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IBD MODULE-1 PART-1.pptx - I B IV SEM MBA Every...

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I B IV SEM MBAEvery international business firm has to face various issues related to organizational policies. Addressed carefully in order to keep the business healthy and profitable. I. Centralization vs. Decentralization. Centralization is the systematic and consistent reservation of authority at central points in the organization. In centralization, the decision-making capability lies with a few selected employees. The implications of centralizations: i. Decision making - top level.ii. Operating authority - mid-level managers.iii. Operation at lower level is directed by the top level. Decentralization is a systematic distribution of authority at all levels of management. International business means the buying and selling of the goods and services across the border. International Business is the process of focusing on the resources of the globe and objectives of the organizations on global business opportunities and threats. International business is defined as global trade of goods/services or investment.
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Cont…1. Higher Rate of Profits: -business firms search for foreign markets. For example, Hewlett Packard in the USA earns more than half of its profits from the foreign markets as compared to that of domestic markets. International sales of Apple accounted for about 60% of its revenue in 2012, which is a big part of Apple’s success story.2. Expanding the Production Capacities beyond the Demand of the Domestic Country: -Toyota of Japan is an example.3. Limited Home Market: -smaller size of the populationor due to lower purchasing power of the people or both, the companies internationalize their operations. For example, most of the Japanese automobiles and electronic firms entered the USA, Europe and even African markets due to smaller size of the home market. ITC entered the European market due to the lower purchasing power of the Indians with regard to high quality cigarettes.
Cont…4. Political Stability vs. Political Instability:It is viewed that the USA is a politically stable country; countries like the UK, France, Germany, Italy and Japan are also politically stable. Most of the African countries and some of the Asian countries are politically instable countries. 5. Availability of Technology and Competent Human Resources: In fact, American and European companies, in recent years, depended on Indian companies for software products and services through their business process outsourcing (BPO). This is because the cost of professionals in India is 10 to 15 times less compared to the US and European labor markets.6. High Cost of Transportation: For example, Mobil which was supplying petroleum products to Ethiopia, Kenya, Eritrea, Sudan etc., from its refineries in Saudi Arabia, established its refinery facilities in Eritrea in order to reduce the cost of transportation.
Cont…7. Nearness to Raw Materials: For example Vedanta Resources is a London Stock Exchange (LSE) listed UK based company operating principally in India due to availability of raw materials

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Term
Spring
Professor
ANIL SIR

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