Introduction to International Business
Unit 1
Importance of international Business
Allows countries to expand their search of
new markets or products
To provide goods and services that other
companies might not have
To know surrounding neighbors
Forms of international business
• International business can take many forms, including importing,
exporting, franchising, licensing, and foreign direct investment.
• Importing: Buying products or services from another country
• Exporting: Selling products or services from your home country to
another country
• Cross-border trading: The exchange of goods and services across
borders .
• Franchising -A parent company (franchisor) allows another company
(franchisee) to use its brand and products in a specific way
• Licensing- A licensor grants another entity (licensee) the right to
use intangible property for a set period of time
• Foreign direct investment (FDI) - Investing assets directly into a
foreign country's buildings, equipment, or organizations
[Link]
#1 - Company Structure, Rivalry, and Strategy
• This aspect of the theory focuses on the competition in the native
markets that businesses have to excel against. The region in which the
firms operate determines the structure and strategies to be framed to
compete in the home market.
• As a result, the strategies differ from nation to nation. For example, Italy,
known for its fashionable clothing, will definitely have a different
approach than Greece, which emphasizes tourism and related facilities.
• In addition, rivalry plays an important role in driving every entity
operating in the same sector to improve, innovate, and perform better
than each other. Therefore, the businesses have to be consistent. This
makes them trustworthy and reliable national companies around the
globe in the long run.
#2 - Factor Conditions
• Factor conditions include resources available to businesses that help them
perform well. The availability of resources could be influenced by the skillset,
strategies, infrastructure, or nature. For example, Italy performs well
because of its ability to choose better fabrics; Greece’s tourism market is
influenced by the weather, which might keep changing.
• The natural resources constitute the basic factors, while the infrastructure,
skilled experts, and capital form the advanced factors. A nation develops a
real competitive advantage with the development of advanced elements. In
contrast, the contribution of basic factors to regional advantage is
comparatively lower.
#3 - Demand Conditions
• The demand for a particular product or service also plays an essential
factor. Porter Diamond model’s third attribute indicates how the
increase in demand for an item among local customer boosts the
growth of a brand or business.
• When customers want a product, businesses strive to improve the
quality and live up to their expectations. As a result, they become
competent enough to acquire the number one position on the global
platform.
#4 - Supporting and Related Industries
• Another factor that influences business growth is the
complementary services that lend support to the companies of
national advantage. For example, the tourism services in Greece
would never be the best if the accommodation facilities and food
units over there did not support the industry.