize in producing
the goods and services where they have a
comparative advantage. This enables a net
gain in economic welfare.

• Lower prices. The removal of tariff barriers

can lead to lower prices for consumers

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 Advantages of Trade Liberalization
• Increased competition.
This should act as an incentive to increase efficiency and
cut costs or it may act as an incentive for an economy to
shift resources into new industries where they can
maintain a competitive advantage.

• Economies of scale.
Trade liberalization enables greater specialization. This
can enable big efficiency savings from economies of scale

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 Problems of Trade Liberalisation
• Shift in the balance of an economy may
often cause structural unemployment from
certain industries closing.

• Trade liberalisation could lead to greater

exploitation of the environment.

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 Problems of Trade Liberalisation

Damaging for developing economies who

cannot compete against well established
industrialized nation.

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 Discussion Topic:

• Movement of labor and capital across borders;

opportunities and threats to LDCs

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 Causes of labor movement:
• Push – pull factors:

• PUSH factor: The “push” of population, unemployment

and crisis pressures in less developed countries.

• Pull factor: The “pull” of changing demographics and

labor market needs in many industrialized counties.

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 Opportunities and threats:

Key words;
• Remittances, labor migration, poverty
elevation, rise in living standard, loss of
industry job and agricultural productivity,
short term vs. long term economic impact, FDI
etc.

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