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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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