DEFINITION: INTERNATIONAL BUSINESS

Any

business transaction that involves persons of firms of more than one country may be described as International Business An international business is any business that intentionally buys, sells or invests internationally International business includes all business activities that involve business organizations from two or more countries

INTERNATIONAL BUSINESS Methods of buying and selling products internationally a. Exporting and Importing b. Licensing-i.e. granting foreign firms permission to produce your product for a fee c. Franchising-licensing plus operational controls

India's exports rose 37.5% in 2010-11 to touch a record $246 billion as traders targeted new markets and gained from improved sentiments in the US and Europe oil appeared to be the main culprit when it came to imports, which rose 21.5% to $350.3 billion during the last financial year In March, exports went up by 43.9% to $29.1 billion, while imports rose 17.3% to 34.7 billion, resulting in a trade deficit of $5.6 billion.

MNCs Is that only MNCs who play the role in ib??

GLOBALIZATION
The term globalization describes the increased mobility of goods, services, labor, technology and capital throughout the world. Although globalization is not a new development, its pace has increased with the advent of new technologies, especially in the area of telecommunications.

Globalization has resulted in economic restructuring Resources have flowed out of one country into another Jobs have been lost and new jobs are created Some resource owners have been winners and some have been losers Some evidence demonstrates that globalization brings great benefits as well as costs.

GLOBAL INSTITUTIONS
To manage, police, and regulate the international business GATT General Agreement on Tariffs and Trade WTO World Trade Organization IMF World Bank UN- to preserve peace through international cooperation

FACETS OF GLOBALIZATION

Globalization of market single market

Falling barriers Offer same product

Globalization of product sourcing of goods & services from locations around the globe to take advantage of cost , quality Ex- Boeing, IBM, Sony, Microsoft. Global rivalry

DRIVERS OFGLOBALIZATION
The General Agreement on Tariffs and Trade (typically abbreviated GATT) GATT was signed in 1947 and lasted until 1993, when it was replaced by the World Trade Organization in 1995 WTO ensures trade among nations operates smoothly, freely and orderly

Ministerial

Conference highest level decision making body , meets once in every two years

DRIVERS OF GLOBALIZATION

Decline in the barriers of trade

GATT

WTO (Doha round)Cutting tariffs, phasing out subsidies to agricultural products ..

Technological change communication, transportation Restrictions in FDI removed FDI firm invest in another country in business activities Foreign Direct Investment (FDI) is one of the mostly used ways of internationalization which plays an important role as an engine of employment, technological development, productivity enhancement, economic intensification, and more importantly, as an instrument of technology transfer especially from developed to developing countries.

TYPES OF FDI

Horizontal FDI refers to when firms invest in the same industry in which they work in their homeland

For example, the automobile company Ford builds an automobile manufacturing facility in Mexico

Vertical FDI, on the other hand, is divided into two different types: Backward Vertical FDI - when the abroad sales of a company serve as inputs for the downstream operations of domestic companies

Forward Vertical FDI - when there is investment into a foreign industry that sells the output of a company's domestic production processes EX: if Ford builds an engine production facility in Mexico which ships engines to its manufacturing unit in U.S.A., this would be backward vertical FDI Ford buys ten dealers in Mexico to distribute cars made in the U.S.A., this would be forward vertical FDI

The third type of FDI, conglomerate FDI involves companies operating in different businesses