Transcript International Marketing

People are able to recall
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20% of what they read
30% of what they hear
40% of what they see
50% of what they say
60% of what they do
90% of what they see, hear, say, do
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International Business
Management
Unit 1 - Session 1
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Reading
• Daniels John D, Radebaugh Lee H &
Sullivan Daniel P ,
International Business:Environment and
Operations, 10th Edition, Pearson
• P. Subba Rao, International Business:
Text and cases, 2nd Edition, Himalaya
Publishing house
• Doing Business in 2006- World Bank
• World Development Indicator-World Bank
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What is International Business?
• Commercial Transaction
– Buying, Selling or providing services (value
addition)
– Movement of goods or services across
sovereign borders
– Reverse movement of consideration- Money
– Motive- Profit ( short term or long term)
– Governments may do business without profit
motives
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International Business
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Sales & Service
Purchase or consumption
Investment
Transport
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Why International Business?
• Competition in Domestic Market
• Limitation of domestic market- size, product
acceptance
• Availability of resources at cheaper prices
• Sales at higher prices compared to domestic
market
• Too much profit variation in domestic market (
seasonality, Business cycle)
• No market for your product in domestic marketStatutory and environment restriction
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Why companies engage in
International Business??
• To expand market for Sales & services
• To acquire resources
• To minimize Risk
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Increase Sales ?
• Utilization of capacity
– Leads to lower allocated cost
• Market expansion
• Higher profit
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Acquire Resources
• Products and services
– Domestically not available
– Cheaper overseas
– Better quality which could give market edge
• Investment, technology, service, &
information
– Not available in the domestic market
– Cheaper and abundant
– Technologically superior
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Minimize Risk
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Domestic business cycles
Seasonality
Government hostility
Competition targeting
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Why study International Business?
• India moving fast from Developing economy to
Developed economy
• We will soon overtake most countries in the
world in terms of size of economy
– By 2020- we will be # 3
– By 2050- We will be # 1 ????
• The growth will come through expanding Indian
business across the globe
• India has opened its gate for International
business in sales& services as well as
Investment
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Reasons for Growth
• Expansion of Technology
• Liberalization of government policies
relating to movement of goods and
services.
• Development of institution to support
International trade ( Support services)
• Increased global competition
• Consumer pressure
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Modes of International Business
• Merchandise Import and Export
• Services Import and Export
– Tourism & Transportation
– Performance of services
– Use of assets
• Investment
– Direct (FDI) -Controlling interest
– Portfolio- Investment without controlling
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International Companies
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Multi domestic companies
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Treats each market separately and has country-specific
strategies
Multinational Companies
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Global approach to foreign markets and production; will consider
marketing and locate production facility anywhere in the world
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Must have operations in more than one country
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Transnational Companies
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Company owned and managed by nationals in different countries.
An organisation in which capabilities and contribution may differ by
country but are integrated in worldwide operations
Global Companies
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Company which will integrate its operations that are located in
different company
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Strategic Orientation
• Domestic Market Extension
• Multi Domestic Market Concept
• Global Concept
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External Influences on International
Business
• Physical and Societal Factors
– Political
• India and Pakistan; USA and Cuba
– Legal
• Domestic laws- Host and Home countries
• Taxation, Forex, Distribution, IP
– Cultural
• Interpersonal, social behavior, mental attitude
– Economic
• Income Level, Distribution, Growth rate ,Economic status
– Geographical
• Mountain, Deserts, Frequency of Natural disasters, climate etc.
– Historical
• Affects Culture, behavior
• Competition
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Competition
• Strategy depends on the competition in the local
market as well as in other countries where they
face each other
• Marketing innovation
– Companies surprise their competitors by marketing
innovations
• Number of competitors, capability of competitors
• Competitive difference in the individual countries
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Patterns of Expansion
• Passive to Active Expansion
– Passive response to proposal
– Active search for opportunities
• External to internal handling of operation
– Use of intermediary
– Handling the operations by themselves
• Deepening mode of commitment
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Export Import-Marketing with no production
Marketing & Production in one country
Marketing & Production in many countries with centralized control
Production and marketing in individual country with local decision
making
• Geographic Diversification
– One- many- several
• Leapfrogging of expansion
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Competitive Strategies
• Globally standardized vs. Nationally
responsive
• Country vs. Company competitive
• Sovereign vs.Cross National Relationship
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Goals of IB
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To achieve higher rate of profits
Expanding the production capacities beyond the demand of the domestic
country
Severe competition in the home country
Limited home market
Political stability Vs. Political Instability
Availability of technology and competent human resources
High cost of transportation
Nearness to raw materials
Availability of quality human resources at less cost
Liberalization and globalization
To increase market share
To achieve higher rate of economic development
Tariffs and import quotas
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Advantages of IB
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High living standards
Increased socio-economic welfare
Wider market
Reduced effects of business cycles
Reduced risks
Large-scale economies
Potential untapped markets
Provides the opportunity for and challenge to domestic business
Division of labour and specialization
Economic growth of the world
Optimum and proper utilization of world resources
Cultural transformation
Knitting the word into a closely interactive traditional village
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Problems of IB
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Political factors
Huge foreign indebtedness
Exchange instability
Entry requirements
Tariffs, Quotas and trade barriers
Corruption
Bureaucratic practices of government
Technological pirating
Quality maintenance
High cost
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