Presentation on the introduction of international business-Module-1 IBP.pptx

Fundamental of International business management

1. 1 INTERNATIONAL BUSINESS AND PRACTICE MBA-I by Ms. Prachi Aggarwal Assistant Professor – IB & Marketing

2. Learning Objectives Describe the key concepts in International Business. Understand how International Business differs from the Domestic Business. Identify significant economies in the world. 2

3. Introduction “International business consists of transactions that are devised and carried out across national borders to satisfy the objectives of the individuals, companies and organisations. These transactions take on various forms which are often interrelated.” – Michael R. Czinkota 3

4. Thus, it involves not only the international movement of goods and services, but also of capital, personnel, technology and intellectual property like patents, trademarks, knowhow and copyrights etc. 4

5. Lets look at this video to understand the concept of International Business What Makes Coca-Cola a Global Marketing Success? - Bing video 5

6. Why do companies go international….. To expand the business or to increase the revenues. Saturation in the Domestic Market Risk Diversification To exploit the opportunities present in other markets. To reduce costs by outsourcing or accessing cheaper resources. To achieve economies of scale. 6

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9. World Top Economies According to the Countries GDP Data(July 2023) USA - $26 trillion China - $19 trillion Japan - $4.4 trillion Germany-$4.3 trillion India - $3.7 trillion 9

10. United States GDP:  $26,854 billion Annual GDP Growth Rate: 2% The US economy is the largest and most influential in the world, accounting for about 25% of global GDP and 15% of international trade. The US economy is highly diversified and market-oriented, with a dominant role of the private sector and innovation. 10

11. In 2022,  China  was the top trading partner of the United States based on import value. But Mexico became the top U.S. trading partner at the beginning of 2023. 11

12. Main companies that hail from the US are Amazon, Walmart, Microsoft, Pepsi co, Apple, Ford Motors, General Motors, JP Morgan Chase, Citi Grp, AT&T, Pfizer, P&G, Boeing, IBM, Tesla, and many more. The top exports of the United States are Petroleum Products , Cars and vehicle parts , Integrated Circuits,  Food and beverages, Machinery including computers , Electrical machinery, and equipment . The top imports of the United States are Computers, telecommunications equipment and semiconductors. Crude oil, finished metal , chemicals and plastics. U.S. Customs and Border Protection (CBP) is charged with regulating and facilitating international trade, collecting import duties, and enforcing U.S. regulations, including trade, customs, and immigration.   12

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14. US DEBT CRISIS 14

15. China is the  world's second-largest economy  by nominal GDP and the largest by purchasing power parity. GDP:  $19,374 billion Annual GDP Growth Rate: 5.2% The Chinese economy predominantly hinges upon manufacturing, exports, and investment. It proudly possesses an extensive workforce, robust governmental backing, infrastructural advancements, and an expeditiously expanding consumer market. Rapid economic growth based on the production of raw materials, low-paid labour , and exports has enabled the country to lift more than 800 million people out of poverty. 15 Wats worrying the dragon these days: https://youtu.be/3Se3EnAd-Rs

16. Alibaba, Tencent, Huawei, Lenovo, Oppo, Vivo, Xiaomi, TikTok, Haier and Shien are some of the Chinese companies. In July 2023, China's foreign exchange reserves totalled   US$ 3.20 trillion , which is the highest foreign exchange reserves of any country. Mainland China’s biggest export products by value in 2022 were led by phone devices including smartphones, computers, electronic integrated circuits, solar power diodes and semi-conductors, then electric storage devices. In 2021, China was the world's biggest importer of  Crude Petroleum ,  Iron Ore ,  Petroleum Gas ,  Copper Ore , and  Soybeans.   16

17. GDP:  $4,410 billion Annual GDP Growth Rate: 1.3% It is the fourth-largest by purchasing power parity (PPP). It is the world's second-largest developed economy. Japan is the world's second-largest automobile manufacturing country. It is often ranked among the world's most innovative countries, leading several measures of global patent filings. Facing increasing competition from China and South Korea.  Manufacturing in Japan currently focuses primarily on high-tech and precision goods, such as integrated circuits, hybrid vehicles, and robotics 17 Japan

18. Moreover, Japan garners recognition for its unwavering work ethic, pioneering technological advancements, and exceptional exports of superior quality. The main groups of Japanese exports are vehicles; machines; robots; electronic devices; technical optics and medical equipment, iron and steel of all kinds; chemicals and plastic. Japan’s most significant export partners are China, USA, Korea, Thailand, and Hong Kong. Imported items are machinery, equipment, fuel, food, chemicals, textiles, and raw materials, mainly minerals and energy. Importing partners are China, the USA, Australia, Saudi Arabia, the United Arab Emirates, 18

19. Germany GDP:  $4,309 billion GDP By Country Per Capita: $51,380 Annual GDP Growth Rate:  -0.1% The German economy strongly focuses on exports and is renowned for its precision in the engineering, automotive, chemical, and pharmaceutical sectors. It derives advantage from its proficient labour force, robust research and development initiatives, and a pronounced commitment to fostering innovation. 19

20. India GDP:  $3,750 billion GDP By Country Per Capita (Nominal):  $2,601 Annual GDP Growth Rate: 5.9% India's economy boasts diversity and swift growth, fuelled by key sectors such as information technology, services, agriculture, and manufacturing. The nation capitalises on its broad domestic market, a youthful and technologically adept labour force, and an expanding middle class. 20

21. Globalization Globalization is a term used to describe how trade and technology have made the world more connected and interdependent. Integrated economies marked by free trade The free flow of capital among countries easy access to foreign resources, including labour markets, to maximise returns and benefit for the common good. Economies have become more information-based and more interdependent. In the modern era, economic success or failure at one focal point of the global web can be felt in every major world economy. 21

22. Socially, it leads to a greater interaction among various populations. Culturally, globalization represents the exchange of ideas, values, and artistic expression among cultures. Globalization also represents a trend toward the development of a single-world culture.  Politically, globalization has shifted attention to intergovernmental organizations like the United Nations (UN) and the World Trade Organization (WTO). Legally, globalization has altered how international law is created and enforced. 22

23. The Roman Empire Silk Road trade. Pre-World War I Post-World War II Emergence of World Wide Web and the Internet 23

24. When did globalisation begin? The Roman Empire.  Going back to 600 B.C., the Roman Empire spread its economic and governing systems through significant portions of the ancient world for centuries. Silk Road trade . These trade routes, which date from 130 B.C. to 1453 A.D., represented another wave of globalization. They brought merchants, goods and travelers from China through Central Asia and the Middle East to Europe. Pre-World War I.  European countries made significant investments overseas in the decades before World War I. The period from 1870 to 1914 is called the golden age of globalization. 24

25. Post-World War II.  The United States led the effort to create a global economic system with a set of broadly accepted international rules. Multinational institutions were established such as the United Nations (UN), International Monetary Fund, World Bank and World Trade Organization to promote international cooperation and free trade. The acceleration of globalization is greatly attributed to the era of Information. The emergence of new technologies in computers and communication has redefined the concept of being "connected" in a global context. The World Wide Web and the Internet allowed someone in Germany to read about a breaking news story in Bolivia in real-time. Someone wishing to travel from Boston, Massachusetts, to London, England, could do so in hours. 25

26. Types of globalization There are three types of globalization. Economic globalization: The focus is on the integration of international financial markets and the coordination of financial exchange. Multinational corporations, which operate in two or more countries, play a large role in economic globalization. Political globalization.  This type covers the national policies that bring countries together politically, economically and culturally. Organizations such as NATO and the UN are part of the political globalization effort. Cultural globalization.  This aspect of globalization focuses in large part on the technological and societal factors that are causing cultures to converge. These include increased ease of communication, the pervasiveness of social media and access to faster and better transportation . 26

27. These three types influence one another. For example, liberalized national trade policies drive economic globalization. Political policies also affect cultural globalization, enabling people to communicate and move around the globe more freely. Economic globalization also affects cultural globalization through the import of goods and services that expose people to other cultures. 27

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30. BARRIERS TO GLOBALISATION 30

31. Barriers to globalization include : Immigration policies that restrict free entry Trade policies that promote protectionism and restrictions to free flow of trade & commerce Culture: Some cultures restrict free human interactions like marriages. Language and communication can constitute barriers Exploitation of foreign workers High investment costs 31

32. MNC Multinational corporations conduct business in two or more countries. Some consider a multinational company to be one that generates 25% or more of its revenue outside the home country. An MNC can have a positive economic effect on the countries in which it operates. Some believe outsourcing U.S. manufacturing to a foreign country has a negative effect on the U.S. economy. Investing in a multinational corporation is a way to add international exposure to a portfolio. 32

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34. Characteristics of a Multinational Corporation A worldwide business presence Typically, large and powerful organizations Business conducted in various languages A complicated business model and structure Direct investments in foreign countries Jobs created in foreign countries, potentially with higher wages than found locally Seeks improved efficiencies, lower production costs, larger market share Has substantial expenses associated with navigating rules and regulations of foreign countries Pays taxes in countries in which it operates Reports financial information according to International Financial Reporting Standards (IFRS) 34

35.  Types of Multinational Corporations Multinational corporations can be viewed as four main organizational types. 1. A Decentralized Corporation A decentralized corporation maintains a presence in its home country and has autonomous offices and other facilities in locations around the world. This type of multinational company has the capability to achieve more, faster because it's decentralized. Each office manages the local business itself, making its own decisions. 2. A Centralized Global Corporation A centralized global corporation has a central headquarters in the home country. Executive officers and management located there oversee the global offices and operations as well as domestic operations. 35

36. 3. An International Division Within a Corporation An international division is that part of the multinational corporation that has been made responsible for all international operations. This structure facilitates business decision-making and general activities in local, foreign markets. 4 . A Transnational Corporation A transnational corporation involves a parent-subsidiary structure whereby the parent company oversees the operations of subsidiaries in foreign countries as well as in the home country. Subsidiaries can make use of the parent's assets, such as research and development data. Subsidiaries may be different brands, as well. The parent usually maintains a management role directing the operations of its subsidiaries, domestic and foreign. 36

37. Organizational Structure/ Organizational design   It is “the way of a systematic and logical grouping of activities, delegation of authority and responsibility and establishing working relationships that will enable both the company and employee to realize their mutual objectives” 37

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