Overview of International Business.pdf - CHAPTER 1 Overview...

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1Overview of InternationalBusinessC H A P T E R1.1INTRODUCTIONGlobal economy is at crossroads. There is no single or simple answer tocurrent economic problems. Transparency in the conduct of monetary andfiscal policies is needed to provide an anchor for expectations. Developmentsthat seem unusual, even unbalanced, need to necessarily be judgedunsustainable. For example, the potential gains offered by new technology,particularly in the production of goods and financial services, may provide asound rationale for a number of trends that currently seem hard to explain.Yet, a starting point characterized by significant macroeconomic imbalancesand major financial restructuring does not present a comforting environmentfor policymakers; given very low interest rates and virtual price stability inmany countries, the scope for lowering real policy rates is now limited. Thischapter implies a continuing need to focus on measures to strengthen theglobal financial system which looks to be the most vulnerable part of market-based economies.1.2WHAT IS A BUSINESS?A business is an economic activity. It refers to buying and selling of goods.Today’s business carries a complex area of commerce and industries whichincludes the activities of both production and distribution. To the enterprisesbusiness is related with the decision. What to produce? When to produce?Whom to produce? Where to produce? How much to produce? In simplestword we can say that the modern time’s business is very much complex. Asthe environment is dynamic and changes frequently so the above questionsalways make the business enterprises to rethink about their business strategies.1.3INTERNATIONAL BUSINESSInternational business means the buying and selling of the goods and servicesacross the border. These business activities may be of government or private
2INTERNATIONAL BUSINESS ENVIRONMENT AND FOREIGN EXCHANGE ECONOMICSenterprises. Here the national border are crossed by the enterprises to expandtheir business activities like manufacturing, mining, construction, agriculture,banking, insurance, health, education, transportation, communication and soon.A business enterprise who goes for international business has to take avery wide and long view before making any decision, it has to refer to social,political, historical, cultural, geographical, physical, ecological and economicaspects of the another country where it had to business.India has managed an average economic growth rate of 6% since the1990s. In the period 2000-2003, it averaged 5.8%. In the 1990s, the majorcontributors to Indian GDP have been traditional farming, modern agriculture,handicrafts, a wide range of modern industries and support services. Indiahas a history of high inflation rates. However, in recent years it has been wellunder control. The RBI has been promoting liquidity in the economy since1996. It took measures such as reducing the CRR, cutting short-term lendingrates, and allowing banks to lend loans in foreign currency. The growing fiscal

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