Incentives are any measurable economic advantage afforded to specific enterprises or categories of enterprises by (or at the direction of) a government, in order to encourage them to behave in a certain manner. They include measures either to increase the rate of return of a particular FDI undertaking, or to reduce (or redistribute) its costs or risks. They do not include broader nondiscriminatory policies, relating to the availability of physical and business infrastructures, the general legal regime for FDI, the general regulatory and fiscal regime for business operations, free repatriation of profits or the granting of national treatment. While these policies certainly bear on the location decisions of TNCs, they are not Foreign direct investment incentives. The main types of Foreign direct investment incentives used are fiscal incentives (e.g. reduction of the standard corporate income-tax rate, investment and reinvestment allowances, tax holidays, accelerated depreciation, exemptions from import duties), financial incentives Continue reading
International Business Basics
Definition of Globalization – Stages of Globalization
A very commonly used term, globalization can mean different things to different people. At a broad level, globalization refers to the growing economic interdependence among countries, reflected in the increasing cross border flow of goods, services, capital and technical know how. At the level of a specific company, globalization refers to the degree to which competitive position is determined by the ability to leverage physical and intangible resources and market opportunities across countries. “Globalization refers to the multiplicity of linkages and interconnections between the states and societies that make up the present world system. It describes the process by which events, decisions, and activities in one part of the world come to have significant consequences for individuals and communities in quite distant parts of the globe. Globalization has two distinct phenomena: scope (or stretching) and intensity (or deepening). On the one hand, it defines a set of processes which embrace Continue reading
Export Credit – Definition and Types
Credit is an essential requirement for any kind of business. So is the case with exporting also. The various sources available have to be explored by the exporter in order to fulfill the financial requirements of export business. We can define export credit as “the credits required by the exporters for financing their export transactions from the time of getting an export order to the time of the full realization of the payment from the importers.” From the time of an export order is received and confirmed, the exporter needs finance (export credit) at pre-shipment stage and also at post-shipment stage. Finance is required at pre-shipment stage for the following purposes: To purchase raw materials and other inputs to manufacture goods. To assemble the goods in the case of merchant exporters. To store the goods in suitable warehouses till the goods are shipped. To pay for packing, marking and labeling Continue reading
New Trade Theory of International Trade
New Trade Theory of International Trade takes a different approach from the Ricardian and the Heckscher-Ohlin models on why countries engage in international trade. Both Ricardo and Heckscher assumed constant returns to scale where to them if all factors of production are doubled then output will also double. But a firm or industry may have increasing returns to scale or economies of scale in way that when all factors of production are doubled, output more than doubles which will necessitate a bigger market and thus forcing firms to engage in international trade where there is a larger market. The New Trade Theorist noted that the bigger the size of a firm or industry the more the efficiency of its operations in that the the cost per unit of output falls as a firm or industry increases output. The increase in output must however be met with an increase in the Continue reading
Relevance of Sustainable Development Goals (SDGs) for Businesses and Organizations
The organizations have been focused towards adopting key business approaches and practices that would contribute towards their improved revenue as well as profitability in the marketplace. In order to achieve such strategic goals to revenue and operational growth, it is required by the management to identify and understand the changing market needs, as well as the stakeholder preferences and accordingly the internal business or operational strategies, are to be defined. Considering such need, it can be reflected that in the present marketplace there is a need for the business organization to focus towards the increased social preferences and need towards sustainability and societal development along with that of the business growth. The approach to sustainability ensures that the business organization have a balanced approach towards society, business as well as the environment. Further to strengthen the approach to sustainability international organizations including United Nations (UN) has defined several key sustainable Continue reading
Why Marketing Strategies of Global Companies Sometimes Fail
‘The world today is a global village’ it’s a fact. But the global village still has some tribes and it is very important to keep all the tribes happy if we need to have good relationship with all of them. Since the globe is accessible to everyone, it is also vital to design the marketing strategy and develop it in the perspective of variations in the culture, traditions, taste, weather and norms of a country. One of the most striking trends in business has been growing internationalization of the business. Companies are going global but they have to keep their customers satisfied domestically and internationally. The internationalization affected the business strategies and the companies are in the rethinking process to counter the problems in the global marketing strategies. Marketing is no exception to this. Attitude of the customers in this regard is very important for designing the marketing strategy, especially Continue reading