International Business Assignment Sample
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The arrival of globalisation opened economies to interact and integrate for transaction, trade and capital movement, knowledge diffusion and technology transfer, etc across the international boundaries. The trade movement and different transactions at a global level indicates business operation in foreign countries or two or more countries. Accordingly, international business refers to different types of business activities operated across national boundary (Cantwell et al., 2010). Here, the buyer- seller engages in cross borders transaction in more than one national border as the organisation has presence of operational units in more national boundaries. In the international market, many companies like Amazon, Google, Coca-Cola, IBM and several others have been successful in international business (Cavusgil and Cavusgil, 2012). These companies have given the impression to expand internationally effortlessness but many have failed in doing internal business. Thus, to face the international competition and develop an effective global strategy the companies are making effort to understand the essential attributes of international business to achieve success in international business expansion and for growth strategy. The international business can be done through direct exports, joint venture, licensing to domestic company in host country for goods production, franchise for production and distribution in the host country. The international business can be also through managerial services in host country companies (Cavusgil et al., 2014).
In the last two decades, India has seen a trend of growing international business among its various cities. The Indian markets are going international for product trade, investments, technology, financial, insurance and construction services, etc. In particular, Mumbai city in Maharashtra, India is a home to intellectual populace. The city also has huge economic capital making it one of the top performing well balanced metropolitan cities in India for business. As a major economic entity it is a hub of commerce which plays an essential part in developing international influence in the economic structure.
The purpose of this essay is to develop an understanding of the main characteristics of the international business in the context of an Indian city. For this, Mumbai city is chosen that is a major economic entity which has been globalising the economic structure of India. The essay explores the Mumbai city in regional, national and global perspective by relating to an international business trading in this city.
International Business in India in reference to an Indian City
International business has given opportunities and risk to businesses and government to respond in changing events. I have been persuaded with the international business concept on both positive and negative level. As on one side it motivates economic integration, transfer of knowledge, technology, lower production and transaction cost and improves capital investment but at the same time it has creates a gap between the poorer and rich nations and between the qualified skilled labours with unqualified ones. Despite this, international business is booming in the developing nations in forms of merger and acquisitions and other entry modes which I have observed is mainly for expansion of product mix, acquiring capital infrastructure, technical expertise and for rapid growth. Thus, I witness that the globalised era driven by international business and supported by information technology has effect on Indian macro-environment and culture. It has led to improvement in living standards, transformation in lifestyle, and thus, increased demand for quality, branded and western products. Globalisation promoted international business which has loosened up the Indian culture towards westernization. In my perspective, this is more evident in food, clothing, and employment in multinationals, branded product in consumer goods, and inclination towards foreign languages.
The international business has influence over the macro – environmental factors such as political, economic, technological, social, etc. of a nation. According to Terpstra et al. (2012), the foreign legal system, inflation rate, foreign exchange markets, government import and export trade policies and cultural differences are some of the fundamental factors in international business affecting multinational corporations. In particular, India is considered as an attractive destination for multinational corporations owing to stable political environment, growing middle class segment, young demographics, liberal economic policies and other factors. India has maintained amiable relationship with both developed and developing economies such as United States, Japan, China, Russia, United Kingdom, and other European states. Among these, the relationship of India and Japan has been strong in terms of economic, political, cultural and social aspects Nataraj (2010) that has led to several successful international businesses to flourish in Indian Territory. India share bilateral economic relationship with Japan which is evident from the below figure that shows volume of trade among the two countries for a period of 11 years.
From a period of 2013 to 2016, Japan share was 7 percent as foreign investment in India according to the statistics from Government of India (Jejurkar and Sanbe, 2017). The Japanese foreign investment in India has increased since year 2013 as shown in below figure.
There is an interrelationship between the modern cities in India and the multinational corporations (Iammarino et al., 2018). The cities in India have been central contributors of capital to the Indian economy. In particular, Mumbai contributes around 6 percent in India gross domestic product (GDP) and has an approximated GDP of $310 billion (Business World, 2017). From the last 150 years, the city of Mumbai is continuously progressing as a globally involving city to attract many foreign investors (Clark and Moonen, 2014). The growth of international business in Mumbai is lucrative as the city provides business opportunities for company’s growth in the marketplace. The city of Mumbai is actively involved and shapes the activities of multinationals operating in the city. The city of Mumbai has distinct characteristics concerning the international business in terms of its interconnectedness to international markets and advanced products and services and other features to help the multinationals in lowering the cost of doing business in the city. According to Iammarino et al. (2018), multinational have shown interest in urban cities and regions owing to its trade-able export sectors supply chain linkage structures and the relationships of city with the more urban neighbourhood regions. Mumbai relations with neighbouring cities, regions and states are steady and have high-skilled staff and young population from other Indian states also migrate to Mumbai so there is availability of talented and qualified staff as well as no shortage of manpower in the city. Moreover, the upper class segment as well as the growing middle class segments offers the company to explore the market opportunities. This has led to a fast transition in economic terms in Mumbai in terms of international trade and service where the business has expanded across cross borders from and to the Indian city. Mumbai is also considered as an internationalized economy as it forms the hub of many corporate headquarters and regional office and institutional centres for many multinational corporations (Clark and Moonen, 2014). International business has impact on the Mumbai city culture which has moved more towards westernisation. In business perspective, international business has also influenced the pace of business, management of employee based on values and priorities, communications, decisions to enter other markets, risk taking propensity, marketing, sales, distribution and other functional areas operating within the city.
In India, one of the many successful international businesses is Panasonic Corporation since year 2006. It is a Japan based multinational operating in home appliances, consumer electronic and electrical manufacturer. Panasonic corporations has been engaged in international trade with multiple countries and has set up manufacturing plants in North America, Europe, etc, to provide innovative products. The internationalisation is also focused on Asian countries for the rapid growth of the business since 2008. The mode of entry has been through high control modes such as cross border acquisition and shared ownership mode through licensing, joint ventures, franchising as well as contract manufacturing. It has entered India through a high entry mode. The company’s Indian operations are handled by Panasonic India Pvt. Ltd. This Japanese business operates in the Mumbai city where it has its regional office and also conducts business in other cities within India. It can also be recognised that to realise the competitive edge over the market by multinationals the location factor cannot be ignored in the field of international business. The location strategy of multinational plays a role in international business strategy. It can be said that the location strategy of Panasonic in metropolitan city of Mumbai highlight the role played by Mumbai city location in doing international business. The location factor in international business was evident from the classification of eclectic paradigm put forward by Dunning as ownership-location-internalisation (OLI) framework. According to Iammarino et al. (2018), locations decisions that led to investment decisions in a location are good if they are taken for correct cities. The location decision for correct cities drives the activities of multinational corporations’ subsidiaries and also improves the overall performance of the corporate entity. The framework indicates that the location refers to a country but the location dimension can be helpful to suggest the cities analysis for location decisions of multinationals affecting their investment choices (Iammarino et al., 2018). According to Clark and Moonen (2014), understanding the city economy, their growth potential, trade feature, availability of skills and knowledge age group have been an explicit behaviour of multinational in forming investment decisions. The globalised trend in the city of Mumbai has been favourable for Panasonic business as it presents a new market for growth and development of the organisation. It can also be said that the economy of Mumbai and its related characteristics must have played a significant role in decision for Panasonic intention to operate in this city.
Characteristics of international business in the context of an Indian city
The most important characteristic of international business is its integration of different economies (Cravino and Levchenko, 2017). This means that a company in doing international business may obtain finances from home country and obtain managerial services or design services from another country and also labour and physical infrastructure from same or different host countries. Also, the company may locate it manufacturing unit, assembly centre and distribution centre in different host countries and sells the products in international markets. This highlights combining different countries in business operations in doing international business. The Panasonic Corporation highlight the integration of developed economy with a developing economy in doing international business in the Indian city. The international business environment is also characterized by the interaction among the environmental forces of the domestic and foreign entity (Rugman et al., 2011). In this context, it can be stated that decision made by Panasonic under the power of foreign environment will also be linked to their business operations in Mumbai. The complexity in decision making in Panasonic can arise due to cultural values and differences, working style, working relationships, business and management practices. In related perspective, it can also be noted that in international environment is also characterised by complex decision making process.
Another related characteristic is that international business gives advantages to participating economies. According to Sethi and Judge (2009), the internal business operations offer maximum benefits to developed economy as compared to developing economies. Panasonic corporation business provides more benefit to the parent company in home country than in Indian city as the Japan is technological resource rich to gets benefits in terms of economies of scale, lower labour costs, lower production cost and increase in market share. However, Japan face challenges related to population decline has led to manpower shortage and their availability. Panasonic Corporation with its investment in Mumbai and other Indian cities has helped the company to maintain its growth in the foreign metropolitan. On the other hand, India with technology and capital constraints and average managerial techniques gets benefits from Japan. Accordingly, the Indian city gets access to foreign capital, managerial expertise and technology. This is useful for Mumbai to gain benefit in terms of rapid industrial development in the city and to create more economic opportunities in the city to lower the unemployment rate. This is benefits Mumbai city in contributing to the economic development at regional level in the Maharashtra states and in Indian economy at national level. Thus, it can be said that international business provides opportunity to the participating countries to integrate and gain benefits.
The international business has also led to intense competition in the international marketplace. The international business has influenced the consumer electronic industry in India by providing promising market opportunities and increasing consumer market bases but has increased competition extensively in the Indian ecosystem. The Indian market has become more aware of specifications and new technology which has led to more comparison and choice in consumer electronic from different domestic and foreign brands. There are small and medium and large domestic businesses that are giving competition to the Panasonic Corporation. However, considering Panasonic it is in strong position in the Mumbai markets owing to its quality products which are also available at affordable prices. It can be said that competition due to international business is also between unequal partners in Mumbai. The intense competition also represents a characteristic of the international business. The restrictions also form a characteristic in international business. The restrictions are related to international business from the government which can be for capital inflows, capital outflows, movement of goods, movement of labour, transfer of technology, etc. There are several tariff and non-tariff restrictions that which require attention and acceptance in the markets internationally. As different countries have different rules and follow different directives the restrictions are legalized where the country is liable to logically stand for the tariff difficulties (Picciotto, 2017). Therefore, in international business the trade import or export among two or more countries tend to follow the restrictions in trade, investment and foreign exchange. However, the liberal economies in India pose less restriction for international business. There are less restriction on foreign exchange and has limited tariff barriers. This is supports foreign investment and is positive towards international business in the city of Mumbai.
Another important characteristic of international business is its large scale operations. In Panasonic Corporation, the business operations such as marketing and production are carried on a large scale. The goods produces are marketed in the local, regional and national market in India and some of the goods are exported to Dubai and other foreign countries. The operations of the Panasonic Corporation on a large scale require labour force on a large number, capital infrastructure, physical infrastructure such as warehouses and a good transportation infrastructure and network. The city of Mumbai provides food transport network for the organisation to carry on its business operations and activities.
The responsive nature of international business forms another characteristic of international business as it is sensitive towards changes in the external environmental factors. The international business is responsive towards the political environment, trade laws, economic policies, technological changes, cultural differences, legal and environmental laws as if affect the business in cross borders. This also implies that international business needs to adapt to environmental changes and adjust the business activities accordingly to survive in turbulent global business environment. In other words, it can be said that international business is aware and flexible towards the changes in the business environment (Cantwell et al., 2010).The demand for the products offered by the organisation, Panasonic Corporation in the market of Mumbai is influenced by the economic factors, political environment and other factors which can either increase or decrease the demand of Panasonic products. Therefore, the organisation adapts itself in its business approach and strategies with the external environments to meet the local market acceptance and maintain its market competitive. The Panasonic Corporation has undertaken marketing research activities to find out impact of external factor changes in its international business in India.
There is also a requirement for specialized organizations as operating and managing business at an international level is complex. Also, doing business in the international market is also associated with uncertainty, political, financial and business risk (Krifa-Schneider and Matei, 2010). This requires a number of formalities to be fulfilled and macro-environmental factors to be considered. Thus, the need for specialised establishment forms another characteristic of international business. Panasonic Corporation is a specialized institution that has shown its capability in managing business operation in the international market. The organisation has competent expertise which is need for effective and efficient handling of its business operations and marketing activities in the Mumbai city. In this relation, it can also be stated that as operating and managing business in international level is complex, uncertain and with risks therefore multinational entities require a long term planning which also constitutes one of the several characteristic in the management of international business. The international business activities are known to be complex and time consuming due to the regulations and local laws governing the different Indian states and cities. The policies enforces to foreign corporate entity is also differs from nation to nation and the payment issues in foreign currency which makes the process of international business more lengthy. Panasonic Corporation has gone through time consuming and lengthy procedure of business formalities to set up its international business operations in the city. The requirement long term planning is also triggered in the organisation in the business area of marketing as the marketing practices differs from region to region and is also impacted by the business environment and related factors.
It is also recognised that developed countries and multinationals in these countries have dominance over international business (Rugman et al., 2011). This is due to the fact as the developed countries have abundance of resources, advanced technology, strong financial resources and capabilities for large funding and for huge spending on research and development (R&D). Thus, the dominance of international business by developed countries and multinational of these countries form another characteristic feature. In case of Panasonic Corporation, the international business is under dominance of multinational to a certain extent which belongs to a developed country, Japan. The dominance is also owing to the wider reach of multinationals of the developed countries and strong presence in multiple developed and developing countries. The multinationals thus, have experience in applying efficient and effectual management and business practices to manage their operations in different environment of the countries (Deresky, 2017). In addition, it can also be mentioned that dominance of developed country, Japan in international business is also owing to its advanced technology. The advanced technology is exploited in different business operations such as designing, production, promotions and marketing, to get quality products at lower costs and to strengthen the brand image at a global level. This also gives an edge to the multinational corporations in Japan over other corporate entity in developing countries. Thus, the multinational, Panasonic Corporation belonging from a developed country, Japan has a steady position in the international market and their advanced technology and global business approach makes them dominant in the arena of international business. The advanced technology is crucial for Panasonic operating in Mumbai as technological innovation by other market competitor can launch new products which may impact the demand and sale of Panasonic products in the marketplace. The use of advanced technology for high quality and superior product is necessary for Panasonic to achieve stay ahead of market competition in the city.
In related context, it is also considered that science and technology plays a significant part which is also a characteristic feature in international business. It can be said that international business supports scientific knowhow and technology (Dodgson, 2018). In Panasonic Corporation, the science discipline and technology play an imperative role in business in designing and to operate as a large scale operation in the city. The technology transfer from the parent company to host country has helped the international business in Mumbai in design technology and production operations on a large scale. It can also be stated that the significance given to the advanced technology in international business field is high. Japan with high advance technology for its products, design and marketing provide benefits to Panasonic Corporation. The organisation makes use of advanced technology for factory automation, marketing activities and in other business operations (Dodgson, 2018) to develop its well-built business existence in the markets of Mumbai. Panasonic brand have large and strong presence and recall in the Mumbai city.
Apart from this, the international business also demands knowledge and skills in conducting business across the cross borders for the management of business operations of an organisation operating in more than one country. The Japanese has business expertise and has superior management techniques (Deresky, 2017) that fulfil the knowledge and skills requirements of international business in Indian cities. The Japanese management in Panasonic Corporation is well versed with the business regulation prevailing in India and are also aware of the regulation in conducting the business and marketing operations in the city of Mumbai. The company management has understanding of local laws and customers, cultural differences and capabilities of company in conducting transaction in foreign currency i.e. Japanese Yen. Thus, payment transaction in foreign currencies also forms an important characteristic for the success of an international business. This is evident as international business allows participation of more than one country which operates in different currencies. This also links to understanding about the international rules, regulation and procedure to conduct currency exchange.
It can be concluded that with globalisation the scope of international business in Indian metropolitan cities has expanded. The international business environment is complex and has several characteristics that require understanding in planning, managing and conduct of business operations in the foreign marketplace. Here, marketing integration of Japan and India is discussed in context of Indian metropolitan city, Mumbai for the international business operation of Panasonic Corporation operating in the city. Panasonic entered the international business in India considered it as easy to enter economy with favourable market characteristics and huge potential consumer market in the city. The high entry mode has allowed the organisation to have high control over the business operation in the international market. However, the international business of the organisation has high risk through this entry mode. Panasonic has good knowledge for the Mumbai market and competency to take care of business functions. It was found that Mumbai city has been favourable and contribute in the growth and development of the international business and benefits in terms of job creation and economic development at regional and national level. The international business provides opportunity for Panasonic Corporation to integrate with Indian city and gain benefits from market integration and interactions. Thus, the international business characteristics were highlighted for the international business operating in Mumbai city to comprehend the international business environment. For future understanding and development of international business, there is a need to review existing approach to culture in international business. This is required to get deep understanding of role of culture in segmenting, targeting and positioning as well as in formulation of business strategies in the international business.
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