International Business: Session 1 & 2

International Business Session 1 & 2 a)- Defining Business in international context b)- India’s position in global business

Defining Business 2

Business is for making money – creating wealth for

the investor in the venture. Wealth is the sum total of additional assets created from the utilized assets. An ‘Asset’ is one whose worth can be “monetanised” or assessed and expressed in monetary terms. In short – Business means “Making Money”.

What good Business is supposed to do! 3

Generate Revenue in excess of the cost of money

at levels higher than other alternate businesses. Generate revenue to fund operations fully accommodating, inflation, escalation and currency fluctuation. Add to the surplus or reserves to be able to take care of growth. Create wealth for the stake holders / investors in excess of what other investments would offer to them.

Easiest way of making money ! 4

Choose the business in which you have a unique

strength- core competency. Operate from a location that is best technocommercially viable. Cover a region or area of operation which is well within your capability (capacity + ability) and span of control. Operate within a system that facilitates both entry and exit.

So- what does business do ? 5

It manufactures / produces / creates. It delivers. It services. It makes more consumers turn into customers and

more customers into buyers – holds them to his/her product/service and brand – and – makes them buy – more and more often.

Features of domestic business 6

Known terrain- geography, climate, language,

currency, laws, resources, systems etc. Know people – their attributes, likings, preferences, behavior, responses etc. Preferences and privileges under the law of the land. Know the local monetary system- banking, taxes, duties etc.

Features of business when you go away from home grounds ! 7

Uncertainties appear Risks multiply Operations become more expensive Both entry and exit becomes more difficult. Consumer trust drops Credit gets restricted Legal system treats you as an alien Management systems may need expensive overhaul Likely to face higher risks of failure.

………………… etc. etc.

So- why go sell away from home ? 8

Create wealth in home country Create jobs Improve the life quality of its citizen Use available resources Use available skill Take advantage of opportunities Create order of political. Social and economic

dominance.

India’s history of global business venture ! 9

The definition of world has been changing in terms of

reach and distances. India as a country has been evolving since over 3000 years of recorded human history. We information of greatness but no recordsknowledge lost over time. Over 3000 years of recorded period of slavery. What could we sell other than agro products since we hardly invented anything !

What has India been selling ? 10

 What have been selling to the world since 1940s

- Manpower - Iron ore , mica and other non-value added raw material - Agro products like spices and dyes etc. - Since 1990s – IT services  What we have not been able to do: - Establish an India brand - Produce and sell value added products in both consumer and industrial sectors. - Create a trade surplus

India’s rank in Business Competitiveness in the world 11

 INDIA RANKS A DISMAL 49TH POSITION IN GLOBAL

COMPETIVENESS REPORT among 133 countries surveyed: SWITZERLAND TOPPLES U.S.A. TO GRAB TOP POST

Factors supporting global competitiveness 12

 The index is based on 12 parameters that it claims provides

a comprehensive picture of the competitive landscape among countries of the world, despite their different stages of development. These include public institutions, infrastructure, macroeconomic stability, health and education outreach, the sophistication of financial markets and labour markets and innovation.  The sum of all these parameters is assumed to set the sustainable current and medium-term levels of economic prosperity.

Where is India heading to in 2020 ? 13

Population could exceed 120 million and cross

China. Per capita income and domestic disposable income could grow by same amount in next 10 years as it happened in last 50 years. Domestic market pull would still anchor aggressive venturing into global markets. Lack of technology ownership would continue to position India below global technology powers in business competitiveness.