CENTRAL UNIVERSITY OF
HARYANA
INTERNATIONAL BUSINESS
CONTENT
• Definition
• Nature
• Scope
• Characteristics
• Approaches
• Advantages
• Disadvantages
What is international business ?
• Business is defined as an economic system where goods and services are
exchanged in return for money.
• International business is the commercial activity which is not limited to
boundaries of domestic nation but extends beyond the borders into
other foreign countries.
• To put it in simple words, it can be called as commercial transaction occurring
between two or more countries.
• These transactions could be between government , private organization or
between government and private organization.
Nature of International business
• The organization involved in the international business ,need precise information
to make informed and better decisions which can add value to the business
organization objective.
• This information should be provided in a timely manner, any delay can result in
loss of business opportunity and the information procured is rendered useless.
• Size of the organization should be large enough to accommodate the demands of
the host nation or to meet the global objectives of the business organization.
• In terms of market segmentation, more emphasis is given to geographic
segmentation due to the fact that people of a particular area or region have
similar or identical needs which in turn is based on the weather, climate or
economic conditions of the region or area.
Scope of International business
• International trade: International business includes the import and
export of goods.
• Service export and import: It is also known as invisible commerce.
Invisible commerce items include tourism, transportation,
telecommunications, banking, warehousing, distribution, and
advertising.
• Foreign investment: It involves investing funds abroad in exchange for
economic profitability.
• International finance and investment: International business attracts
investments from global corporations which aids in sustaining the
business overseas.
Characteristics of International business
• It includes two countries: international business is only possible when there
are transactions in different countries.
• Use of currencies: Each country has its own different currency. This causes
currency exchange problems as foreign currencies are used to carry out
transactions.
• High risk: International companies face great risks due to long distances, the
risk of fluctuations between the two currencies, and the risk of obsolescence.
• Heavy document: Subject to a series of steps. Many documents need to be
completed and sent to the other party.
• Time consumption: The time interval from sending and receiving goods to
payment is longer than that of domestic transactions.
• Lack of personal contact: Lack of direct and personal contact between
importers and exporters.
Approaches of IB
ETHNOCENTRIC APPROACH POLYCENTRIC APPROACH
Target market is the domestic country, Companies modify the marketing mix to
only surplus products are exported. meet the taste, performance and needs
of the customers of each international
market.
REGIOCENTRIC APPROACH
GEOCENTRIC APPROACH
A company operating successfully in a
foreign country thinks of exporting to
Company studies the taste , preferences
other neighbouring countries of the host
and needs of the customer in all foreign
country.
markets and then adopts a standardized
marketing mix for all foreign markets.
Advantages of International business
• 1. A Country can Consume those Goods which it cannot Produce.
• 2. The Productive Resources of the World are utilised to the Best Advantage of the Country.
• 3. Heavy Price Fluctuations are Controlled:
• If the price of any commodity goes up, the goods can be imported from abroad and its price can be brought
down.
• 4. Shortages in Times of Famine and Scarcity can be met from Imports from Other Countries.
• Surplus produce can be sent out to needy countries. Food scarcity in India and Europe in often met by surplus
food-grains from the U.S.A.
• 5. Countries Economically Backward but Rich in Resources may Develop their Industries:
• Indian people are opening industries with the idea of sending produced goods to foreign countries.
• 6. International Business Promotes Peace and Friendship
Problems of International business
• 1. The Worst Part of Foreign or International Business is the Destruction of
Cottage and Home Industries.
• 2. Dependence on Foreign Business Creates Difficulties in Times of Need.
• 3. The Extreme Specialization which makes a Country Depend on One or Two
Industries is Bad.
• 4. Countries which Sell Raw Materials and Buy Manufactured Goods in Return are
always Loser and cannot Improve the Country Economy.
• 5. International Business may Completely Exhaust a Country’s Natural Resources
like Coal and Oil which are Irreplaceable.
• 6. Imports of Harmful Drugs and Luxuries Goods ruin the Health of the Nation.
• 7. International Business Rivalry Leads to Friction and War.
THANK YOU
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