International Business: It is defined as the process of extending the business activities from domestic to any

foreign country with an intention of targeting international customers.

It is also defined as the conduction of business activities by any company across the nations

It can also be defined as the expansion of business functions to various countries with an objective of fulfilling
the needs and wants of international customers

A "multinational corporation" is also referred to as an international, transnational or global corporation.

Actually, for an enlarging business firm, multinational is a beginning step, as it gradually becomes transnational
and then turns into a global corporation. For, transnational corporation represents a stage where in, the
ownership and control of the concerned organization crosses the national boundaries.

Features of MNCs :

1. MNCs have managerial headquarters in home countries, while they carry out operations in a number of other
(host) countries.

2. A large part of capital assets of the parent company is owned by the citizens of the company's home country.

3. The absolute majority of the members of the Board of Directors are citizens of the home country.

4. Decisions on new investment and the local objectives are taken by the parent company.

1
5. MNCs are predominantly large-sized and exercise a great degree of economic dominance.

6. MNCs control production activity with large foreign direct investment in more than one developed and
developing countries.

7. MNCs are not just participants in export trade without foreign investments.

Main Drivers of Globalization [International Business]

Cost driver companies consider the various lifestyle of the country before considering the price of the product
and services to rendered
Technology driver : increasing technology system, transportation, advancing in the level of world trade system
Government driver: reducing trade tariffs and non trade tariffs, reducing the role of political policies
Competition driver: organization becoming a global center, shift in open market system, Privatization,
Liberalization

Approaches in International Business

1. ETHNOCENTRIC ORIENTATION:

The ethnocentric orientation of a firm considers that the products, marketing strategies and techniques
applicable in the home market are equally so in the overseas market as well. In such a firm, all foreign
marketing operations are planned and carried out from home base, with little or no difference in product
formulation and specifications, pricing strategy, distribution and promotion measures between home and
overseas markets. The firm generally depends on its foreign agents and export-import merchants for its export
sales.

2. REGIOCENTRIC ORIENTATION :
2
In regiocentric approach, the firm accepts a regional marketing policy covering a group of countries which have
comparable market characteristics. The operational strategies are formulated on the basis of the entire region
rather than individual countries. The production and distribution facilities are created to serve the whole
regionwith effective economy on operation, close control and co-ordination.

3. GEOCENTRIC ORIENTATION :

In geocentric orientation, the firms accept a world wide approach to marketing and its operations become
global. In global enterprise, the management establishes manufacturing and processing facilities around the
world in order to serve the various regional and national markets through a complicated but well co-ordinate
system of distribution network. There are similarities between geocentric and regiocentric approaches in the
international market except that the geocentric approach calls for a much greater scale of operation.

4. POLYCENTRIC OPERATION :

When a firm adopts polycentric approach to overseas markets, it attempts to organize its international marketing
activities on a country to country basis. Each country is treated as a separate entity and individual strategies are
worked out accordingly. Local assembly or production facilities and marketing organisations are created for
serving market needs in each country. Polycentric orientation could be most suitable for firms seriously
committed to international marketing and have its resources for investing abroad for fuller and long-term
penetration into chosen markets. Polycentric approach works better among countries which have significant
economic, political and cultural differences and performance of these tasks are free from the problems created
primarily by the environmental factors.

INTERNATIONAl BUSINESS ENVIRONMENT

FOREIGN ENVIRONMENT:

The home-based or the domestic export expansion measures are necessarily related to the conditions prevailing
in possible markets. An Exporter has to overcome various constraints and adapt plans and operations to suit
foreign environmental conditions. The main elements of foreign environment affecting marketing activities of a
firm in a foreign country consist of the following.

3
A) POLITICAL DIMENSION:

Nations greatly differ in their political environment. Govt. policies, regulations and control mechanisms
regarding the countries, foreign trade and commercial relations with other countries or groups of countries. At
least four factors should be considered in deciding whether to do business in a particular country. They are

1. Attitudes towards International Buying:

Some nations are very receptive, indeed encouraging, to foreign firms, and some others are hostile. For
e.g.: Singapore, UAE and Mexico are attracting foreign investments by offering investment incentives,
removal of trade barriers, infrastructure services, etc.

2. Political Stability: A country's future and stability is another important issue. Government changes
hands sometimes violently. Even without a change, a region may decide to respond to popular feeling. A
foreign firm's property may be seized; or its currency holdings blocked; or import quotas or new duties
may be imposed. When political stability is high one may go for direct investments. But when instability
is high, firms may prefer to export rather than involve in direct investments. This will bring in foreign
exchange fast and currency convertibility is also rapid.

3. Monetary Regulations:

Sellers want to realise profits in a currency of value to them. In best situations, the Importer pays in the
seller's currency or in hard world currencies. In the worst case they have to take the money out of the
host country in the form of relatively unmarketable products that they can sell elsewhere only at a loss.
Besides currency restrictions, a fluctuating exchange rate also creates high risks for the exporter.

4. Government Bureaucracy:

It is the extent to which the Government in the host country runs an efficient system for assisting foreign
companies: efficient customs handling, adequate market information, etc. The problem of foreign
uncertainty is thus further complicated by a frequently imposed "alien status", this increases the
difficulty of properly assessing and forecasting the dynamic international business. The political
environment offers the best example of the alien status.

4
 A foreign political environment can be extremely critical; shifts in Government often means sudden
changes in attitudes that can result in expropriation, expulsion, or major restrictions in operations. The

fact is that a foreign company is foreign and thus always subject to the political whim to a greater degree
than a domestic firm.

CULTURAL ENVIRONMENT:

The manner in which people consume their priority of needs and the wants they attempt to satisfy, and the
manner in which they satisfy are functions of their culture which moulds and dictates their style of living. This
culture is the sum total of knowledge, belief, art, morals, laws, customs and other capabilities acquired by
humans as members of the society. Since culture decides the style of living, it is pertinent to study it especially
in export marketing. e.g. when a promotional message is written, symbols recognizable and meaningful to the
market (the culture) must be used. When designing a product, the style used and other related marketing
activities must be culturally acceptable.

ECONOMIC ENVIRONMENT: In considering the international market, each Exporter must consider the
importing country's economy. Two economic characteristics reflect the country's attractiveness as an export
market. They are the country's industrial structure and the country's income distribution by employment
industrialization and socio economic justices.

LEGAL ENVIRONMENT:

The legal dimension of international Business environment includes all laws and regulations regarding product
specification and standards, packaging and labeling, copyright, trademark, patents, health and safety regulations
particularly in respect of foods and drugs. There are also controls in promotional methods, price control, trade
margin, mark-up, etc., These legal aspects of marketing abroad have several implications which an exporting
firm needs to study closely.

Regional Strategy:

In international business the regional strategy is explained as business strategy directed in doing business for a
specific country, region in international business is one nation, large scale business operators will have to design
the business strategy based on each nation and which ultimately affects the international business

Companies can source goods, technology, information, and capital from around the world, but business activity
tends to be centered in certain cities or city regions in a few parts of the world
5
Global strategy

Global strategy is the ability of an organization to apply a replicable and systematic methodology to the unique
challenges that are faced by the organization. A sound global strategy addresses questions such as, how to build
necessary global presence and what should be the optimal locations for various value chain activities. Any
company which implements the global strategy will have the following aspects as its features

 Product is the same in all countries.

 Centralized control - little decision-making authority on the local level

 Effective when differences between countries are small

 Advantages: cost, coordinated activities, faster product development