‘Int.

Business’ an Intro
What it is all about?
International Business– Spring 2020 Lecture 1
 Agenda
• What is a “International Business”?
• Scope and Forms of International Business.
• Risks of International Business.

Contact Number: +92-336-4171147

Email ID: mirab@outlook.com
 What is Business
• Business is
– a combination of all these activities which
include production, distribution and sale of
goods and service for a profit.
– Creating profit or economic surplus is a
primary goal of business activities.
• Manufacturing local or international
• Trading local or international
• Services local or international
Sizes of business (SMEDA)
• Micro 1-9 people
• Small 10-35 people
• Medium 36-99 people
• Large > 99 people
Legal status of business
• Single owner (NTN)
• Partnership (Act 1932)
• Company (Act 2017) SMC
 What is International Business
• International business as a field of management
training deals with the special features of business
activities that cross national boundaries.

• Multinational enterprises an enterprise based in one

country and operating in one or more other
countries.
 How Does International Business
Differ from Domestic?
• Currency conversion
• Legal systems
• Culture
• Availability of resources

• NDMA
• 90% 10%
 The Scope of International Business
Activities
• International transactions in physical goods and in
service
• International investment capital supplied by
residents of one country to residents of another.
– Foreign Direct Investment----it defined as
investments that give the investor effective
control and are accompanied by managerial
participation (the country in which the parent
company’s headquarters is located is called the
home country; any other country in which the
company operates is known as a host country.)
Activity:
• What are the currencies of Malaysia, Thailand,
England, France, Bangladesh and China?
• Can you identify some cultural differences
between Pakistanis and Americans?
• Can you think of various aspects to consider
when doing business in Muslim countries?
Other forms of International Business Activities

• Exporting: is the selling of products made in one’s

own country for use or resale in other countries.
• Importing: is the buying of products made in other
countries for use or resale in one’s own country.
• Licensing: is a contractual arrangement in which a
firm in one country licenses the use of its
intellectual property (patents, trademarks, brand
names, copyrights, or trade secrets) to a firm in a
second country in return for a royalty payment.
Other forms of International Business Activities

• Franchising: is a specialized form of licensing,

occurs when a firm in one country authorizes a firm
in a second country to utilize its operating systems
as well as its brand names, trademarks and logos in
return for a royalty payment.
• Management contract: is an arrangement wherein a
firm in one country agrees to operate facilities or
provide other management services to a firm in
another country for an agreed-upon fee.
(Hotel industry: Marriott and Hilton)
 Visible and Invisible Trade
• Trade in Goods
– Merchandise exports and imports
– Visible trade
• Trade in Services
– Service exports and imports
– Invisible trade
Choosing a Mode of Entry
 Management of International
Business
• Planning----it involves determining overall
company objectives and deciding how these goals
can best be achieved.
• Organizing----it is the process of putting the plan
into action.
• Directing----guide, teach, and motivate workers so
that they reach their potential abilities.
• Coordinating----it is to bring into proper relations
among the various departments of the company.
• Controlling----it evaluates how well company
objectives are being met.
Steps in International
Strategy Formulation

Develop a Mission Statement

Perform a SWOT Analysis

Set Strategic Goals

Develop Tactical Goals and Plans

Develop a Control Framework

 Mission Statements
• Clarifies the organization’s purpose, values,
direction;
• Communicates firm’s strategic direction;
• Specifies firm’s target customers and markets,
principal products, geographical domain, core
technologies, concerns for survival, plans for growth
and profitability, basic philosophy, and desired
public image.
 SWOT Analysis
• Strengths
• Weaknesses
• Opportunities
• Threats
 Strategic Goals
Strategic Goals are the major objectives the
firm wants to accomplish through pursuing a
particular course of action.
 Tactical Goals and Plans
• Middle management • Examples
issues – Hiring
• Details of – Compensation
implementation – Career paths
– Distribution and logistics

18-11
 Control Framework
A control framework is the set of managerial
and organizational processes that keep the
firm moving toward its strategic goals.

19-11
 Brief introduction to WTO
• Introduction
• Its essential functions are
– Administering and implementing the multilateral and
plural-lateral trade agreement which together make up the
WTO;
– Acting as a forum for multilateral trade negotiation,
establishing impartial procedure for resolving trade
disputes;
– Overseeing National trade policies and reduce remaining
trade barriers through multilateral negotiations;
– Cooperating with other international institutions involved in
global economic policy-making.
 Differences between WTO and GATT
(General Agreement on Tariffs and Trade)
• GATT focused on promoting trade in goods; WTO’s
mandate includes
– trade in goods
– trade in services
– international intellectual property protection
– trade-related investment
• WTO’s enforcement powers are stronger
 Enforcement of WTO Decisions
• Country failing to live up to the agreement
may have a complaint filed against it ；
• WTO panel evaluates complaint ；
• If found in violation, the country may be
asked to eliminate the trade barrier.
 Assignment
Case study presentation and discussion in next class.
Thank
You