Tejal Krishna GBE-1

DIFFERENT WAYS
OF
DOING GLOBAL
BUSINESS
Global business
refers to business
activities that span
national borders. It
SO, WHAT can involve
businesses dealing
BASICALLY with other businesses
GLOBAL or customers in
different countries.
BUSINESS
2
IS ?
GLOBAL BUSINESS ADVANTAGES
• caAccess to new markets and customers: One of the

primary benefits of international business is the ability to access
new markets and customers. By expanding into other countries,
companies can reach new audiences and increase their revenue
potential. This can be particularly valuable for companies that
have saturated their domestic market
• Diversification of risks: Another advantage of international
business is the ability to diversify risks. By operating in multiple
countries, companies can reduce their dependence on any one
particular market. This can help to mitigate the impact of
economic downturns or other disruptions in a specific country
• Increased competitiveness: International business can also
help companies become more competitive. By expanding into
new markets, companies can learn from different business
models and best practices. This can help them to improve their
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• Exposure to new ideas and technologies: International
business can also expose companies to new ideas and
technologies. By interacting with other cultures and
businesses, companies can learn about new products,
services and innovative business practices.
• Potential for higher profits: International business can

also provide the potential for higher profits. By tapping into
new markets, companies can increase their revenue potential
and grow their business. Additionally, international
businesses can take advantage of lower production costs in
certain countries to increase their profit margins.
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GLOBAL BUSINESS DISADVANTAGES
• Cultural differences and communication barriers: One

major disadvantage of international business is the potential for
cultural differences and communication barriers. Companies
may struggle to understand and navigate the cultural norms and
expectations of a foreign market, which can lead to
misunderstandings or miscommunication. This can make it
difficult to establish relationships with partners
• Complex and ever-changing regulations: Another
disadvantage of international business is the complexity and
ever-changing nature of regulations in different countries.
Companies must navigate a wide range of laws and regulations,
which can be difficult to understand and comply with. This can
increase the cost and complexity of doing business in a foreign
country. and customers, and can also impact the effectiveness
of5marketing efforts
• Increased competition: International business can
also lead to increased competition. Companies may
face new rivals in a foreign market, which can make
it more difficult to establish a foothold and build
market share. This can be particularly challenging
for small and medium-sized businesses
• Political and economic instability in foreign

countries: Lastly, international business can be
impacted by political and economic instability in
foreign countries. Companies may face risks such as
currency fluctuations, trade barriers, and even
6
expropriation. These risks can be difficult to
GLOBAL BUSINESS STRATEGIES
• Exporting/Importing
• Outsourcing/Offshoring
• Licensing and Franchising
• Foreign Direct Investment (FDI)
• Joint Ventures/Strategic Alliancescc
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E X P O RT I N G / I M P O RT I N G
• Exporting is the easiest and most

straightforward way to engage with the global
market. Exporting is taking goods that were
produced within a company’s home country and
shipping them to another country. The party
sending the good is called an exporter.
• Importing is the process by which a good is

brought into a jurisdiction, especially across a
national border, from an external source. The
party bringing in the good is called an importer. For
Example of U.S. imports are everywhere
O U T S O U RC I N G / O F F S H O R I N G
• Outsourcing and offshoring are two additional

strategies that a business can use in order to take
advantage of the global
market. Outsourcing contracts out a business
process to another party and may include either or
both foreign and domestic contracting.
• Offshoring, on the other hand, is the

actual relocation of a business process from one
country to another—typically it’s an operational
process, such as manufacturing, or sometimes a
supporting process, such as accounting.
F O R E I G N D I R E C T I N V E S T M E N T ( F D I )
• Out of all of the ways that a business can reach the global
market, the most intensive approach is through foreign
direct investment or FDI. Foreign direct investment is an
investment in the form of a controlling ownership in a
business enterprise in one country by an entity based in
another country. FDI can take one of two forms: Greenfield
ventures or mergers/acquisitions.
• In a Greenfield venture, the company enters a

foreign market and establishes a new subsidiary as a start-
up business.for ex. . A good example of this is the BMW US
Manufacturing Company
• Businesses that are not ready to take on the challenge of

establishing a new facility or subsidiary in a foreign country
will usually choose either a merger or acquisition as a means
of expanding their global reach
LICENSING AND FRANCHISING
• Increasingly, businesses are getting their products and

services into global markets via licensing and franchise
agreements. Under a licensing agreement, the licensor
agrees to let someone else (the licensee) use the property of
the licensor in exchange for a fee. License agreements
usually cover property that is intangible, such as
trademarks, images, patents, or production techniques. Ex.
Star Wars remains the most lucrative source of licensing in
the entertainment business, generating more than $42
billion from the sale of licensed merchandise.
• Under the terms of a franchise agreement, a party

(franchisee) acquires access to the knowledge, processes,
and trademarks of a business (the franchisor) in order to sell
a product or service under the business (franchise)
name. ExMcDonald’s, Holiday Inn, Hertz Car Rental, and
Dunkin’ Donuts have all expanded into foreign markets
JOINT VENTURES/STRATEGIC ALLIANCES
• A joint venture establishes a new business that is

jointly owned by two or more otherwise
independent businesses. The most common joint
ventures involve two companies that are equal
partners in the new firm, investing money and
resources while sharing control of the newly
formed firm.
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Tejal Krishna GBE-1

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DIFFERENT WAYS

• caAccess to new markets and customers: One of the

• Potential for higher profits: International business can

• Cultural differences and communication barriers: One

• Political and economic instability in foreign

• Exporting is the easiest and most

• Importing is the process by which a good is

• Outsourcing and offshoring are two additional

• Offshoring, on the other hand, is the

• In a Greenfield venture, the company enters a

• Businesses that are not ready to take on the challenge of

• Increasingly, businesses are getting their products and

• Under the terms of a franchise agreement, a party

• A joint venture establishes a new business that is

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