An Overview of International Business: Theories and Practices

This assignment provides a comprehensive overview of international business, beginning with fundamental definitions of business and its characteristics. It then delves into the meaning and scope of international business, exploring its various modes such as imports/exports, licensing, franchising, outsourcing, joint ventures, and multinational companies. The assignment highlights the motives driving the growth of international business, including the role of the WTO, technological advancements, and the opening of new markets. It examines key factors influencing international business, like culture, economic systems, exchange rates, and political risks. The document also contrasts domestic and international business, and explains globalization's dimensions. Furthermore, it details international trade theories, including mercantilism, absolute and comparative cost advantages, and provides an overview of GATT and WTO, their objectives, functions, and key agreements like AOA, ATC, GATS, and TRIMS, along with intellectual property rights and dispute settlement processes.

INTRODUCTION TO INTERNATIONAL BUSINESS
UNIT-I
Business:-Business is an economic activity, which is related to continuous and
regular production and distribution of goods and services for satisfying
human wants.
• Stephenson Definition:- "The regular production or purchase and sale of
goods undertaken with an objective of earning profit and acquiring wealth
through the satisfaction of human wants."
• Dicksee Definition:- "Business refers to a form of activity conducted with
an objective of earning profits for the benefit of those on whose behalf
the activity is conducted."

Features of Business
 Exchange of goods and services
 Deals in numerous transactions
 Profit is the main objective
 Business skills for economic success
 Risks and Uncertainties

Goods and Services
Good is a commodity, or a physical, tangible item that satisfies some
human want or need, or something that people find useful or desirable
and make an effort to acquire it.
A service is an activity which has some element of intangibility associated
with it, which involves some interaction with customer or with property in
their possession, and does not result in a transfer of ownership.
Philip Kotler defines a service as, “Any act or performance that one party
offers to another that is essentially intangible and does not result in the
ownership of anything. Its production may or may not be tied to the
physical product.”

Characteristics of Services
 Intangibility
 Inseparability
 Perishability
 Variability

Meaning and Definition of International business
International business encompasses all commercial activities that take
place to promote the transfer of goods, services, resources, people, ideas,
and technologies across national boundaries.
Cambridge dictionary defines: international business as – “the activity of
trading goods and services between countries”.
However international business is beyond this definition, it has a very wider
scope.
Basically international business is a cross border transaction between
individuals, businesses, or government entities.

“InternationaIbusiness consists of transactions that are devised and carried
out across national borders to satisfy the objectives of the individuals,
companies and organizations. These transactions take on various forms which
are often interrelated.” – Michael R. Czinkota
“International business involves commercial activities that cross national
frontiers” – Roger Bennett

International business occurs in many different formats like:
 The movement of goods from country to another (exporting, importing,
trade)
 Contractual agreements that allow foreign firms to use products, services,
and processes from other nations (licensing, franchising)
 The formation and operations of sales, manufacturing, research and
development, and distribution facilities in foreign markets

TYPES /MODES OF INTERNATIONAL BUSINESSES
 IMPORTS AND EXPORTS
 LICENSING
 FRANCHISING
 OUTSOURCING
 JOINT VENTURES
 MULTINATIONAL COMPANIES

Motives for growth of International Business
 The formation of the World Trade Organization (WTO) in 1995
 The inception of electronic funds transfers
 The introduction of the euro to the European Union
 Technological innovation that facilitates global communication and
transportation
 The dissolution of a number of communist markets, thus opening up
many economies to private business
 Global competition

Factors considering in International Business
1. Culture
2. Economic system
3. Economic conditions
4. Exchange rates
5. Political risk and regulations

Differences between Domestic business and International business
 Approach
 Geographic scope
 Operating Style
 Environment
 Quotas
 Tariffs
 Foreign exchange rates
 Culture
 Export-import procedures
 Human Resources

Globalization
Globalization is a complex process by which the world is becoming a
highly interconnected world through economic, political and cultural
contracts.
In simple terms “Globalization is a process that encompasses the causes,
course and consequences of transnational and transcultural integration of
human and non-human activities”.