There are a number of objectives of international business but the primary and the basic of them being; 1. Learning and Product Development: Today every organization is a learning organization. Also it has to continuously be in touch with the competition in the market. Hence it has to do the up gradation of the existing products eventually whenever required. When one enters international markets, one comes across other competitors from other countries. One is therefore exposed to competition from other countries. Domestic goods have to match international standards to remain in competition, not only with respect to product, cost and quality but services as well. Therefore, one gets an opportunity to learn and develop or improvise new products. 2. Brand building for other products In international markets, if the company is competent enough to beat the rivals in the field, it not only creates a goodwill and image of the Continue reading
International Business Basics
Country Risk in International Investments
Country risk is defined as the exposure to a loss in cross-border lending caused by events in a particular country. These events must be, at least to some extent, under the control of the government of that country; they are definitely not under the control of an enterprise or individual. All cross-border lending in a country – whether to the government, a bank, a private enterprise or an individual – is exposed to country risk. Country risk is thus a broader concept than sovereign risk, which is the risk of lending to the government of a sovereign nation. Further, only events that are, at least to some extent, under the control of the government, can lead to the materialization of country risk. A default caused by bankruptcy is country risk if the bankruptcy is the result of the mismanagement of the economy by the government. It is commercial risk if Continue reading
Global Marketing Strategies
Marketing strategy is one of the most interesting, challenging and important elements in international business. Compared with art and science, marketing strategy is more about people finding ways to deliver exceptional value by fulfilling the needs and wants of customers, shareholders, business partners and society. It is inherently driven by people and is always changeable which explains why making marketing strategy is difficult and significant. Moreover, a perfect marketing strategy that is executed without any flaws can still fail. Additionally, sometimes businesses get success despite having a general strategy or execution because marketing is complicated and flexible and the nature or characteristics of marketing can make planning strategy very difficult and frustrating. Marketing strategy has been a great challenge for each enterprise. To some degree, the difficulty of making marketing strategy highlights the extraordinary success of those famous business, for instance, Coca-cola, Starbucks, Best buy, Apple, etc. A global marketing Continue reading
Push and Pull Factors in International Business
Companies decide to go global and enter international markets for a variety of reasons, and these different objectives at the time of entry should produce different strategies, performance goals, and even forms of market participation. However, companies often follow a standard market entry and development strategy. The most common is sometimes referred to as the “increasing commitment” method of market development, in which market entry is done via an independent local partner. As business and confidence grows, a switch to a directly controlled subsidiary is often enacted. This internationalization approach results from a desire to build a business in the country-market as quickly as possible and by an initial desire to minimize risk coupled with the need to learn about the country and market from a low base of knowledge. International markets evolve rapidly and very often companies struggle to keep up in terms of their strategy. It is therefore Continue reading
Hofstede’s Cultural Dimensions
Dr. Greet Hofsted had conducted a comprehensive study and explained how culture influences the values at the work place. He worked as a psychologist in IBM from 1967 to 1973. In the time of working in IBM he has collected the analyzed data from aver 100000 individual from more than forty different countries. To the above study he made some additions and he developed four dimensions and later on he added fifth dimension that is long term outlook. Geert Hofstede’s dimensions investigation can support the trade individual in enhance understanding the intercultural variance within regions. “Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster.” – Dr. Geert Hofstede The different dimensions of the Geert hofstede are explained below they are Power distance index (PDI) Individualism (IDV) Masculinity (MAS) Uncertainty avoidance index (UAI) Long term orientation (LTO) Power Continue reading
Human Resource Management (HRM) in a Global Environment
As the organizations continue to grow globally at a rapid pace, nations are increasingly permeable to the international exchange of knowledge, capital, goods and services, giving rise to more complexities and uncertainties. Intensified rate of globalization is evident from the changing trends in foreign direct investment which is increasingly indicating a shift toward developing economies like China and India. Growing internationalization is breaking down organizational and geographical boundaries with business processes and structures undergoing complete transformation. This has brought the role of human resources to the fore as the competitiveness of these organizations is contingent on their ability to adapt and design human resource strategies that can sustain global nuances and dynamics. International human resource management (IHRM) from an organization’s perspective is defined as the effective management of human resources in global markets for multinational companies(MNCs), in order to gain a key source of competitive advantage and to be globally Continue reading