1. International and Global Business

8/10/2019 1. International and Global Business

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International & Global Business:

Principles, Insights & Challenges

Syed Ferhat Anwar

Professor, IBA

University of Dhaka


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Insights

In Hong Kong, a German businessperson

is driving a Lexus made in Brazil;

wearing Bruno Magli shoes made in India; wearing Irish cashmere socks made in Cambodia;

With Calvin Klein undergarment made in China;

an Armani suit, with a Gucci belt made in Italy;

he has a Mont Blanc pen made in Thailand;

in his Italian shirt made in Bangladesh. Hes going to meet an American investor at a McDonald

restaurant, working on a Samsung Note Pad made in Korea.

--- OK, thats a stretch.

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Challenges

Huge Foreign indebtedness

Unstable governments

Foreign-exchange problems

Foreign entry and government bureaucracy

Tariffs and other trade barriers Corruption

E-commerce inefficiencies

Technological pirating

High cost of product and communication adaptations

Political and economic power brokerage Human and other capital scarcity or under productivity

Lack of knowledge and innovation management

Etc. etc

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International Business

International business is a term used to collectively

describe all commercial transactions (private and

governmental, sales, investments, logistics,and

transportation) that take place between two or morenations.

Usual ly, pr ivate companies undertake suc h transact ion s for

prof i t ; governments under take them for prof i t and for

po l i t ical reasons .

Internat ional marketing is th e act of m arketing in more thanone so ciety across boarders by keeping th e spir i t of

internat ional bus iness intact

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International Business

Means Modes: importing and exporting, tourism and

transportation, licensing and franchising, management

contracts, production contracts, direct investment,

outsourcing etc.

Functions: marketing, global manufacturing and value

chain management, accounting, finance, human resources

Overlaying alternatives: choice of countries, organizationand control mechanisms

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International Business 1

Objectives:

sales expansion, resource acquisition,

risk minimization

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Physical and societal factors

Political policies and legal practices

Cultural & social factors

Economic forces

Geographical influences Global Climate factors

Technology issues

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Resource Allocation

Market Command

Private

Resource

Ownership

State

MarketCapitalism

MarketSocialism

CentrallyPlannedCapitalism

CentrallyPlannedSocialism

Economic System

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Rankings of economic freedom among countries free mostly free mostly unfree repressed

Variables considered include such things as:

Trade policy

Taxation policy

Capital flows and foreign investment

Banking policy

Wage and price controls

Property rights

Black market

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Competitive factors

Major advantage in price, marketing,

innovation, or other factors.

Number and comparative capabilities

of competitors

Competitive differences by country

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International Operations 6

The conduct of international operations

depends on companies' objectives and

the means with which they carry them out. The operations affect and are affected by

the physical and societal factors and the

competitive environment.


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Standardization and Adaptation 1

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Standardization and Adaptation 2

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Global Business Outlook 1

Mistaken assumptions about LDC1. The poor have no money.

2. The poor will not waste money on non-

essential goods.3. Entering developing markets is fruitless

because goods there are too cheap to make aprofit.

4. People in BOP (bottom of the pyramid)

countries cannot use technology.5. Global companies doing business in BOP

countries will be seen as exploiting the poor.

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Exporting

Importing

USA (initiating country)

Other advanced nationsLDCs

1 2 3 40

Source: Sak Onkvist and John J, Shaw, An Examination of the International Product LifeCycle and Its Application within Marketing, Columbia Journal of World Business 18 (Fall,1983)

(0) Local innovation, (1) Overseas innovation, (2) Maturity,(3) Worldwide imitation, (4) - Reversal

Theory of International Product Life Cycle (IPLC)

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Acquisition of Wealththe ultimate

Show AV 1. Rise of new global rich

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http://h/academic%202014/International%20business/AVs/Chrystia%20Freeland-%20The%20rise%20of%20the%20new%20global%20super-rich.mp4


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Globalization 1

Growth to a global or worldwide

scale due to "the globalization of the

communication industry. The tendency of world investment

and business to move from national

and domestic markets to a worldwideenvironment.

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Globalization 2

Worldwide economic integration of

many formerly separate national

economies into one global economy,mainly through free trade and free

movement of capital as by

multinational companies, but also byeasy or uncontrolled migration and

single technology frame.

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Globalization 3

Show AV 2. One World One Company

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http://h/academic%202014/International%20business/AVs/2.%20One%20World.One%20Company.mp4


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Globalization 4

Technology is expanding, especially in transportation andcommunications.

Governments are removing international businessrestrictions.

Institutions provide services to ease the conduct ofinternational business.

Consumers know about global goods and services.

Competition has become more global.

Political relationships have improved among some majoreconomic powers.

Countries cooperate more on transnational issues.

Cross-national cooperation and agreements.

Governance and legal issues are being standardized

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Global Integration Forces 1

Driving Forces Technology

Culture

Market Needs Costs

Free Markets

Economic Integration

Peace

Strategic Intent Management Vision, Strategy and Action

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Challenges 1

Markets can present higher profitopportunities than present markets.

Markets can offer size but not profits. Company needs a larger customer base

for economies of scale.

Present customers are needing service

and products as they go international.

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Challenges 2

Global Standardization or Adaptation

Toyota built the Corolla on a world platform. Ford

with its Focus. McDonalds uses chili sauce(salsa) on its hamburgers in Mexico. Coca-Cola is

can be sweeter, or less carbonated.

Adaptation elements: Product features, brandname, labeling, packaging, colors, materials,

prices, sales promotion, advertising themes,media, execution.

Marketing programs do work best when they aretailored to each target group.

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Challenges 3

Principle of Anticipation and Being Proactive. NotReactive.

Are you ready for change? Being adaptive to the

marketplace. Macro environment Changes. The high income

growth country has shifted from Japan to US.Low to medium has been concentrated inSoutheast Asia and southern Asia with China andIndia to a certain extent as a unique, high-growth,large country in the region and the world.

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Challenges 4

Principle of the Growth of Internet andInformation Technology.

Principles of:

Marketing Mix

11Ps

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Challenges 5

11 Ps of Global marketing

Consumers

Purpose

Positioning

Product

Price

Place

Promotion

Packaging

People

Process

PhysicalEvidence

Planet

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Challenges 6

The old trade model is just old.

It stated that as a product matures, productionwould shift to low-wage countries.

Today, must look at transportation costs,availability of skilled labor, marketresponsiveness, market access and innovation inproduct design and manufacturing. Especially of

products with less than 15%of labor in total cost.

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Challenges 7

Principle of Service:

Service before, during and after sale.

Create long-term value and connect withcustomer.

Both products and services. Its creating more

value.

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Challenges 8

Principle of Future:

Manage todays products by managing a profit

and by servicing customers of today and

tomorrow.

Develop tomorrows products.

There is no such thing as permanent advantage.

Governance in societal norms leads to totalsustainability.

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Challenges 9

Principle of Global Experience

Counts for companies

Counts in the job market for employees.

Marketing Audits.

Marketing is not a destination, or a goal. Its a

process. A moving target.

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Political Window 1

World economic development and well being are

linked to freedom and democracy.

This correlation is the key that explains our world society:

Freedom => Knowledge => Technical progress =

Economic development

This trilogy is the basic equation for development.

Global leaders have to repeat again and again this golden rule.

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Political Window 2

We have 10 criteria by which to measureknowledge:

Education rate,

Number of scientists,

Illiteracy rate,

Number of internet users,

Proportion of exports,

Population parameters,

Health status,

Purchasing and spending powers, Geopolitical maturity,

International relations.

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The People in Global Business 1

Most companies are either international orcompete with international companies.

Modes of operation may differ from those used

domestically. The best way of conducting business may differ

by country.

An understanding helps you make better careerdecisions.

An understanding helps you decide whatgovernmental policies to support.

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Factors contributing to the need for

international managers Increased internationalization of operations

Recognition that poor overseas performance can be

costly

Perceived shortage of international managers

Recognition of differing national culture/institutional

arrangements within which firms operate Firms operate in increasingly internationally regulated

business environments

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The Ideal International Manager

Four major variables:

1. technical competence

2. personal traits or relational abilities

3. ability to cope with environmental variables

4. family situation

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The Ideal International Manager (Continued)

Technical ability

Managerial skills

Cultural empathy and cross-

cultural communication

skills

Adaptability and an active

desire to adjust to living and

learning in the local culture

Nonjudgemental

Diplomacy and tolerance

Language ability

Positive attitude

Emotional stability and

maturity

Adaptability of family

Negotiating ability

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Wrap-up 1

Companies cannot stay domestic and expect to

maintain their markets.

Companies need to define their global policies

and objectives.

Companies need to decide on how much to adapt

marketing mix.

Companies must be manned properly

There is no such thing as cheap labor!

Selection of types of markets and countries are

interlinked

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Wrap-up 2

Market entry and market control costs can behigh which could be politically motivated.

Product and communication adaptation costs can

be high. Dominant foreign firms can establish high

barriers of entry.

Technology has created a big shift of themarkets.

Growth in Asia and Africa is a reality

End dictates the means

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Wrap-up 3

Ultimate goal of project Relationship to other projects

High-level timing goals

Attractiveness influenced by the product,geography, income, population, politicalclimate and more factors.

Key Strategic Outlook:

---Driving and Stabilizing

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Documents

1. International and Global Business