BACC6

• International  Business 

  is all commercial transactions,  private and governmental between two or more countries.  Private companies undertake such. Transactions for profits, government may or may not do the same in their transactions.  These transactions include SALES, INVESTMENTS and TRANSPORTATION.
• Global Companies

  have invested and are present in many countries. They market their products through the use of the same coordinated image/brand in all markets
• Multinational Companies

  have investment in other countries, but do not have coordinated product offerings in each country
• Transnational Companies

  are much more complex organizations.  They have invested in foreign operations, have a  central corporate facility but give decision –making , R&D  and marketing  powers to each individual  foreign market.
• NATURE OF INTERNATIONAL BUSINESS

  1.  products offered/ market served

  2.  capabilities

  3.  results
• INFLUENCES AND GOALS OF INTERNATIONAL BUSINESS

  1.  Expand Sales
  2. Acquire Resources
  3. Minimize Risk
• Expand Sales  

  Companies ‘ sales are dependent on

  a.) the consumers’ interest in their products or service,  

  b.) the consumers’ willingness and ability to buy. Increased sales are a major motive for a company’s  expansion  into international business.
• Acquire Resources

   Manufacturers and distributors also look for foreign capital, technologies and  information that they can use  at home to reduce their costs. Sometimes a company operates  abroad to acquire something not readily available in the home country so as to improve  its product  quality and differentiate itself  from competitors, potentially increasing market share and profits.
•  Minimize Risk

   Companies seek out foreign markets to minimize swings in sales  and profits arising out of business cycle recessions and expansions which occur differently in different countries.
• PROBLEMS OF INTERNATIONAL  BUSINESS

   Political and Legal differences

  Cultural Differences

  Economic Differences

  Differences in the Currency Unit

  Differences  in the Language

  Differences in the Marketing Structure

  Trade Restrictions

  High Cost of Distance

  Differences in Trade Practices
• Political and Legal differences

  :  the political and legal environment of foreign markets is different from that of the domestic..  The complexity increases as the number of countries in which a company does business increases.  It should also be noted that the political and legal environment  is not the same in all  provinces of many home markets.
• Cultural Differences

  One of the most difficult problems in international marketing. Many domestic markets are not free from cultural diversity.
• Economic Differences

   The economic environment may vary from country to country.
• Differences in the Currency Unit

  It cause problem in currency convertibility and exchange rate fluctuations
• Differences  in the Language

    Even same language is being used and same words but with different meanings..
• Differences in the Marketing Structure

  The availability and nature of the marketing facilities  may vary  widely
• Trade Restrictions

  Particularly import controls is a very important problem face by the  international marketer.
• High Cost of Distance

  When the markets are far  the transport cost becomes high, and the time required  affecting the delivery tends to become longer. Distance tends to increase  certain other costs also.
• Differences in Trade Practices

  Trade practices may differ between two countries.
• TYPES OF INTERNATIONAL TRADE

   Export Trade

  Import trade

   Entrepot
• Main Reasons International Trade Takes Place

  1. Differences in technology

  2  Differences in resource endowments

  3.  Differences  in demand

  4.  Presence of economies of scale

  5.  Presence of government policies
• ESSENTIAL INTERNATIONAL BUSINESS  SKILLS

  1. Strong communication
  2. Emotional Intelligence
  3. Cultural Awareness
• Globalization  

  a term used to describe how trade and technology have made  the world into a more connected and interdependent place.   The rate of globalization has increased  due to the result of rapid  advancements in communication and transportation.  Advances in communication enable businesses to identify opportunities for investment.
• Effects of globalization

  1.  technological advancements

  2.  socioeconomic  development

  3.  political development

  4.  environmental development

  5.  lower operating costs to increase products, services and consumers.
• International Trade Theories.

  • Specialization  theory was devised by Adam Smith.
  • Comparative Advantage  Theory
• INTERNATIONAL MONETARY SYSTEM

  1.  financial institutions

  2.  multinational corporations

  3.  investors
• Major Stages in the Evolution of Monetary System

  1.  Era of Bimetallism
  2. Gold Exchange standard
• Gold Exchange standard

  1. US dollar

  2.   French franc

  3.  German mark

  4.  Japanese  yen

  5.   British pound