IB-Unit-1 BBA BVIMR 2022 Syllabus_watermark.pdf
0 likes173 views
International Business BBA 4 as per Syllabus CBCS 2022 of Bharati Vidyapeeth (Deemed to be University)
IB-Unit-1 BBA BVIMR 2022 Syllabus_watermark.pdf
- 1. Slides Prepared by: Dr. Mahtab Alam INTERNATIONAL BUSINESS Dr. MAHTAB ALAM Assistant Professor Management Department
- 2. Slides Prepared by: Dr. Mahtab Alam BBA-PROGRAM OUTCOME (POs) On the successful completion of this program the students will be able to: 1. Demonstrate an understanding of management concepts, theories, models and key businessterms. 2. Communicate effectively with various stakeholders of business 3. Apply Information Technology applications for managing the business effectively 4. Provide optimum solutions to problems in the field of Business Management 5. Make sound business decisions. 6. Identify entrepreneurial opportunities and leverage the knowledge in starting and managinga business enterprise. 7. Collaborate with others in the organizational context, manage resources and lead them in thepursuit of organizational goals 8. Investigate the multidimensional business problems using research-based knowledge, methods and in turn, make data driven decisions 9. Understand the contemporary issues and changes in the macro environment that may have animpact on the business 10. Identify the need for and engage in lifelong learning in the field of business management 11. Develop effective and diverse teams 12. Create sustainable and ethical business policies
- 3. Slides Prepared by: Dr. Mahtab Alam INTERNATIONAL BUSINESS COURSE OUTCOME (COs) After completing the course successfully, the learner will be able to 1. To enable the students to take decisions related to global issues and policies. 2. To be able to Interpret Foreign trade policy and avail incentives offered under various schemes. 3. To recall the role and functions of Global Institutions IMF, WTO, and World Bank. 4. To comprehend the exchange rates practically and its implications on trade.
- 4. Slides Prepared by: Dr. Mahtab Alam International Business-Syllabus (2022) S. No Unit wise Overview Sessions 1. Unit 1 (Introduction of International Business) 09 2. Unit II (Globalization & InternationalTrade Theories) 10 3. Unit III (Foreign Exchange Market) 08 4. Unit IV (International Financial Management) 09 5. UnitV (Regional Economics Grouping) 09
- 7. Slides Prepared by: Dr. Mahtab Alam UNIT -1 Unit Sub Unit Unit I Introduction of International Business Definition of International Business, Nature and Scope of International, Stages of Internationalization, Differences between Domestic and International Business. Exporting, Importing, and Countertrade Settlement through NOSTRO and VOSTRO Accounts, Advantages and Disadvantages
- 8. Slides Prepared by: Dr. Mahtab Alam What is Business? Introduction: The term Business has been taken from the English word Busyness. Busy + ness means “state of being busy”. Meaning: Business is an economic activity that involves the exchange, purchase, sale, or production of goods and services with a motive to earn profits and satisfy the needs of customers.
- 9. Slides Prepared by: Dr. Mahtab Alam Economic & Non-Economic Activity Economic Activity: An economic activity is a human activity of providing, making, buying, or selling commodities or services to earn profit. • Business: – This economic activity provides goods and services to satisfy human needs daily to earn profits. • Profession: – It can also be defined as an occupation or a professional job that offers specialized services in return for professional charges. • Employment: – This activity is based on a contract between the company and the employee. Here, the employee performs duties for the company, and is paid (with wages or a salary) in return.
- 10. Slides Prepared by: Dr. Mahtab Alam Non-Economic Activity: A non-economic activity is a human activity performed to provide services to others without any consideration of financial gains. The aim of non-economic activities is personal satisfaction and happiness. Free time activities for self-satisfaction such as Painting and playing. Religious activities, family commitment activities, social welfare activities
- 13. Slides Prepared by: Dr. Mahtab Alam Business Classification based on Region/Area
- 16. Slides Prepared by: Dr. Mahtab Alam International Business- Definition •Daniels; Rodebaugh and Sullivan – International business is all commercial transactions – private and governmental between two or more countries. •Taggart and McDermott – International business can be defined as those business activities that involve the crossing of national boundaries. •Hill (2005) – International business is any firm that engages in international trade or investment.
- 17. Slides Prepared by: Dr. Mahtab Alam HOME COUNTRY & HOST COUNTRY In the context of International Business, the terms home country and host country are described: Home Country: The home country is the country where a business is originated/Registered/Headquartered. Example: If Tata Motors is headquartered in India, then India is its home country. Host Country: The host country is a foreign country where a business operates or invests, such as setting up a branch, subsidiary, or joint venture. Example: When Tata Motors opens a manufacturing facility in the UK, the UK is the host country. Aspect Home Country Host Country Location Origin of the business Destination for operations Operations Headquarters and strategy Branches, subsidiaries, or investments Cultural Influence Reflects the company’s native culture Requires adaptation to local culture Economic Impact Contributes to the home economy Impacts the host economy Key Differences
- 18. Slides Prepared by: Dr. Mahtab Alam Historical Evolution of International Business
- 19. Slides Prepared by: Dr. Mahtab Alam Historical Evolution of International Business
- 20. Slides Prepared by: Dr. Mahtab Alam Historical Evolution of International Business Historical evolution detailed content can be obtained from this link https://bit.ly/3tCwOac
- 21. Slides Prepared by: Dr. Mahtab Alam Features/Nature of International Business 1. Cross-Border Transactions: International business involves trade and investment activities that cross national boundaries, involving multiple countries. 2. Diverse Markets: It operates in different countries, each with its own unique consumer preferences, cultural norms, and business practices. 3. Cultural Diversity: Understanding and managing cultural differences is crucial, as international business deals with varying languages, traditions, and customs. 4. Legal and Political Environment: Businesses must navigate different regulatory frameworks, legal systems, and political conditions in each country. 5. Global Competition: Firms face competition not only from local companies in foreign markets but also from other global players. 6. Complex Supply Chains: International businesses often manage intricate supply chains involving sourcing, production, and distribution across multiple countries.
- 22. Slides Prepared by: Dr. Mahtab Alam 7. Currency Fluctuations: The exchange rates between different currencies impact pricing, costs, and profitability. 8. Technology Transfer: Sharing and transferring technology between countries is a common feature of international business, often aiding innovation. 9. Foreign Investments: International businesses frequently invest in physical assets, infrastructure & Shares in other countries. 10. Economic Integration: The growth of international business is supported by regional and global economic agreements like NAFTA, EU, and WTO. 11. Risk and Uncertainty: Operating in foreign markets entails risks such as political instability, economic fluctuations, and cultural misunderstandings. 12. Scale of Operations: International businesses often operate on a larger scale than domestic firms to achieve economies of scale and efficiency. 13. Adherence to International Standards: Businesses need to comply with global standards in quality, safety, and environmental management.
- 23. Slides Prepared by: Dr. Mahtab Alam Difference Between Domestic Business and International Business
- 24. Slides Prepared by: Dr. Mahtab Alam Importance of International Business
- 25. Slides Prepared by: Dr. Mahtab Alam Disadvantages of International Business
- 26. Slides Prepared by: Dr. Mahtab Alam Scope of International Business 1. Export 2. Import 3. Entrepot/Re-Export 4. Multinational Corporations (MNCs) 5. Market Development 6. Franchising 7. Outsourcing 8. Foreign Investment (FDIs & FIIs) 9. Global Strategic Alliance 10. Technological Advancement 11. Economic Development
- 27. Slides Prepared by: Dr. Mahtab Alam Challenges of International Business
- 29. Slides Prepared by: Dr. Mahtab Alam Internationalization of Business is necessary for expansion and growth. Firms can rank countries in terms of : Attractiveness Profitability Easiness of entry Competitiveness Entry timings. All firms should consider the points mentioned above at the time of entry through any mode as it directly impacts the entry planning and execution of internationalization. Modes of Entry - International Business
- 32. Slides Prepared by: Dr. Mahtab Alam KVIC products, such as Khadi fabrics, are exported to foreign markets through agencies like the Export Promotion Council for Handicrafts (EPCH). These intermediaries connect Indian manufacturers with international buyers. Direct Export Indirect Export
- 33. Slides Prepared by: Dr. Mahtab Alam In 2018, Starbucks entered into a global licensing deal with Nestlé. Under this agreement Nestlé acquired the rights to sell, distribute, and market Starbucks’ packaged coffee and tea products globally (except for Starbucks stores). Starbucks received a licensing fee of $7.15 billion upfront and continues to earn royalties from the sales of these products.
- 42. Slides Prepared by: Dr. Mahtab Alam Stages of Internationalization Internationalization is a process through which a company expands its operations beyond its domestic market and engages in business activities on a global scale.
- 43. Slides Prepared by: Dr. Mahtab Alam Reasons for Internationalization
- 45. Slides Prepared by: Dr. Mahtab Alam Stages of Internationalization
- 46. Slides Prepared by: Dr. Mahtab Alam Stages of Internationalization
- 47. Slides Prepared by: Dr. Mahtab Alam Stages of Internationalization
- 48. Slides Prepared by: Dr. Mahtab Alam Stages of Internationalization
- 49. Slides Prepared by: Dr. Mahtab Alam Stages of Internationalization
- 50. Slides Prepared by: Dr. Mahtab Alam Basis Domestic International Multi-Domestic Global Transnational Definition Operates within a single country. Engages in business across national borders. Adapts products and strategies to each local market. Standardizes products/services for global markets. Combines global efficiency with local responsiveness. Scope of Operations Limited to the home country. Operates in one or more foreign markets. Focuses on individual foreign markets separately. Operates uniformly across multiple countries. Integrated and interconnected operations worldwide. Strategic Focus Serving the domestic market. Expanding market presence internationally. Localization to meet specific country needs. Standardization for economies of scale. Balancing global integration and local adaptation. Decision- Making Centralized within the home country. Centralized, with some input from foreign markets. Decentralized to adapt to local preferences. Centralized decision- making at headquarters. Combination of centralized and decentralized decision- making. Product/ Service Designed for domestic consumers. Minor adaptations for foreign markets. Customized for each local market. Uniform products for global consumers. Hybrid approach: some standardization, some customization. Approach Ethnocentric Focuses on the home market. Ethnocentric Explores international opportunities. Polycentric & Treats each country as a separate market. Geocentric Treats the world as a single market. Standardized practices Geocentric & Regiocentric: (Hybrid): Simultaneous global integration and local focus. Resource Management Focuses on domestic resources. Limited use of foreign resources. Uses local resources in each country. Centralized resource allocation. Optimized resource use across global and local levels. Cost Efficiency Relatively low operational costs. Moderate costs due to export/import activities. High costs due to customization and decentralization. High cost efficiency through standardization. Moderate costs, balancing customization and scale. Example Indian Railways (Indian) Patanjali (Indian) Tata Motors (Indian) Harley Davidson (USA) Nestle (German) Difference between Stages of Internationalization
- 51. Slides Prepared by: Dr. Mahtab Alam Approaches of International Business
- 52. Slides Prepared by: Dr. Mahtab Alam Approaches of International Business
- 53. Slides Prepared by: Dr. Mahtab Alam Approaches of International Business
- 54. Slides Prepared by: Dr. Mahtab Alam Approaches of International Business
- 55. Slides Prepared by: Dr. Mahtab Alam Approaches of International Business
- 57. Slides Prepared by: Dr. Mahtab Alam Exporting-Meaning & Definition Export is one of the main components of International business and involves the movement of goods and services across nations and the exchange of foreign currencies between the dealing parties. -Definition
- 58. Slides Prepared by: Dr. Mahtab Alam Features of Exporting 1. Globalization Business Strategy. 2. Systematic Procedure. 3. Transaction between 2 or more countries 4. Sending Goods/Services to host countries 5. Receiving Global Currency in the home country 6. International Risk management 7. Legal documentations obligation 8. Cross-Cultural exchange 9. Support in making favorable BOP. 10. Global Brand and image.
- 59. Slides Prepared by: Dr. Mahtab Alam Types of Exporting
- 60. Slides Prepared by: Dr. Mahtab Alam Advantages of Exporting
- 61. Slides Prepared by: Dr. Mahtab Alam Disadvantages of Exporting
- 65. Slides Prepared by: Dr. Mahtab Alam Importing-Meaning & Definition -Definition
- 66. Slides Prepared by: Dr. Mahtab Alam Features of Importing 1. Domestic Industrialization. 2. To meet domestic demand. 3. Systematic Procedure. 4. Transaction between 2 or more countries 5. Receiving Goods/Services to home country 6. Sending Global Currency to the host country 7. International Risk management 8. Legal documentations obligation 9. Cross-Cultural exchange 10. To overcome natural calamities & emergency
- 67. Slides Prepared by: Dr. Mahtab Alam Advantages of Importing 1. Reduce domestic dependency. 2. Access to cheaper raw materials. 3. Access to high-quality goods. 4. Advantages of Technology Transfer. 5. Extend Sales Potential in the domestic market. 6. Global Brand and Image. 7. Support in natural calamities and emergencies. 8. Increase in Living standards.
- 68. Slides Prepared by: Dr. Mahtab Alam Disadvantages of Importing 1. Excessive Competition in the domestic market. 2. Exchange Risk. 3. More imports can make BOP unfavorable. 4. Cultural exploitation. 5. Risk of trade with an enemy country. 6. Risk of inferior or damaged goods 7. High Cargo & Insurance cost.
- 73. Slides Prepared by: Dr. Mahtab Alam Countertrade-Definition “Countertrade refers to a range of barter-like agreements used in international trade, where goods and services are exchanged for other goods and services without the use of money.” ----P. Buckley and M. Casson---- “Countertrade is a form of trade in which part or all of the payment for goods or services is made in the form of other goods or services rather than cash.” ----Michael R. Czinkota and Ilkka A. Ronkainen----
- 74. Slides Prepared by: Dr. Mahtab Alam Types of CountertradeTransaction 1. Barter: Barter is one of the oldest forms of trade, wherein the transaction is contained in a single contract and there is no exchange of money between the parties in a transaction. Sometimes a small amount is paid to cover special costs, or a down payment is made as a guarantee
- 75. Slides Prepared by: Dr. Mahtab Alam 2. Counter Purchase: The counter purchase involves an importer obtaining goods and services from an exporter with an assurance that the exporter will purchase other specific goods or services from the importer. Under this arrangement, the exporting country under a primary sales contract sells goods, technology, or services to the importing country, and agrees as part of a secondary sales contract, to purchase from the importing country within a specified period, which is normally 1-5 years, a specific value of goods.
- 76. Slides Prepared by: Dr. Mahtab Alam 3. Offset: In an offset agreement, importers require the contractors to purchase a predetermined level of components from subcontractors located within the importing country. This type of countertrade is an offset agreement, also known as industrial compensation or industrial cooperation. They are often observed in deals involving aircraft and military equipment. The agreements usually portray an exporter manufacturer agreeing to the importer’s terms like marketing their products, final assembly of exported items in the importer’s country, and buying other goods and services from the importer’s country.
- 77. Slides Prepared by: Dr. Mahtab Alam 4. Buyback (Compensation): Buyback or Compensation is a countertrade mechanism where the supplier of plant/equipment to a project/company in another country assures buyback of certain quantities of products made with that plant/equipment.
- 78. Slides Prepared by: Dr. Mahtab Alam 5. Switch Trading: Switch trading involves a minimum of three parties. It enables one party to sell its obligation or assurance to another party to a third party. For example, country X exports its product to country Y. Country Y will ship other products to another country Z, known as switch trader. Country Z, in turn, provides or exports the product needed by country A.
- 79. Slides Prepared by: Dr. Mahtab Alam 6. Clearing Arrangements: Clearing agreements are entered when two nations encounter a coincidence of needs. They must determine the type and quantity of goods that they wish to obtain from each other and establish an exchange ratio to be used over the specified life of the contract. The Agreed volume of goods are imported and exported by the countries over a specific time period without the payment of foreign currencies. If a country does not purchase enough goods to balance its accounts within the set time limitation, it receives clearing credits. Although stated in terms of currency, clearing credits cannot be redeemed for currency.
- 80. Slides Prepared by: Dr. Mahtab Alam 7. Debt-for-Goods: Debt-for-goods is a countertrade transaction whereby a debtor country offers its goods or services to avail funding or to cover full or partial repayment of an outstanding debt. Under this, the countertrade route can be utilized for repayments of funded facilities extended to overseas entities
- 81. Slides Prepared by: Dr. Mahtab Alam Advantages of Counter-Trade
- 82. Slides Prepared by: Dr. Mahtab Alam Disadvantages of Counter-Trade 1.Acceptance of goods rather than hard currency. 2. Exchange of unusable or poor-quality goods. 3. Expenses for maintaining the counter trade department. 4. Complexity of transactions 5. Risk of Foreign relations on trade
- 83. Slides Prepared by: Dr. Mahtab Alam Counter-Trade Settlement through Nostro &Vostro Account
- 84. Slides Prepared by: Dr. Mahtab Alam Meaning of Nostro A/C,Vostro A/C & Loro A/c
- 86. Slides Prepared by: Dr. Mahtab Alam Factors Affecting Operations of Nostro &Vostro Account 1. Exchange Rates: Exchange rate fluctuations can directly affect the balance in both types of accounts, especially when they involve cross-border transactions in different currencies. 2. Interest Rates: Interest rates in the currency held in a nostro or vostro account can affect the returns on funds kept in these accounts, influencing decisions about the volume and duration of deposits. 3. Banking Regulations: Different countries have specific banking regulations that impact the operation of nostro and vostro accounts. For example, limits on foreign currency transactions, capital controls, or restrictions on the movement of money can affect how these accounts are used. 4. Counterparty Risk: The financial stability of the banks involved in the nostro or vostro arrangement affects the safety and liquidity of funds. If one of the banks faces a crisis, it may result in issues for both accounts.
- 87. Slides Prepared by: Dr. Mahtab Alam 5. Transaction Costs and Fees: The cost of transferring funds, maintaining accounts, and processing payments can differ based on the arrangement between the two banks, influencing the cost-effectiveness of using these accounts. 6. Political Stability and Economic Environment: Political or economic instability in either the country of the nostro or vostro account can affect the ability to conduct international transactions smoothly and impact the value of funds in these accounts. 7. Payment Systems: The efficiency and security of the international payment systems used (such as SWIFT or local equivalents) affect the speed and cost of transferring money through these accounts. 8. International Trade Flows: The volume and frequency of international trade between the two countries can influence the usage of these accounts. A higher volume of trade leads to more transactions, which increases the need for nostro and vostro accounts. 9. Liquidity Needs: The liquidity needs of the entities using the accounts (banks or corporations) can affect how much money is held in each account and for how long.
- 88. Slides Prepared by: Dr. Mahtab Alam Nostro &Vostro Account Advantages: Global Trade Promotion. Global BankingTransaction. Correspondent Banking Relationship. Foreign market reach for business. High Liquidity Reduce the risk of Currency Fluctuation. Facilitator in Domestic Country.
- 89. Slides Prepared by: Dr. Mahtab Alam Nostro &Vostro Account Disadvantages: Transaction Cost. Complexity. Dependent on Foreign Country Relationship. Risk of Cyber Crime Mismatch of Local time Zones for Transactions
- 90. Slides Prepared by: Dr. Mahtab Alam Difference Between Nostro &Vostro Account Basis NOSTRO A/C VOSTRO A/C Currency A NOSTRO account opened in Foreign Currency in Foreign Bank A VOSTRO account opened in Domestic Currency in Domestic Bank Ownership Owned and maintained by the foreign bank Owned and maintained by the domestic bank Transaction Foreign Transactions in Foreign Countries for domestic players Foreign transactions in Domestic Country for Global players Purpose To facilitate Global Trade for Domestic Players in Foreign Countries To facilitate Global Trade for Global Players in Domestic Country Presence Access Global Banking Service without establishing overseas Branch. Providing Local Banking Service without inviting Branch in Domestic market. Example NOSTRO Account of UCO Bank and IndusInd Bank of India in Russia VOSTRO Account of Sberbank and VTB Bank of Sussia in India