NATURE OF INTERNATIONAL BUSINESS (IB)¶
Globalization¶
Globalization represents an attitude of mind - it is a mindset that views the entire world as a single market. This perspective transcends traditional boundaries and focuses on global opportunities, aiming to leverage resources and markets across the world for optimal benefits.
International Trade and International Marketing¶
Initially, producers exported products to nearby countries, expanding over time to more distant markets. This gradual extension beyond mere trade has evolved into what we now understand as International Business.
From International Marketing to International Business¶
A true global company views the entire world as a single market, embodying a vision that seeks to:
- Source raw material wherever they are cheapest.
- Manufacture wherever in the world it is most cost-effective.
- Sell in markets where prices are highest.
- Raise finance globally.
- Forge international strategic alliances.
- To manage these complexities, hire the best talent from all over the world.
This approach, highlighted by the strategy of Arvindh Mills, emphasizes efficiency and optimization in every aspect of business operations, from production to human resources.
International Business Defined¶
International Business is the process that focuses on leveraging the globe's resources and an organization's objectives towards seizing global business opportunities and addressing threats. This involves the production, purchase, sale, or exchange of goods and services on a worldwide scale.
Characteristics of International Business¶
- Large Scale Operations: International business operates on a larger scale than domestic business, often involving complex logistics, diverse markets, and vast distribution networks.
- Integration of Economies: It fosters economic integration among countries, making economies more interdependent.
- Dominated by Developed Countries and MNCs: Major players include developed countries and multinational corporations, which have significant influence over global trade and economic policies.
- Benefits to Participating Countries: Countries engaged in international business can enjoy various benefits, including access to larger markets, advanced technologies, and increased foreign investment.
- Keen Competition: The global market is highly competitive, with companies from around the world vying for market share, innovation, and customer loyalty.
- Special Role of Science and Technology: Advances in technology and science play a crucial role in facilitating international business, through improvements in communication, transportation, and production techniques.
- International Restrictions: Despite the opportunities, companies must navigate various restrictions, including tariffs, trade barriers, and regulatory standards imposed by different countries.
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