International Business Management

(IBM) Assignment
By -Naman Seth
03251101717

Question- What is meant by International Business and what are its

objectives?

International Businesses have been around since the ancient ages of

mankind , in fact ever since businesses flourished in the home countries
there was a need for expanding operations overseas and tap into new
markets for reasons being maximization of profits and availability of
various types of goods all around the globe. Some instances being the
trade of spices and silk on camel backs throughout the middle east ,
Indian products being transported to Yemen , the trading of precious
metals such as gold and silver from the east to Syria and some of the
more prominent examples being The East India Company and The Silk
Route developed by the Han Chinese empire resulting in the
transportation of Chinese goods all throughout Central and South East
Asia. International trade grew immensely throughout the globe in all
continents. This increase in international business operations resulted in
the creation of policies and framework which would go out and set the
basis for international trade , trade infrastructure , free trade agreements ,
new trade routes and further liberalization amongst various different
economies around the world are some of those policies and framework.
In the Modern times , International business can be termed as any form
of business operation that operates in two or more countries , with one of
them being the home country, i.e. the country where the business was
founded and the other being the country or countries where the business
ultimately decided to expand it’s operations to. Another definition of
International Business is “Globalization of our (home country) economy
with the world’s economy .” Milton Friedman was an exceptional
economist from the Chicago School of Economic thought propelled and
championed neoliberal Globalization. According to Friedman , an
International businesses must keep in mind of the local laws of the
country that they operate in and at the same time work towards
reciprocating profits back to their home country and that globalization
has made the world a place where multinational countries basically are
running the world.
Therefore , International Business is trading and investments are done by
entities across national borders. IBs can be both Government and Non -
Government institutions. International organisations controlled by the
government serve the motive of social service and regulating all the vast
number of International Businesses functioning across the globe. Some
prominent examples of Government controlled International
organisations are United Nations , The World Bank , International
monetary fund (IMF) are some of the most well-known amongst a vast
number of other institutions. On the other hand Privately owned and
operated International organisations function most of the time with the
sole intention of profit making. Examples of the most renowned and
prestigious International Businesses are Apple , Microsoft , Tencent , JP
Morgan Chase, Alibaba , Visa , Tata Group etc.
Besides the nature of International Businesses, they can also be
classified into various forms of business operations, these are –
• Exporting- Exporting is one of the most commonly known form of
International Business. Exporting simply refers to shipping out
home made products out to different countries for consumption.
We can come across various products that are imported from
abroad and those are, therefore an example of goods or even
services that were exported from a foreign nation and made its way
to ours.
• Licensing – Another form of international business operation is
licensing; it is a type of business operation wherein a foreign firm
sells rights to use an intangible process usually in exchange for
royalty. Intellectual Property rights, patents, copyrights and
manufacturing processes are different means of licensing.
 • Foreign Direct Investment – Foreign Direct Investment or FDI is a
foreign company investing in the business entities abroad for
controlling some parts of their business operations. An important
example for understanding FDI could be Apple outsourcing its
electronics assembly operations to China.
• Franchising- Franchising is also another commonly known form of
international business. Franchising is basically opening of new
business models outside its home country which envisions
expansion of business and also as a way of expanding the culture
of a particular country abroad. You could take a walk at a mall and
see examples of franchises all around you , McDonalds , Burger
King, City Sushi , Hamley’s are all examples of Franchises.

Some people might get confused between the terms Globalization and
Internationalization in the context of International Businesses and might
even not know the subtle difference between the two, whilst in reality
these are quite different from one another.
Globalization is a much broader concept and it refers to the assimilation
of markets as a whole while Internationalization is merely a means to
achieve the end. Internationalization is a process or technique
implemented to achieve the latter. Globalization is similar to
Internationalization but it is much more intense than that. Globalization
is integrating not just the monetary aspect but also social, cultural,
political and technological aspects as well. In terms of a business
operation these factors mentioned above would be dubbed as capital,
knowledge and labour.
The point of addressing the complex relationship between these two
terms would aid us in grasping the concept of International Businesses
far more easily.
Every concept has its pros and cons, the field of International Business
Management helps even a layman understand the importance as well as
the disadvantages of opting an International business venture.
First we will count down the advantages of taking a business global.
An international business operation would –
• Enjoy first mover advantage
 • Opportunity for Growth
• Larger markets from the earlier smaller markets for products in
their respective home countries
• Increasing number of customers (Population of the new target
country)
• Discouraging local competitors.

We counted down the pros , now lets take a look at the

disadvantages –
• Wealth disparities between different nations
• Cultural differences , different cultural practices for examples
different festivals in different countries
• Cultural diversity i.e. religious differences, population and
wealth differences.

Up until now , we have a thorough understanding of International

Business operations and how they function in a nutshell , further before
concluding we will discuss the objectives of opting for an International
Business.
International Business management give us pros and cons of opting an
international business operation and by studying every aspect of it we
can formulate objectives that business owners have on their minds.
International Business operations gives organisations access to a whole
new market of customers, for example – Lo’real is a hair care product
from France which has achieved new heights as a multinational
company operating in several nations and is well respected and
recognized , therefore , taking the firm into international markets took
them to a place where domestic operations never would have as they had
access to customers from the whole world.
Government policies are different for every nation , some allow and
encourage free trade like USA and India and some prefer to produce and
consume domestically like China, another objective of International
business firms are to identify and exploit these opportunities worldwide.
Different nations also offer dynamic advantages like India has a large
scale availability of cheap man power or labour and countries like USA
lack in that, therefore International Business firms tend to take
advantage of cheap labour available in different countries , a live
example of this would be India’s huge BPO industry where many
nations have outsourced their customer support operations here.
Another objective would be to increase knowledge in different fields
like manufacturing processes and technological improvements from
around the world.
Finally, an important objective of opting an International form of
business is to gain Market monopoly and to increase the customer base
and finally maximizing the profits which is the sole objective of any
business operation.