A Seminar report
on
International Relation
and it’s effect on the
business.
Submitted by:Abhinandan jain
Roll no.21421069 (MBA -1B)
Meaning:
International relations: the study of the relations of states with each other
and with international organizations and certain subnational entities
(e.g., bureaucracies, political parties, and interest groups). It is related to a number of
other academic disciplines, including political
science, geography, history, economics, law.
International relations attempts to explain the interactions of states in the global
interstate system, and it also attempts to explain the interactions of others whose
behavior originates within one country and is targeted toward members of other
countries.
In short, the study of international relations is an attempt to explain behavior that
occurs across the boundaries of states, the broader relationships of which such
behavior is a part, and the institutions (private, state, nongovernmental, and
intergovernmental) that oversee those interactions.
Historical development
The field of international relations emerged at the beginning of the 20th century
largely in the West and in particular in the United States as that country grew in
power and influence. Whereas the study of international relations in the newly
founded Soviet Union and later in communist China was stultified by officially
imposed Marxist ideology, in the West the field flourished as the result of a
number of factors: a growing demand to find less-dangerous and more-effective
means of conducting relations between peoples, societies, governments, and
economies
The importance of international relations
The theory behind international relations studies stems from political science and the way
international systems operate, investigating the relationships between countries and foreign
policies. Though the concept may seem foreign, every member of society is involved in
international relations. Your place is actively defined by the choices you make: whether you buy
fair trade products, your religion, your cultural background, where you live, and the resources
you own. Why international relations is important, is that it goes beyond peace and war, past
poverty and business; rather it explores the key players in world politics, intrinsic political
patterns, and identifies the theories for how resolution and cooperation can be reached.
Why study international relations?
International relations knowledge and skills enables you to interpret and navigate global affairs, through
the intricate and often subversive layer of influences. This framework effectively analyses how it impacts
both developed and developing economies – and how to adapt to this. International relations imparts
transferable skills in history, politics, analysis, and research. These skills allow you to critically interpret
the contemporary world, and analyse the shifting complexities that dynamically occur in politics.
Individuals learn to be objective and analytical when considering various issues and events from multiple
perspectives. This goes much further than only knowing history – contemporary global affairs also
explores:
The natural environment
Resource scarcity
Technological disruption (with the threat of new technologies such as artificial intelligence and
robotics)
Major concerns regarding nuclear weaponry
Understanding how the world has evolved is crucial for future development.
Events don’t occurring isolation, as happenings in one part of the globe can have
unlikely consequences in another. Globalization has affected political, socio-
economic, and cultural forces across the globe, and despite populist movements,
globalization continues to develop.
The Value of International Relations in a Globalized
Society
International relations promotes successful trade policies between nations.
International relations encourages travel related to business, tourism, and
immigration, providing people with opportunities to enhance their lives.
International relations allows nations to cooperate with one another, pool
resources, and share information as a way to face global issues that go
beyond any particular country or region. Contemporary global issues include
pandemics, terrorism, and the environment.
International relations advances human culture through cultural exchanges,
diplomacy and policy development.
Purpose of foreign/international relation
The answer is pretty simple. Since not everything that the residents need is
available or available in adequate quantities in a country, there is a need to
purchase (import) from the countries that have more or surplus of that
product. So, while countries need diamonds and gold more than they have,
they inevitably import them from Africa. Similarly when a country has a
shortage of professional engineers and doctors, it looks for professionals
who are ready to immigrate. Secondly, there are times when a country has
excess or surplus of a product or service which will be wasted if not sold to
other countries. We can think of China exporting huge volumes of steel to its
Asian neighbour because it has more than it needs. Thirdly, if a country/ a
tradesman feel that a particular product or service earns more abroad than in
the home country, they are tempted to engage in exporting off such cash
cows.
International Business
MEANING: International Business refers to the exchange of goods and services between
two parties of different countries. International Business may be understood as those business
transactions involve crossing of national boundaries. International Business is the process of
focusing on the resources of the globe and objectives of the organization on the global business
opportunities and threats in order to produce/buy/sell or exchange of goods and services
worldwide.
FEATURES:
1. Large Scale Operations: In International business, all the operations are conducted on a
very huge scale. Production and marketing activities are conducted on a very large scale. It first
sell its goods in the local market and then the surplus goods are exported.
2. Integration of Economies: International Business integrates (combines) the economies
of many countries. This is because it uses finance from one country, labour from other country
and infrastructure from another country. It designs the product in one country, produces its parts
in many different countries and assembles in another country and sells in many countries.
3. Dominated by developed countries and MNC’s International Business is dominated
by developed countries and their multinational companies. Europe and Japan dominate the
foreign trade, this is because they have high financial and other resources.
4. Benefits to Participating countries: International Business gives benefits to all
participating countries. However, the developed countries get the maximum benefits, the
developing countries also get benefits. They get foreign capital and technology. They get rapid
industrial development. They get more employment opportunities.
5. Keen Competition: International Business has to face competition in the world market.
The competition is between unequal partners. In this situation, the developed countries are in
favorable position as they International Business
REASONS FOR THE EMERGENCE OF
INTERNATIONAL BUSINESS:
To achieve higher rate of profits The basic objective of the business firm is to earn
profit. The domestic markets do not promise a higher rate of profits. Business firms search for
foreign market which hold promise for higher rate of profits. Thus the objective of profits affects
and motivates the business to expand its operations to foreign countries.
Expanding the production capacity Domestic companies expanded their
production capacities more than the demand for product in domestic countries. In such cases,
these companies are forced to sell their excessive production in foreign developed market.
Severe competition in home country The countries oriented towards market
economies since 1960’s, experience severe competition from other business firm in the home
country. The weak companies which could not meet the domestic countries started entering the
markets of developing countries.
Political Stability v/s Political Instability Business firms prefer to enter the
politically stable countries and are restrained from locating their business operations in
politically instable countries. In fact, business firms shift the operations from politically instable
countries to the politically stable countries.
Availability of Technology and Managerial Competency Availability of
advanced technology and competent human resource in some countries acts as pulling factors for
business firms from the home country. In fact, American and European countries depend on
Indian Companies for software products and services through their BPO’s.
Nearness to Raw materials The source of highly qualitative raw materials and bulk
raw materials is a major factor for attracting the companies from the various foreign countries.
Most of the US based companies open their manufacturing unit in Middle East countries due to
the availability of petroleum. These companies, thus, reduces the cost of transportation.
Liberalization and Globalization Most of the countries in the globe liberalized their
economies and opened their countries to the rest of the globe. These changed policies attracted
the multinational companies to extend their operations to these countries.
To increase market share Some of the large-scale business firms would like to enhance
their market share in the global market by expanding and intensifying their operations in various
foreign countries.
Factors effect international Business
Geographical location- as some countries are far near and some have long coastline while
some are landlocked hence while framing policies there factors are considered.
Political system- there are some boundary regions that gets affected by the policies taken by
different countries.
Economy- the foreign policies are established on account of economic needs hence needs to
be considered.
National leadership-The prime positions like Prime Minister ,President play a important role
in framing policies.
Administration factors- The embassies in of different nations in each countries are the
administrative factors involves in creating these policies.
5 COMMON CHALLENGES OF INTERNATIONAL
BUSINESS
1. Language Barriers
When engaging in international business, it’s important to consider the languages spoken in the
countries to which you’re looking to expand.
Does your product messaging translate well into another language? Consider hiring an interpreter
and consulting a native speaker and resident of each country.
One example of a product “lost in translation” comes from luxury car brand Mercedes-Benz.
When entering the Chinese market, the company chose a Mandarin Chinese name that sounded
similar to “Benz”: Bēnsǐ. The name translates to “rush to death” in Mandarin Chinese, which
wasn’t the impression Mercedes-Benz wanted to make with its new audience. The company
quickly adapted, changing its Chinese name to Bēnchí, which translates to “run quickly, speed,
or gallop.”
2. Cultural Differences
Just as each country has its own makeup of languages, each also has its own specific culture or
blend of cultures. Culture consists of the holidays, arts, traditions, foods, and social norms
followed by a specific group of people. It’s important and enriching to learn about the cultures of
countries where you’ll be doing business.
When managing teams in offices abroad, selling products to an international retailer or potential
client, or running an overseas production facility, demonstrating that you’ve taken the time to
understand their cultures can project the respect and emotional intelligence necessary to conduct
business successfully.
One example of a cultural difference between the United States and Spain is the hours of a
typical workday. In the United States, working hours are 9 a.m. to 5 p.m., often extending earlier
or later. In Spain, however, working hours are typically 9 a.m. to 1:30 p.m. and 4:30 to 8 p.m.
The break in the middle of the workday allows for a siesta, which is a rest taken after lunch in
many Mediterranean and European countries.
3. Managing Global Teams
Another challenge of international business is managing employees who live all over the world.
When trying to function as a team, it can be difficult to account for language barriers, cultural
differences, time zones, and varying levels of technology access and reliance.
To build and maintain a strong working relationship with your global team, facilitate regular
check-ins, preferably using a video conferencing platform so you can interact in real time.
When distance divides teams, as it has for many during the coronavirus (COVID-19) pandemic,
communication is key to ensuring everyone feels valued and engaged.
4. Currency Exchange and Inflation Rates
The value of a dollar in your country won’t always equal the same amount in other countries’
currency, nor will the value of currency consistently be worth the same amount of goods and
services.
Familiarize yourself with currency exchange rates between your country and those where you
plan to do business. The exchange rate is the relative value between two nation’s currencies. For
instance, the current exchange rate from the Canadian dollar to the US dollar is 0.77, meaning
one Canadian dollar is equal to 77 cents in US currency. Make it a point to watch exchange rates
closely, as they can fluctuate.
It’s also important to monitor inflation rates, which are the rates that general price levels in an
economy increase year over year, expressed as a percentage. Inflation rates vary across countries
and can impact materials and labor costs, as well as product pricing.
Understanding and closely following these two rates can provide important information about the
value of your company’s product in various locations over time.
5. Nuances of Foreign Politics, Policy, and Relations
Business doesn’t exist in a vacuum—it’s influenced by politics, policies, laws, and relationships
between countries. Because those relationships can be extremely nuanced, it’s important that you
closely follow news related to countries where you do business.
The decisions made by political leaders can impact taxes, labor laws, raw material costs,
transportation infrastructure, educational systems, and more.
One hypothetical example Reinhardt presents in Global Business is that if the Chinese
government decided to subsidize Chinese dairy farms, it would impact dairy farmers in all
surrounding countries. This is because, with extra funding, Chinese dairy farms may produce a
surplus of dairy products, causing them to expand their markets to neighboring countries.
Example
The Taliban’s takeover of Afghanistan will impact bilateral trade
relations with India, said Praveen Khandelwal, secretary general of the
Confederation of All India Traders (CAIT).
Afghan exports to India include dried raisins, walnuts, almonds, figs,
pine nuts, pistachios, dried apricot and fresh fruits such as apricot,
cherry, watermelon, and a few medicinal herbs. On the other hand,
India’s exports to Afghanistan include tea, coffee, pepper and cotton,
toys, footwear and various other consumable items, according to BC
Bhartia, CAIT national president.
The bilateral trade between India and Afghanistan was $1.4 billion in
2020-21, compared to $1.52 billion in 2019-20. Exports from India were
valued at $826 million while imports amounted to $510 million in 2020-
21.
Conclusion
At last it is directly seen that the relation between the two countries put a huge
impact on international as well as domestic business. The businesses have to tackle
the problems and also have to face challenges in the market. Even the govt. laws
also imposed a diverce effect on the trade of any country and many other factors
like culture , religion factors and many more also depend.