1. NATURE & SCOPE OF INTERNATIONAL BUSINESSBy
Elisante Ole Gabriel (Tanzania)
Chartered Marketer
11/27/2018

2. KEY TOPICS TO BE COVERED
Nature and Scope of International Business
International Business Environment
International Markets entry strategies
The Role of World Trade Organisation
Management Tools for International Business
International Payment systems & Risks
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3. NATURE & SCOPE OF IBM
International Business Management in the context of this subject is used synonymously with International Marketing management (IMM)
Deriving from the word ‘International’ it suggests that IBM is about managing business between nations.
These nations could be separated by ‘geographical’ or ‘Political’ boundaries.
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4. Globalization
This is a concept considering the whole world as one huge homogeneous market. Globalisation is hinged on a number of assumptions. It is however on two major dimensions:
Globalization of production
Globalization of markets
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5. Domestic marketing and international marketing decisions
Overseas Environmental Challenges (Uncontrollables)
Domestic Environmental Challenges (Uncontrollables)
Political
Marketing Challenges in country Y
Economic
Legal
Competition
Economic
(Controllables)
Product
Marketing Challenges in country X
Consumer
Place
Price
Socio Cultural
Political
Marketing Challenges in country Z
Promotion
Legal
Competition
Infrastructure
Logistics
Geography
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6. Reasons for entering international markets
growth
profitability
achieving economies of scale
risk spread
access to imported inputs
uniqueness of product or services
marketing opportunities due to life cycle
spreading R&D cost
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7. Key issues in export growth
Developing a proactive approach to international
trade
Promoting Foreign Direct Investments
Promoting Competitiveness
Simplification of procedures
Encouraging large-scale manufacturers
Reducing transaction costs
Infrastructure development
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8. Key issues (contd) Entrepreneurship facilitation Strengthening SEZs
Encouraging SMEs
Devolution of power to states
Abolition of indirect taxes for certain sectors
Strategy for promoting services’ export
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9. Identifying opportunities in international markets
Extreme focus product strategy
Products-country matrix strategy
Growth-share matrix of exports
Market focus strategies
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10. MODES OF ENTREING INTERNATIONAL MARKETS
This is an institutional mechanism by which a firm makes its products or services available for consumers in international markets.
Mode of entry is determined by:
- the ability and willingness of the firm to commit
resources
- the firms’ desire to have a level of control over
international operations
- the level of risk the firm is willing to take
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11. Modes of international market entry Production in home country
Exports: production is carried out in home country and finished goods are shipped to the overseas markets for sale
indirect exports: process of selling products to an export intermediary in the company’s home country who in turn sells the products in the overseas markets
direct exports: process of selling the firm’s products directly to an importer in the overseas market
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12. Modes (contd)
complementary exporting: use of distribution channels of an overseas firm to make the product available in the overseas market
provide offshore services: to overseas clients with the help of information and communication technology
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13. Production in a foreign country
Modes (contd)
Production in a foreign country
contractual entry modes
international licensing: process by which a domestic company allows a foreign company to use its intellectual property and specific business skills for a compensation (royalty)
international franchising: transfer of intellectual property and other assistance over an extended period of time with greater control compared to licensing
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14. Modes (contd)
overseas turnkey projects: conceptualize, design, install, construct, and carry out primary testing of manufacturing facilities or engineering structures for an overseas client organisation
types : built and transfer (BT), built, operate, and transfer (BOT), built, operate, own (BOO)
international management contracts: a company provides its technical and managerial expertise for a specific duration to an overseas firm
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15. Modes (contd)
international strategic alliance: the relationship between two or more firms that cooperate with each other t o achieve common strategic goals but do not form a separate company
international contract manufacturing: a contractual arrangement under which a firm’s manufacturing operations are carried out in a foreign countries
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16. Investment entry modes
Modes (contd)
Investment entry modes
assembly in overseas markets: refers to exporting various components of the product in completely knocked down (CKD) condition and assembles them overseas
international joint ventures: equity participation of two or more firms resulting into formation of a new entity
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17. Factors for selecting partners for cooperation
the alliance partner should have some strength which
can be translated into business values for the alliance
the alliance partners should be committed to
cooperative goals
it is preferable that the alliance partner should have
multi-cultural business environment
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18. Wholly owned foreign subsidiaries
Factors (contd)
Wholly owned foreign subsidiaries
to have complete control and ownership of
international operations a firm opts for foreign
direct investment through:
1. acquiring a foreign company and all its resources in
a foreign market (acquisition)
2. the establishment of production and marketing
facilities by a firm on its own from scratch (green field)
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19. Factors affecting the selection of entry mode
External factors
Market size
Market growth
Government regulations
Level of competition
Level of risk
political
economic
operational
Production and shipping costs
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20. Factors affecting the selection of entry mode (contd)
Internal factors
Company’s objectives
availability of company resources
level of commitment
international experience
flexibility
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21. Benefits of IBM More opportunities
Avenue for learning new concepts and challenges
Possibility of developing a global brand
A room to benefit from economies of scale & scope
Spread of risks … AND
Wider scope for innovation and creativity.
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