TOPIC 2: GLOBAL AND Foreign or international business activities

INTERNATIONAL BUSINESS take place in the different picture such as :

1. Countries are sovereign states that • The movement of goods from country
have specific geographical regions and to another (exporting, importing, trade)
have distinct cultures, languages, and
people. • Contractual agreements that allow
foreign firms to use products, services,
2. Global is an adjective which means and processes from other nations
concerning the entire earth and not just (licensing, franchising)
one or two regions. It is synonymous
worldwide and universal, and it also • The formation and operations of
means unlimited, unbounded, general, and sales, manufacturing, research, and
comprehensive. development, and distribution facilities
in foreign markets
3. International is an adjective that
means "concerning two or more nations." International business studies include
understanding the impact of the above
4. International Business comprises the practice on domestic and international
impact of the above practices on the markets, economies, states, firms, and
domestic and international markets, individuals. Successful multinational
economies, states, companies, and businesses understand the world
individuals. marketplace's complexity and can deal
with the challenges and threats of doing
Topic 2.1: Global vs. International business in a rapidly evolving global
market environment.
Countries are sovereign states with
definite geographical regions and have Multi-domestic – A strategic business
distinct cultures, languages, and model that involves promoting products
individuals. They are politically organized, and services in various markets around
distinct, and separate from each other. the world and adapting the
They communicate with each other on a product/service to the cultural norms,
regional or global level, through trade and taste preferences and religious customs of
other activities. the various markets.

The word “global” is an adjective which Multinational – A business strategy that

means “concerning the entire earth and involves selling products and services in
not just one or two regions.” It is different foreign markets without
synonymous to “worldwide” and changing the characteristics of the
“universal,” and it also means “unlimited, product/service to accommodate the
unbounded, general, and comprehensive.” cultural norms or customs of the various
markets.
When economies go global, there is free
trade, migration, and technological, Participation in international business
political, military, and socio-cultural allows countries to take advantage of
interaction and sharing between nations. specialized expertise and abundant factors
“Global” means “the integration of of production to deliver goods and services
different nations as a single unit.” into the international marketplace. This
has the benefit of increasing the variety of
The word “international,” on the other goods and services available in the
hand, is an adjective which means marketplace.
“concerning two or more nations.”It
means the interaction between countries International business also increases
regardless of national boundaries. It competition in domestic markets and
affects only the countries that are introduces new opportunities to foreign
involved. markets. Global competition encourages
companies to become more innovative and
efficient in their use of resources.

Topic 2.2: International Business The Challenges and Considerations of

International Business
Because nation-state has specific Competitive Environment
government structure, laws and The competitive environment is constantly
regulations, taxes, duties, currencies, changing according to the economic,
culture, and traditions, international political, and cultural environments.
business is definitely more complex than a Competition may exist from a variety of
business that exclusively operates in the sources, and the nature of competition
domestic economy. may change from place to place. It may be
encouraged or discouraged in favor of
National wealth disparities: Wealth cooperation, and the relationship between
disparities among nations remain vast. buyers and sellers may be friendly or
hostile. The level of technological
Regional diversity according to wealth innovation is also an important aspect of
and population: North America is home the competitive environment as firms
to just 5 percent of the world’s population, compete for access to the newest
yet it controls almost one-third of the technology.
world’s gross domestic product.
Features of International Business
Cultural/linguistic diversity: There are Cross-border business is very different
more than 10,000 linguistic/cultural from one that involves a single country.
groups in the world. The main feature of such businesses is
that they operate on very large scales and
Country size and population diversity: involve multiple jurisdictions.
There were about 60 countries at the start
of the twentieth century; by 2000, this Large companies and MNCs often operate
number grew to more than 200. in more than one country. Managing such
cross-border operations requires a
Economic Environment thorough understanding of local cultures,
The economic environment may be very practices, laws and business
different from one country to the next. The environments.
economy of countries may be
industrialized (developed), emerging Global Business Practice/International
(newly industrializing), or less developed Business
(third world). Further, within each of these International business basically means
economies are a vast array of variations, commercial transactions that involve two
which have a major effect on everything or more countries. These transactions can
from education and infrastructure to occur between private entities as well as
technology and healthcare. government agencies. The only
prerequisite of such transactions is that
Political Environment they should involve multiple nations.
The political environment of international
business refers to the relationship
between government and business, as well International management refers to the
as the political risk of a nation. Therefore, practice of managing these kinds of
companies involved in international international businesses and global
business must expect to deal with different practices. This field of management has
types of governments, such as multi-party gained a lot of prominence after
democracies, one-party states, globalization. Even small and medium-
dictatorships, and constitutional sized companies these days transact with
monarchies. foreign entities.

Cultural Environment Features of International Business

The cultural environment of a foreign A cross-border business is very different
nation remains a critical component of the from one that involves a single country.
international business environment, yet it The main feature of such businesses is
is one of the most difficult to understand. that they operate on very large scales
The cultural environment of a foreign and involve multiple jurisdictions.
nation involves commonly shared beliefs
and values, formed by factors such as Another feature of international
language, religion, geographic location, businesses is that they integrate the
government, history, and education. economies of multiple countries.
Functions like importing, exporting,
financing, hiring, selling and managing system is not the same as all other states
may all happen in separate nations. in the US.

Another feature of cross-border businesses Cultural Differences.

is that they face fierce competition. In international business, cultural
Smaller companies from developing differences are considered to be one of the
nations often have to compete with MNCs most challenging problems in international
that have no shortage of resources. marketing. Thus, the domestic market,
however, is not an excuse for cultural
Importance of International Business diversity.
International business offers the following
benefits to the economies and Economic Differences.
organizations it involves in its In international business, the economic
transactions: environment may vary from country to
country.
Since import and export are common
functions of cross-border business, they Differences in The Currency Unit.
involve the use of foreign exchange. In international business activities, the
The country exporting goods and services, currency unit plays an important role that
thus, can earn foreign exchange from the varies from one nation to another and
country importing them. sometimes may cause problems such as
currency convertibility and also the
Cross-border operations offer businesses problems of exchange rate fluctuations.
the opportunity to earn higher profits. The monetary system and regulations also
This is because they can sell their vary from one nation to another.
products to a large customer base from
multiple countries. Differences in The Language.
Differences in the language are one of the
Since international business helps a common problems that an international
nation’s economy, governments often marketer often encounter. There are
provide benefits to attract foreign instances when the same language (words
business. Such government benefits may and terms) is used in different countries,
be in the form of tax sops, subsidized but it gives a different meaning. However,
resources, financial incentives, etc. the challenge of language differences is
not something peculiar to international
International businesses also facilitate marketing like India has a multiplicity of
optimum utilization of resources. languages.
Companies use natural and human
resources from various countries in their Differences in The Marketing
operations. Infrastructure.
Different countries may vary widely on the
It is very easy for international businesses availability of their marketing facilities
to diversify and expand their activities. and its nature. For instance, an
This is because they earn very high profits advertising medium could be very effective
and receive many governments benefits. in one market and may not be available or
not yet developed in the other market.
TOPIC 3: INTERNATIONAL BUSINESS
DIFFERENCES Trade Restrictions.
In international business activities, trade
Political and Legal Differences. restrictions or barriers, particularly import
Each nation possesses different political control, become a very important problem
and legal environment practices that face by the international marketer.
differed from the domestic economy of the
foreign market. Generally, the complexity High Costs of Distance.
of the political and legal environment Distance is one of the factors considered
increases the number of companies that in international business that contribute
do business in other countries. It should additional cost when the markets are far
be remembered that the political and legal located from each other. Transportation
environment in all the provinces of many cost and the time required affects the
markets is not homogeneous. For instance, delivery that tends to become longer.
in the United States, the political and legal
Distance tends to increase the certain cost Globalization is the term used to
of each product. describe the interdependence and
interconnectedness of the economies,
Differences in Trade Practices. societies, and populations of the world
The trade practices of every nation and brought on by cross-border trade in
customs vary from one nation to another. products and services, technology, and
investment, citizens, and knowledge flows.
Determinant of Culture It promotes and increases interactions
Companies must take into account the among different regions and populations
lifestyles and cultures of countries to worldwide.
which they are considering exporting.
Such information can be used to decide It is generally understood that there are
whether a product or service in a target two interrelated elements: the opening up
market will be considered important, of international borders to increasingly
valuable, luxurious, or undesirable. You rapid flows of goods, services, finance,
might even find certain products and people and ideas; and the changes in
services culturally unacceptable. national and international institutions and
policies that facilitate or promote such
Material culture. flows.
Material culture discusses technological
goods being utilized by most of the
population.
Globalization
means speeding up movements and
transactions (of people, products, services,
Cultural preferences. money, technology, and cultural
Preferences for products, foods, product practices).
quality levels, and brands my differed in
every international market. Globalization in Geography
is defined as the set of processes that
Languages. contribute to the relationship between
The Languages used in a country affect societies and individuals worldwide
the marketing activities, brand names, (economic, social, cultural, technological,
gathering of data through interviews, institutional).
advertising, and business relationships.
Economic globalization
Education. In transactional actors such as
Education refers to the level of completed corporations or NGOs, economic
educational attainment in a region that globalization is the development of trade
can be an indicator of the quality and systems.
potential workforce and consumers'
status. Financial globalization
with international economic exchanges
Religion. and monetary exchanges, can be linked to
Religion is considered to be the major the rise of a global financial system.
cultural influencer that can affect the lives
of individuals. Cultural globalization
refers to the interpenetration of cultures,
Ethics and values. which means that nations adopt other
Ethics and values influence international nations' principles, beliefs, and costumes
business, especially on the conduct of and lose their unique culture to a unique,
business in another country. globalized supra-culture.

Social organization. Political globalization

Social organizations are composed of the growth of political globalization, and
family and groups, the prevalence of the increasing impact of international
special-interest groups, and attitude organizations such as the UN or the WHO
toward them means that policy action takes place at the
international level.
TOPIC 4: GLOBALIZATION
Sociological globalization
Sociological information on globalization, between supply price and quantity
together with the interconnection and supplied.
interdependence of events and their
consequences, travels almost in real-time. Supply Curve.
A supply curve is nothing more than a
Technological globalization graphical representation of the law of
is the phenomenon by which millions of supply.
people are interconnected via platforms
like Facebook, Instagram, Skype, or Market Equilibrium.
YouTube, thanks to the digital world's It refers to the state of equilibrium that
power. exists when the opposing market forces of
demand and supply exactly offset each
Geographic globalization other, and there is no inherent tendency
is the ever-changing modern structure and for changes.
hierarchy in various parts of the world.

Equilibrium Price.
It refers to the price that exists when a
market is in equilibrium.
Ecological globalization
reflects the idea of seeing planet Earth as Equilibrium Quantity.
a single global object. All communities It refers to the quantity exchanged
should protect this common good since the between buyers and sellers when a market
weather affects us, and we are all is in equilibrium.
protected by the same atmosphere.
The law of demand states that, other
TOPIC 5:BASIC THEORY USING things being equal,
DEMAND AND SUPPLY IN TRADE More of a good will be bought the lower
its price
Law of Demand. Less of a good will be bought the higher
The law of demand is the inverse relation its price
between demand price and quantity
demanded. demand to refer to the amount of some
good or service consumers are willing and
Demand. able to purchase at each price.
Demand is a fundamental aspect of market
exchanges and economic activity. Even Demand Schedule
more, it is an essential feature of human A table that shows the quantity demanded
existence. at each price

Demand Curve. A change in demand means that the entire

A demand curve commonly represents the demand curve shifts either left or right. A
demand relation between demand price change in demand refers to a shift in the
and quantity demanded. A demand curve entire demand curve, which is caused by a
is nothing more than a graphical variety of factors (preferences, income,
representation of the law of demand. prices of substitutes and complements,
expectations, population, etc.)
Supply.
Supply is a fundamental aspect of market A change in the quantity demanded refers
exchange and economic activity. Supply is to movement along the existing demand
based on the ownership and control of curve, D0. This is a change in price, which
scarce resources (labor,capital, and is caused by a shift in the supply curve.
entrepreneurship and foreign exchange),
which are used to produce the goods and A change in price does not move the
services that satisfy wants and needs. demand curve. It only shows a difference
in the quantity demanded.
Law of Supply.
The specific supply relation between price The demand curve will move left or right
and quantity is termed the law of supply. when there is an underlying change in
The law of supply is the direct relation demand at all prices.