International Business

Session 1
Introduction & Overview
of International Business

IIM-K PGP 24 IB 2021-22 S1

July 27, 2021 1
Introduction & Overview
 A News Item A While Ago

TVS Motors, two-wheeler and three-wheeler

manufacturer, will be focussing on strengthening its
exports and international business for next three to five
years. Along with entering new overseas markets, the
Chennai headquartered company aims to improve
exports from its Indonesia plant … The company has a
long term strategic partnership with BMW and has
produced 72,000 units of BMW 310 motorcycles under the
collaboration. TVS has also acquired Norton motorcycles
which has enhanced its global portfolio bringing in
complimentary products, segments, markets in the super-
premium category … [it] will consolidate [its] presence in
Africa and Latin America and improve [its] market share in
some of the countries where [it has] scope for improvement
… For the next three to five years [it] will be focussing on
the international side of the business by improving market
share, ensuring customer satisfaction and entering new
markets

IIM-K PGP 24 IB 2021-22 S1

July 27, 2021 2
Introduction & Overview
 What Do We Learn in This Course

Why do we study International

Business as a separate subject?

Why do companies internationalize?

How do companies internationalize?

How do we understand companies’ strategic

approach?

IIM-K PGP 24 IB 2021-22 S1

July 27, 2021 3
Introduction & Overview
 International Business History

Indus Valley with other Civilizations

India with Roman Empire, China, Arabian peninsula

Search for sea route to India

Colonization

Indian silk, muslin, spices, education,

precious stones, metallurgy

IIM-K PGP 24 IB 2021-22 S1

July 27, 2021 4
Introduction & Overview
 External Internal Strategic Strategic
Analysis Analysis Direction Choice/Option Vision, Mission
Goals, Targets
Strategic Planning

Corporate,
Strategic Plan Formulation Business,
Strategic Plan Direction Operational

Strategy Structure,
Testing Systems,
Organization Processes
Resource Assess.
Financial,
Human,
Organizational Other
Adjustment

Implementation
Retention, Exit, New
Entry, Collaboration
Monitoring
Businesses, Products,
Markets, Customers
Feedback

Strategic Management Process

©2006-2021 P Rameshan IIM-K PGP 24 IB 2021-22 S1
July 27, 2021 5
Introduction & Overview
 International Business Connections of a Firm

Cross-Border Cross-Border
Supply Sourcing

International
Business
Experience
of Firms

Investment Cross-Border
Abroad Competition

©2016-2021 P Rameshan
IIM-K PGP 24 IB 2021-22 S1
July 27, 2021 Introduction & Overview 6
 Extent of Internationalization of Business*

Exports + Imports (Merc.+ Com.Ser)≈ US$50 (40+10) trillion

Annual Net FDI US$2.0 trillion (2017)

Sales of Foreign Affiliates US$35-40 trillion

FDI stock (2017) US$31 trillion

(India 31st rank 2017 $155 bn)

Parent Companies ≈ 85000

Foreign Affiliates ≈ 0.85 million

Employment by Affiliates ≈ 80 million

E-commerce Sales US$1.5-2.0 trillion

Internet Users 4.0-4.5 billion

* Just to provide the magnitude, not exact data

IIM-K PGP 24 IB 2021-22 S1

July 27, 2021 7
Introduction & Overview
 Phases of Internationalization Process

IB Process

Goods/
Exports Investment Inputs
Services

Physical/
Small Beginning & Online Technology/Designs/
Gradual Growth Consultancy

Investment Licensing/
Franchising

Alone Joint

Greenfield/M&A

©2018-2021 P Rameshan

IIM-K PGP 24 IB 2021-22 S1

July 27, 2021 8
Introduction & Overview
 Why Internationalization of Business

Drivers of
Internationalization

Demand Cost Strategy

Product Technology
Life Cycle Life Cycle

©2016-2021 P Rameshan
IIM-K PGP 24 IB 2021-22 S1
July 27, 2021 9
Introduction & Overview
 Internationalization Process
Home Strategic Plan

Business Operational Corporate Going Abroad? Yes

Countries to Enter? Compatible Markets

Generic

Which Entry Mode? By Strategic Policy

Strategic Adaptation

Low Cost International Strategy

Focus Multi-domestic Strategy
Differentiation Global Strategy
Leadership Transnational Strategy
©2016-2021 P Rameshan
IIM-K PGP 24 IB 2021-22 S1
July 27, 2021 Introduction & Overview 10