Thursday, 19 December 2019

Unit 1: Introduction to International Business

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Unit 1: Introduction to International Business

The analytical framework of international business is built around the activities of the MNEs explained by the process of internalisation.

Before the emergence of the multinationals, foreign trade and international business were synonymous.

International trade doctrines based upon labour cost differentials and free trade guided the international transactions.

Innovative efforts of the MNEs, in technological development and management styles superseded the international trade theories.

The theorists began to develop the FDI approaches in support of international business for the improvement and welfare of the world economies.

International companies operate in environments that are highly uncertain and where the rules of the game are often ambiguous, contradictory, and subject to rapid change, as compared to the domestic environment.

A company engages in international business to expand sales, acquire resources and minimise risks associated with doing business only in one country.

Many problems can arise in course of international business.

Some prominent problems include political differences, cultural differences, economic differences, differences in currency, language and marketing infrastructure.

The trade restrictions and differences in trade practices also pose problems for a company looking to expand itself in international market.


Competitive Environment: The immediate competitive context in which an organisation or enterprise operates.

Foreign Direct Investment: Investment by a company in a country other than that in which the company is based.

International Business: The exchange of goods and services among individuals and businesses in multiple countries.


Introduction to International Business Multinational Enterprise (MNE): A firm that owns operations in more than one country.

Notes Social Environment: The environment developed by humans as contrasted with the natural environment; society as a whole, esp. in its relation to the individual.

Trade Restriction: It is an artificial restriction on the trade of goods between two countries.

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