Page 8 - DMGT545_INTERNATIONAL_BUSINESS

Unit 1: International Business: An Overview

In fact, the term international business was not in existence before two decades. The term notes
‘international business’ has emerged from the term ‘international marketing’, which, in turn,
emerged from the term ‘export marketing’.
International Trade to International Marketing: Originally, the producers used to export
their products to the nearby countries and gradually extended the exports to far-off countries.
Gradually, the companies extended the operations beyond trade.

Example: India used to export raw cotton, raw jute and iron ore during the early 1900s.
The massive industrialization in the country enabled us to export jute products, cotton garments
and steel during 1960s.

India, during 1980s could create markets for its products, in addition to mere exporting. The
export marketing efforts include creation of demand for Indian products like textiles, electronics,
leather products, tea, coffee etc., arranging for appropriate distribution channels, attractive
package, product development, pricing etc. This process is true not only with India, but also with
almost all developed and developing economies.

International Marketing to International Business: The multinational companies which were
producing the products in their home countries and marketing them in various foreign countries
before 1980s started locating their plants and other manufacturing facilities in foreign/host
countries. Later, they started producing in one foreign country and marketing in other foreign
countries.

Example: Unilever established its subsidiary company in India, i.e., Hindustan Lever
Limited (HLL), HLL produces its products in India and markets them in Bangladesh, Sri Lanka,
and Nepal etc. Thus, the scope of the international trade is expanded into international marketing
and international marketing is expanded into international business.
History of international business starts with the evolution of human civilization. The integration
and growth of economies and societies was the main reason for the first phase of international
business and globalization.

timeline

l z 19th Century: Broader concept of the integration of economies and societies

l z 1870: Began first phase of Globalization
l z 1919: World War II: End of first phase of Globalization, Industrial revolution in UK,
Germany and the USA Sharp increase in the trade with import and export by colonial
empires
l z 1913: GDP 22.1: After 1913: Increased Trade Barriers to Protect Domestic Production
l z 1930’s: Declined Trade Ratio, GDP 9.1
l z After 1930’s: World Nations felt the need for International Cooperation in global trade and
balance of payments affairs
l z Establishment of IMF and IBRD (World Bank)
l z IMF: International Monetary Fund

l z IBRD: International Bank for Reconstruction and Development
l z 1947: 23 countries conducted negotiations in order to prevent the protectionist policies
and to revive the economies from recession aiming at establishment of World Trade
organization

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