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Transcript of International Business
INTERNATIONAL
BUSINESS
Author
Prof. Pulapa Subba Rao
Professor of Business Administration
University of Papua New Guinea
Publisher:
Himalaya Publishing House Pvt. Ltd., Mumbai,India
Teachers’ Manual
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 1
International Business: An
Overview
CHAPTER-1
INTERNATIONAL
BUSINESS:
AN OVERVIEW
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 1
International Business: An
Overview
Evolution of International Business
Why International Business?
International Business Before World War-I
International Business Between World Wars
International Business After World Wars
Emergence of International Institutions: like IMF, IBRD, GATT and WTO
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 1
International Business: An
Overview
Different Concepts
International Trade
International Marketing
International Manufacturing
International Business
International Trade vs. Marketing
International Marketing vs. Business
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 1
International Business: An
Overview
Drivers of International Business
Establishment of International Institutions like IMF, IBRD, IDA, IFC, andWTO
Emergence of Trade blocks like European Union, NAFTA, ASEAN andSAARC
Foreign Direct Investment
International manufacturing Centers
Strides in Information Technology
Liberalization of Economies
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 1
International Business: An
Overview
Stages of International Business
Domestic Company
International Company
Multinational Company
Global Company
Transnational Company
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 1
International Business: An
Overview
Special Issues of International Business
Modes of International Business
Goals of International Business
Advantages of International Business
Problems of International Business
Strategies of International Business
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
CHAPTER-2
THEORIES OF
INTERNATIONAL
TRADE
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Why and How International Trade?
Mutual Benefits to Two countries
Differences in Opportunity Costs
Comparative Advantage
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Mercantilism
Countries should Export more than they Import and Receive the
Difference in Gold.
Governments Imposed Restrictions on Imports and Encouraged
Exports
Benefited Colonial Powers and Caused Discontent in the Colonies
Decay of Gold Standard Reduced the Validity
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Theories of International Trade
Adam Smith’s Theory of Comparative Cost Advantage
Comparative Cost Advantage Theory
Comparative Advantage With Money
Concept
Implications
Criticisms
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Other Theories
Relative Factor Endowments Theory
Country Similarity Theory
Product Life Cycle Theory
Global Strategic Rivalry
Porter’s National Competitive Advantage Theory
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
CHAPTER-3
INTERNATIONAL BUSINESS
ENVIRONMENT
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
International Business Environment Factors
Meaning of Business Environment
Environmental Factors: (STEPIN)
Social and Cultural
Technological
Economic
Political
International
Natural
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Cultural Environment
• Meaning
• Characteristics
• Cultural Attitude and International Business
• Cross-Cultural Communication
• Cultural Universals
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Social Environment
• Social Environment
• Behavioural Factors Affecting Business
• Power Distance
• Individualism Vs. Collectivism
• Risk-Taking Behaviour
• Masculinity
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Social and Cultural Environment
• Strategies for dealing with Differences: Making
Adjustments, Communication
• Competitive Advantage
• Culture and Business Ethics
• Culture and Consumer Behaviour
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Religions and Economic Implications
• Christianity
• Islam
• Hinduism
• Buddhism
• Confucianism
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Technological Environment
• Meaning of
• Influence of and Investment in
• Economic Development and
• International Cooperation and
• Technology Transfer
• Plant Location and
• Appropriate Technology
• Globalization and Technology
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Economic Environment
• Economic Systems
• Income Levels of Countries: Characteristics
• Basket cases, Location of Income
• Business and Economic Development
• Macro-Economic Issues and Business
• Economic Transition
• Opportunity to MNCs
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Political Environment
• Political Ideologies
• Political Rights and Civil Liberties
• Totalitarianism
• Political Relations and Business
• TYPES OF Political Systems
• Political Stability and Economic Development
• Political Risks
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Legal Environment
• Kinds of Legal Systems
• Theoretical Law
• Property Rights
• Protection of Intellectual Property
• Product Safety and Product Liability
• Labour Laws
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
CHAPTER-4
MODES OF ENTERING
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Modes of Entering Introduction
Analysis of Alternative Foreign Markets
Level of Competition
Environmental Scanning
Assessing Costs, benefits and Risks
Decision Factors: Ownership Advantages, Location
Advantages, Internationalisation Advantages
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Modes of EntryI. EXPORTING
1. Indirect Exports
2. Direct Exports
3. Intra-corporate Transfers
II. LICENSING
4. International Licensing
III. FRANCHISING
5. International Franchising
IV. SPECAL MODES
6. Contract Manufacturing
7. Business Process Outsourcing
8. Management Contracts
9. Turnkey Projects
V. FOREIGN DIRECT INVESTMENT WITHOUT ALLIANCES
10. Green Field Strategy
VI. FOREIGN DIRECT INVESTMENT WITH ALLIANCES
11. Mergers and Acquisitions
12. Joint Ventures
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
CHAPTER-5
FOREIGN DIRECT INVESTMENT
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Foreign Direct Investment- Introduction
Meaning
Forms of FDI: Purchase the Existing, new Investment in
Property, participation in a Joint Venture, Transfer of Assets,
Export of Goods for Equity, Trading in Equity
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
International Investment Theories
Ownership Advantage Theory
Internationalization Theory
Dunning's Eclectic Theory
Factor Mobility Theory
Product Life Cycle Theory
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Factors Influencing FDI
Supply Factors: Production costs, Logistics, Resource
availability, Access to technology, Availability of Human
resources
Demand Factors: Customer access, Marketing advantages,
Exploitation of competitive advantages, Customer mobility
Political Factors: Avoidance of trade barriers, Economic
development incentives.
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Why FDI?
To Increase Sales and Profits
To Enter fast growing Markets
To Reduce Costs
To Consolidate Trade Blocs
To protect Domestic and Foreign Markets
To Acquire Technological and Managerial Know-How
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
FDI In India
Government Policy since 1991
Liberalisation in the FDI sector and Ceilings on Foreign
investment
Direct Investment Inflows
FDI in select Asian Countries
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
CHAPTER-6
GLOBALIZATION
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Globalization-What is It?
Globalization is the shift towards a More Integrated and
Interdependent World Economy
Globally Mobile Capital, Property knowledge and technology
sweep away regulations
Interdependency and Integration of various countries of the
World
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Features of Globalization
Operation throughout the World
Erasing Differences among markets
Establishing manufacturing centers throughout the world
Operation in international Financial Markets
Allow the free flow of Human Resources
Spread the markets in all countries
Establish various services of the business in all countries
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Globalization Process
Stage-I: Export to Foreign Countries Through Intermediaries
Stage-II: Export to Foreign Countries Directly
Stage-III: Establishes Production and Marketing facilities in
Foreign Countries
Stage-IV: Makes foreign subsidiary full-fledged
Stage-V: Serves the foreign customers like a domestic
company
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Drivers of Globalization
Establishment of WTO
Regional Integration/Trade Blocks
Declining Trade Barriers
Declining Investment Barriers
Growth of FDI
Strides in Technology
Growth in MNCs
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
CHAPTER-7
WORLD TRADE
ORGANIZATION (WTO)
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
World Trade Organization-Introduction
The Emergence of General Agreement on Tariffs and Trade
(GATT)
Objectives of GATT
Uruguay Round and Dunkel Proposals
World Trade Organisation (WTO) was established in 1995 to
implement the final act of Uruguay Round agreement of GATT
GATT Vs. WTO
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
WTO and WORLD TRADE WITHOUT
DISCRIMINATION
Promotes trade without any discrimination
MFN Clause: Member countries should give equal treatment to
the products imported from any other member countries
National Treatment Clause: Member country should treat the
foreign products once they enter their country exactly equal to
those of similar domestic products
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
URUGUAY ROUND PACKAGE
To reduce the subsidy on Inputs and eliminate
administered pricing in agricultural sector.
WTO members abolished quotas on trade in textiles and
clothing on 1 January 2005.
Challenges and Strategies to Compete
Trade Related Intellectual Property Rights
Patents Regime Kicks In
NO Foreign Capital Discrimination
Trade in Services
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
Ministerial Meetings of WTO
First meeting: Held on 9th December1996 at Singapore
Second meeting :Held during 18-20, May 1998 at Geneva
Third meeting: Held on December 3, 1999 at Seattle
Fourth meeting: Held at Doha, Qatar during 9-13, November 2001.
Fifth meeting: Held during 10-14, September 2003 at Cancun, Mexico.
Sixth Meeting: Held in Hong Kong, China from 13-18 December 2005.
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 2
Theories of International Trade
WTO and India
Founder Member
Benefits in India
Impact of Abolition of Textile Quota System
Adoption of Product Patent
Disadvantages
India and Dumping
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 8
Multinational Companies
(MNCs)
CHAPTER-8
MULTINATIONAL COMPANIES (MNCs)
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 8
Multinational Companies
(MNCs)
Multinational Companies (MNCs)-
Introduction
MNC does business in more than one country.
Why Domestic Companies become MNCs?
Operating Characteristics of MNCs (Protection, Tap global
markets, Increase market share, Reduce cost, Overcome
tariffs)
Factors Contributed for the Growth of MNCs (Expansions of
market territory, Market superiority, Financial superiority,
Technological superiority Product innovations)
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 8
Multinational Companies
(MNCs)
Advantages& Disadvantages of MNCs
Advantages to Host Country
Advantages to Home Country
Disadvantages to Host Country
Disadvantages to Home Country
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 8
Multinational Companies
(MNCs)
Organization Structure of MNCs
Design Organization Structure
Vertical/ Tall Organization
Horizontal/ Flat Structure
Product Structure
Functions-Based Structure
Matrix Structure
Team Structure
Geographical Structure
Decentralised Business structure
Strategic Business Unit Structure
Virtual Structure
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 8
Multinational Companies
(MNCs)
Role of MNCs in India
• Profit Maximisation
• International networking of Markets
• Diversification Policy
• Concentration in Consumer goods
• Location of Central control Offices
• Public Accountability
• Technology
• Social Justice
• Cultural Erosion
• Indianise a Global company
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
CHAPTER-9
CONFLICTS AND NEGOTIATIONS IN
INTERNATIONAL BUSINESS
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
Conflicts and Negotiations in International
Business
Conflicts between/ Among Companies
Varying Goals Result in Conflicts
Areas of Conflicts: Macro economic Areas, Production Areas,
Marketing Areas, Finance Areas, Human Resource Areas,
Social and Ethical Areas, Environmental Issues, and
Competing Areas.
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
Conflict Resolutions
Negotiation strengths
Bargaining process
Behavioural Aspects in Negotiations
Bilateral and Multilateral Agreements
Corporate Citizenship
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
CHAPTER-10
INTERNATIONAL TRADE POLICIES AND RELATIONS
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
International Trade Policies and Relations-
Introduction
Protect Domestic Industry from Competition
Tariffs
Subsidies
Import Quotas
Voluntary Export Restraints
Local Content Requirements and
Administrative Policies
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
International Law and Business Firms
Material Sources of International Law
International Disputes
Private international Law
International Court of Justice
International Chamber of Commerce
Country Groups
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
CHAPTER-11
TRADE BLOCKS AND
BUSINESS CENTRES
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
Trade Blocks-Introduction
Trade Blocks Vs. Economic Integrations
Types of Trade Blocks:Free Trade Area, Customs Union,
Common Market, Economic Union
Regional Approach
Advantages of Integration
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
European Union (EU)
European Common Market formed in 1957, wit 6 members
turned into European Union with 25 members
Objective:“The community shall have its task, by setting up
a common market, to promote throughout the community a
harmonious development by economic activities, a
continuous and balanced expansion, an increase in stability
and accelerated raising of the standard of living and closer
relations between the Member States belonging to it.”
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
Functioning of the EU
Common Agricultural Policy (CAP)
Common Fisheries Policy
European Monetary Union
THE EUROPEAN SYSTEM OF CENTRAL BANK
Common Transport Policy
EURO CURRENCY
THE EURO SYSTEM
Enlarged EU mulls future challenge
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
North American Free Trade Agreement
(NAFTA)
Formation: 1st January,1994
Objectives: To create new business opportunities particularly inMexico, To enhance the competitive advantage of the companiesoperating in the USA, Canada and Mexico in wider internationalmarkets, To reduce the prices of the products and services byenhancing the competition.
Measures
Critical Appraisal
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
The Association of South-East Asian Nations
(ASEAN)
Established: 1992
To develop free trade area
ASEAN Free Trade Area (AFTA): Objectives:
To Encourage inflow of Foreign Investment
To establish Free Trade Area
To reduce Tariffs
AFTA and India
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
South Asian Association for Regional
Cooperation (SAARC)
Established in December 1985
Objectives: to improve the quality of life
to develop the region in all Aspects.
to provide the opportunity to the people
to enhance the self-reliance.
to provide climate for creating mutual trust.
to enhance the mutual assistance
to enhance the co-operation
to have unity among the member countries
to extend co-operation to other trade blocks.
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
Facilitates Economic Growth, Cooperation, Trade and
Investment
To reduce Tariffs and trade Barriers
Bogor Goals
Safe and Efficient movement of Goods
Economic Growth
Achievement and Benefits
Asia Pacific Economic Cooperation
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 9
Conflicts and Negotiations in
International Business
Other Trade Blocks
MERCOSUR
ANDEAN:
Trade in Goods
Customs Union
Free Trade Area
Common Market
Free Movement of Capital
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-12
INTERNATIONAL
BUSINESS: SIZE AND
GROETH
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
World Merchandise Export Trade
The world merchandise exports (US$8880 billion in 2004) recorded a
positive growth
North America experienced negative growth rates in 2001 and 2002
Europe alone accounted for nearly 50% of the global merchandise
exports in 2004
Next to Europe, Asia’s exports were largest in 2004
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
World Merchandise Import Trade
Recorded a positive growth (US$ 9215 billion in 2004)
North America experienced negative growth rates in 2001
Europe in 2004 accounts for (44.85 percent of the total global
merchandise imports).
European Union’s(25 Countries) share in 2004 was as high as
41.06 percent.
Next to Europe, Asia’s imports were largest in 2004 (US$2214
billion in money value and 24.02 percent
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
World Trade in Commercial Services (Exports)
The (US$2100 billion in 2004) recorded a positive growth
North America experienced negative growth rate in 2001
Thus Europe accounted for more than half.
European Union’s share was as high as 47.86 percent
Next to Europe, Asia’s exports were largest
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
World Trade in Commercial Services (Imports)
Recorded a positive growth (US$ 9215 billion in 2004)
North America experienced negative growth rate in 2001
South and Central America also experienced negative growth in
2002 and zero growth in 2001
European Union’s share in 2004 was as high as 45.56 percent
Next to Europe, Asia’s imports were largest in 2004
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-13
GLOBAL STRATEGIC
MANAGEMENT
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Global Strategic Management
Vision: What We want to Create
Mission: An enduring statement of purpose that
distinguishes one organisation from other similar
organisations.
Strategy: Unified, comprehensive and integrated plan that
relates to the strategic advantages of the firm to the
challenges of the environment
strategic Management: Continuous, iterative cross
functional process aimed at keeping an organisation as a
whole appropriately matched to its environment
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Peculiarities of Global Strategic Management
Integrated strategic management of a global company
Mostly action-oriented
Scans the environment of all the countries
Operate in home country and in foreign countries
Depends upon the cultural differences among the countries
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Ethics in Global Business
Meaning
Ethical Values in Global Business: Utilisation of the natural resources of the host country appropriately and in an optimum way.
Utilisation of the natural resources for the production ofgoods for the consumption in the domestic country. Ifthese goods are exported, the benefit of foreign exchangeshould be provided to the host country.
Do not use the ingredients in the production which harm the basic health of the customers of the host country
Corruption
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-14
INTERNATIONAL
ACCOUNTING
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
International Accounting-Introduction
Accounting system provides financial information to various stakeholders of the company
The accounting function in international firms is morecomplicated due to:
8 varying exchange rates
8 varying inflation rates
8 differing currency controls
8 varying expropriation risks
8 differing custom duties
8 differing levels of sophistication
8 changing national requirements
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Country Differences in Accounting
A research on differences in accounting standards in 22 advanced
countries found that there were
· 76 differences in the approach of cost of goods sold
65 differences in the assessment on return on assets
54 differences in the measurement of R & D expenses
20 differences in the calculation of net profit margin.
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-15
INTERNATIONAL FINANCE AND FOREIGN EXCHANG
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
International Finance-Introduction
Additional Issues to be Considered in International Business:
8 Currency to be used in the international businesstransactions.
8 Creditworthiness of the importer.
8 Acceptable methods of payment.
8 Arranging Finance.
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Methods of Payment
Payment in advance
Open account
Documentary collection
Letters of credit
Credit cards
Counter trade
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
International Risk Management-Types of
Risks
Political Risks
Commercial Risks
Exchange Control Restrictions on Remittances
Differing Tax Systems
Sources of Funds
Exchange Rate Fluctuations,
Different Stages and Rates of Inflation
Risks of Non-payment
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-16
BALANCE OF
PAYMENTS
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Balance of Payments Statements
Balance of Payments Statement presents a classified record of:
8 all receipts on account of goods exported
8 services rendered
8 capital received by residents
8 payments made by the residents due to goods importedand services received from
8 capital transferred to non-residents / foreigners.
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Balance of Payments-Items
Items can be classified as hereunder:
Current Account
Capital Account
Unilateral Payments Accounts
Official Settlement Account.
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-17
INTERNATIONAL FINANCIAL INSTITUTIONS AND LIQUIDITY
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
International Financial Institutions
International Monetary Fund
International Bank for Reconstruction and Development( IBRD)/ World Bank
International Development Agency
International Finance Corporation
United nations Conference on Trade and Development
Multinational Investment Guarantee Agency
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
International Monetary Fund (IMF)
IMF came into being to promote economic and financial co-
operation among the member countries with a view to facilitate
the expansion and balanced growth of world trade with effect
from March 1, 1947
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Quotas in IMF
Country Quota (% of SDRs)
U.S.A. 37.10
U.K. 10.74
Germany 13.01
France 10.74
Japan 13.31
Canada 6.37
Italy 7.05
India 4.16
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
International Bank for Reconstruction and
Development (IBRD)/ World Bank
Established on 5th December 1944
An inter-governmental institution, corporate in form.
Established to provide long term assistance for the reconstruction and
development of the economies of the member countries
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Functions of IBRD
To assist in the reconstruction and development.
To promote private foreign investment by means of guarantees.
To promote the long-range balanced growth of internationaltrade.
To arrange the loans or guarantees by it in relation tointernational loans
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
International Development Association Established in 1960 as an affiliate of the World Bank.
Provide finance to less developed member countries on a ‘soft’ loan basis.
Called the soft loan window of the IBRD
Objectives
8 Development finance on easy terms to the less developedmember countries.
8assistance for poverty alleviation
8 To provide finance at concessional interest rates
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
International Finance Corporation (IFC)
Established in July 1956 in order to provide finance to private sector indeveloping countries. An affiliate of the World Bank
Objectives (i) assist in financing the establishment, improvement andexpansion of productive private enterprise (ii) Seeking to bring togetherinvestment (iii) Seek to stimulate, and to help create conditionsconductive to the flow of private capital, domestic and foreign, intoproductive investment in member countries.
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-18
INTERNATIONAL
MARKETING
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
International Marketing
International Marketing: Extension of marketing activities across the globe
Standardization Vs. Customization
Options in Trade Off in International Marketing: Ethnocentric Approach, Polycentric Approach, Geocentric Approach
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
International Marketing Mix
Product
Price
Place
Promotion
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
International Marketing Information System
Automated System
System Design
IMIS Subsystems
Marketing Information System
Marketing Research: Research Design, Data Collection, Tabulation, Statistical tools, Data Analysis, Report writing, Report presentation-Use of Research findings
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-19
FOREIGN TRADE PROCEDURES
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Export Trade Procedures
(i) Preliminaries
(ii) Offer and receipt of confirmed orders
(iii) Production and clearance of the products for exports
(iv) Shipment
(v) Negotiation of Documents and realisation of export proceeds, and
(vi) Obtaining various export incentives.
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Export– Production& Procurement of goods
and Shipment
Packing and Marking
Quality Control and Pre-Shipment Inspection
Excise Duty Rebates
Shipment: Customs Clearance, GR-I Form, Shipping Bill, Export
License, Carting Order, Customs Examination of Cargo at
Docks, Let Ship , Mate’s Receipt , Port Trust Dues , Bill of
Lading, Shipping by Other Modes of Transport
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-20
INTERNATIONAL PRODUCTION
AND LOGISTICS MANAGEMENT
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Chapter 12
International Business: Size
and Groeth
Key Decisional Areas in Production
Management
Process
Capacity
Inventory
Human Resource
Quality
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Acquisition of Resources
Vertical Integration
Make Option
Buy Option
Make and Buy Option
National Origin
Time Issues
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P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-21
INTERNATIONAL HUMAN
RESOURCE MANAGEMENT
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Chapter 12
International Business: Size
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International Human Resource
Management-Activities Recruitment
Selection Process
Expatriates
Performance Management
Training and Development
Compensation
Women in International Business
Dual Career Groups
International Industrial Relations
Quality Circles
Participative Management
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Expatriates
Expatriates: Living or working in a foreign country. The parent country nationals working in foreign subsidiary and third country nationals are expatriates.
International Adjustment Stages: Honey-Moon, Cultural Shock, Adjustment, Mastery
Dimensions of Adjustment:Individual, Self-Efficacy,Relational Skills,Perception Skills, Non-Work, Job, Organizational Culture
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Cross Cultural Training
Information and Fact Finding Training
Attribution Training
Culture-Awareness Training
Cognitive-Behaviour Modification Training
Experimental Training
Rigorous Training
Job Novelty Training
Interaction with Host Nationals
BLUNDERS IN CROSS-CULTURAL TRAINING
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Specific Issues in Global HRM
Women in International Business
Dual Career groups
Industrial Relations
Quality Circles
Participative Management
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-22
CONTROLLING AND
EVALUATION OF
INTERNATIONAL
BUSINESS
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Chapter 12
International Business: Size
and Groeth
Controlling and Evaluation of International
Business
• Need for Controlling
• Problems in Controlling
• Role of Information Systems
• Organization Structure
• Areas to be controlled
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Control Mechanisms
Corporate Culture
Reports
Visits to Subsidiaries
Management Performance Evaluation
Cost and Accounting Comparability
Evaluative Measure
Control in Special Situations
Changes in Strategies
Legal Structures and Control
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Chapter 12
International Business: Size
and Groeth
CHAPTER-23
E-BUSINESS VIS-À-VIS
INTERNATIONAL BUSINESS
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Chapter 12
International Business: Size
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New Information Technologies
Neural Networks
Business Process Re-engineering,
Enterprise Resource Planning and
Supply Chain Management
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Re-engineer the International Business
Process
Management of Ongoing Business Processes
Improvements of Business Processes
Re-engineering of Business Processes
Management of International Business Process
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
CHAPTER-24
FUTURE OF INTERNATIONAL
BUSINESS
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Chapter 12
International Business: Size
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Future of International Business
Virtual International Business
Front-End Stage
Back-End Stage
Recession in Global Markets
Crisis in East Asia
China: Threat or Opportunity
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Future of Global Business--Stages
1. Heavy flow of goods into the developing Countries
2. Dumping of goods mostly in developing Countries.
3. Recession in both developing and developed countries.
4. Recovery : Initially advanced countries and later the developingcountries recover.
5. Stabilisation : All the economies stabilise their production,employment and income levels.
6. Growth with stability : World economies grow with the stability inproduction, employment and income. This stage results inmultidirectional international business.
Himalaya Publishing HouseInternational Business
P. Subba Rao
Chapter 12
International Business: Size
and Groeth
Prof. Pulapa Subba Rao