Page 13 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes standards of living

Trade affords countries and their citizen’s higher standards of living than other wise possible.
Without trade, product shortages force people to pay more for less, products taken for granted,
such as coffee and bananas may become unavailable overnight. Life in most countries would be
much more difficult were it not for the many strategic metals that must be imported. Trade also
makes it easier for industries to specialize and gain access to raw materials, while at the same time
fostering competition and efficiency. A diffusion of innovations across national boundaries is
useful by-products of international trade. A lack of such trade would inhibit the flow innovative
ideas.

The 1990s and the new millennium clearly indicate rapid internationalization and globalization.
The entire globe is passing at a dramatic pace through the transition period. Today the international
trader is in a position to analyze and interpret the global social, technical, economic, political and
natural environmental factors more clearly.
Conducting and managing international business operations is a crucial venture due to variations
in political, social, cultural and economic factors, from one country to another country.

Example: Most of the African consumers prefer high quality and high priced products
due to there higher ability to buy.
Therefore, the international businessman should produce and export less costly products to most
of the African countries and vice versa to most of the European and North American countries.
High priced Palmolive soaps are exported and marketed in developing countries like Ethiopia,
Pakistan, Kenya, India, Cambodia etc.
International business houses need accurate information to make an appropriate decision. Europe
was the most opportunistic market for leather goods and particularly for shoes. Bata based on the
accurate data could make appropriate decision to enter various European countries.

International business houses need not only accurate but timely information. Coca-Cola could
enter the European market based on the timely information, whereas Pepsi entered later.
Another example is the timely entrance of Indian Software companies also made timely decision
in the case of Europe.
The size of the international business should be large in order to have impact on the foreign
economies. Most of the multinational companies are significantly large in size. In fact, the capital
of some of the MNCs is more than our annual budget and GDPs of the some of the African
countries.
Most of the international business houses segment their markets based on the geographic
market segmentation. Daewoo segmented its market as North America, Europe, Africa, India
sub-continent and Pacific market.
International markets present more potentials than the domestic markets. This is due to the
fact that international markets are wide in scope, varied in consumer tastes, preferences and
purchasing abilities, size of the population etc.

Example: IBM’s sales are more in foreign countries than in USA. Similarly, Coca-Cola
sales, Procter and Gamble’s sales and Satyam Computer’s Sales are more in foreign countries
than in their respective home countries.

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