International Business and its Components Video Lecture | International Business - B Com

hello students welcome to the lecture on
international business environment and
after this lecture we will be able to
learn the following objectives explain
the International marketing environment
discuss the micro environment define the
macro environment explain political
legal environment let's start with a
brief introduction to the topic
international business environment
international business means carrying on
business activities beyond national
boundaries these activities normally
include transaction of economic
resources such as goods capital services
comprising technology skilled labor and
transportation etc international
production thus international business
includes not only international trade of
goods and services but also foreign
investment especially foreign direct
investment objectives of international
business sales expansion the main
objective of international business is
to increase the sale because in
international business a firm can sell
its product in domestic as well as in
foreign market resource acquisition it
means getting the resources from other
countries because there may be so many
resources of other country which may not
be available in home country minimize
competitive risk many companies move
internationally to minimize the risk of
competitors diversification many
companies want to diversify the sources
of sales and supplies so they may seek
foreign market for this purpose modes of
international business a firm adopts
various modes for its entry into
business transaction across borders
direct and indirect export
trade mode presents the first step in
international business it includes
export and import export may be either
direct or indirect direct export in case
of direct export a company takes full
responsibility for making its goods
available in the target market by
selling directly to the end-users
normally through its own agents in
direct export when the exporting company
does not possess the necessary
infrastructure to involve itself in
direct exporting in direct export takes
place counter trade counter trade is a
sort of bilateral trade where one set of
goods is exchanged for another set of
goods in this type of external trade a
seller provides a buyer with delivers
and contractually agrees to purchase
goods from the buyer equal to the agreed
percentage of the original sale contract
value contractual entry modes
contractual entry modes are found in
case of intangible products such as
technology patents and so on forms of
technical collaboration technical
collaboration normally takes four forms
they are licensing licensing is an
arrangement by which a firm transfers
its intangible property such as
expertise know-how blueprints technology
and manufacturing design to its own unit
or to a firm located abroad franchising
in this form of technical collaboration
the franchisor is the entrant and the
franchisee is the host country entity
the franchisee makes use of intellectual
property right like trademarks
copyrights business know-how managerial
assistance etc management contracts in a
management contract one companies
supplies the other with managerial
expertise
such agreements are normally signed in
case of turnkey projects where the host
country firm is not able to manage
day-to-day affairs of the project or in
other cases where the desired managerial
capabilities are not available in the
host country turnkey projects in a
turnkey project agreement a form agrees
to construct an entire plant in a
foreign country and makes it fully
operational it is known as turnkey
because the licensure starts the
operation and hands over the key of the
operating plant to the licensee foreign
investment foreign investment takes two
forms one is foreign portfolio
investment the other is foreign direct
investment international marketing
environment the marketing environment
creates opportunities or threats in two
basic ways first changes in the
marketing environment can directly
affect specific markets changes in the
marketing environment can make markets
larger or smaller or sometimes create
new markets the second way the marketing
environment produces opportunities or
threats is through direct influences on
specific marketing activities changes in
the technological environment
similarly provide opportunities to
produce these high-mileage or
alternative fuel cars these different
levels of marketing can be expressed in
the following terms domestic marketing
which involves the company manipulating
a series of controllable variables such
as price advertising distribution and
the product service attributes in
largely uncontrollable external
environment that is made up of different
economic structures competitors cultural
values and legal infrastructure within
specific political or geographic country
boundaries international marketing which
involves operating across a number of
foreign country markets in which not
only do the uncontrollable variables
differ significantly between one market
and another but the controllable factors
in the form of cost and price structures
opportunities for advertising and
distributive infrastructure are also
likely to differ significantly global
marketing management which is a larger
and more complex international operation
micro environment micro environment
factors are close to businesses and have
direct impact on its business operations
and success before deciding corporate
strategy businesses should carry out a
full analysis of their micro environment
micro economic factors customers as all
businesses need customers they should be
centered orientated around customers the
firm's marketing plan should aim to
attract and retain customers through
products that meets their wants and
needs and excellent customer service
employees employing staff with relevant
skills and experience is essential this
process begins at recruitment stage and
continues throughout an employee's
employment via ongoing training and
promotion opportunities training and
development play a critical role in
achieving a competitive edge especially
in service sector marketing suppliers
suppliers provide businesses with the
materials they need to carry out their
business activities a suppliers behavior
will directly impact the business it
supplies shareholders as organizations
require investment to grow they may
decide to raise money by floating on the
stock market that is
from private to public ownership media
positive media attention can make an
organization or its products and
negative media attention can break an
organization organizations need to
manage the media so that the media help
promote the positive things about the
organization competitors the name of the
game in marketing is differentiation if
a business is unaware of its competitors
activities they will find it very
difficult to beat their competitors
macro-environment a macro environment
comprises the external factors that can
influence a business these factors
typically include economic demographic
political and technological forces in
business macro environment factors
general economic factors in the macro
environment can include supply and
demand number of competitors in the
market availability of economic
resources and efficient production
methods employed by companies these
factors are uncontrollable external
forces that affect how a business
operates analysts often categorize them
using the acronyms best or pestle
broken-down best stands for political
economic social and technological
concerns pestle also includes
environmental and legal factors
political political macro environment
factors include things like tax policies
government-issued safety regulations the
availability of government contracts and
even shifts in the controlling political
party economic economic factors are
often difficult to assess
since economic forecasts and analysis
very widely between experts unemployment
levels comparative foreign exchange
rates and the state of the global
economy
can all help or hurt a business's
ability to get needed components and
maintain a stable profit social the mode
and demographics of the population make
up the social area of macro environment
factors social trends such as a
preference for on-demand mobile media
devices can also influence which
products our company manufactures and
very chooses to spend advertising
dollars technological technological
macro environment factors can influence
how an organization does business owners
must be able to accurately identify
which new developments will be truly
useful and which are just fads
environmental environmental concerns are
important to businesses both in the
short and long term programs such as
environmental risk assessment can help
companies prepare to handle many of the
most likely short-term crisis legal
legal factors can limit or change how a
business operates legal factors are
determined by both local legislation and
regional and national laws hedging
against the macro environment generally
businesses have little to no control
over their macro environment they can
however prepare for the unexpected by
using a pest or PESTEL analysis business
environment types the political legal
environment it encompasses factors and
trends related to governmental
activities and specific laws and
regulations that affect marketing
practice it is closely tied to the
social and economic environments
organizations must deal with laws at the
international federal state and local
levels
demographic environment the demographic
environment refers to the size
distribution and growth rate of groups
of people with different characteristics
a global perspective requires that
marketers be familiar with important
demographic trends around the world as
well as within the United States social
environment the social environment
includes all factors and trends related
to groups of people including their
number characteristics behavior and
growth projections cultural environment
the cultural environment refers to
factors and trends related to how people
live and behave cultural factors
including the values ideas attitudes
beliefs and activities of specific
population subgroups greatly affect
consumers purchasing behavior cultural
differences are important in both
international and domestic markets
economic environment the economic
environment includes factors and trends
related to income levels and production
of goods and services technological
environment the technological
environment includes factors and trends
related to innovations that affect the
development of new products or the
marketing process competitive
environment the competitive environment
consists of all the organizations that
attempt to serve similar customers two
types of competitors are of major
concern brand competitors product
competitors institutional environment
the institutional environment consists
of all the organizations involved in
marketing products and services summary
now in the end let us summarize what we
have learnt in this lecture
International Business means carrying on
business activities beyond national
boundaries changes in the marketing
environment can make markets larger or
smaller or sometimes create new markets
the International marketing environment
is a complex constellation of demands
and constraints which the firm faces as
it attempts to compete and grow micro
environment factors are factors close to
a business that have a direct impact on
its business operations and success a
macro environment comprises the external
factors that can influence a business