International Business Management

Reasons Behind the Financial Crisis of 2008

Financial crisis is a bubble created by excessive investor inclination towards a particular market. It shadows the valuations and when the bubble bursts, the investors want to exit and therefore rapidly start selling their stake.

Too much of capital led to lower interest rates and this in return forced the investors to look for creative investment platforms where the yield was high. This requirement led to an unprecedented growth in the securitization market as the inclination towards such derivative instruments was high. Investors were willing to take higher risks as compared to the returns they would receive for their investments. Greed for higher returns, excessive leverage and low volatility led to the financial crisis of 2008.… Read the rest

Abey Francis

Business Environment Concept – Meaning, Definition, Features and Importance

All living creatures including human beings live within an environment. Apart from the natural environment, environment of humans include family, friends peers and neighbors. It also includes man-made structures such as buildings, furniture, roads and other physical infrastructure. The individuals do not live in a vacuum. They continuously interact with their environment to live their lives.

Just like human beings, business also does not function in an isolated vacuum. Businesses function within a whole gambit of relevant environment and have to negotiate their way through it. The extent to which the business thrives depends on the manner in which it interacts with its environment.… Read the rest

Abey Francis

Different Challenges Faced by the Multinational Companies (MNC’s)

A multinational company  (MNC) is an enterprise that manages production or delivers services in more than one country. There are some challenges faced by MNC’s that transact business in international markets which can hinder its competitiveness hence its controversies and these are as follows;

Market Imperfections

It may seem strange that a corporation has decided to do business in a different country, where it doesn’t know the laws, local customs or business practices of such a country is likely to face some challenges that can reduce the manager’s ability to forecast business conditions. The additional costs caused by the entrance in foreign markets are of less interest for the local enterprise.… Read the rest

Abey Francis

Sources of Attaining Competitive Advantage by a Business Firm

When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. Competitive advantages are capabilities that are difficult to replicate or imitate and are non-tradable.

Pitts and Snow define a competitive advantage as “any feature of a business firm that enables it to earn a high return on investment despite counter pressure from competitors.”

A competitive advantage exists when the firm is able to deliver the same benefits as the competitors are but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage).… Read the rest

Abey Francis

The 10-P Framework of Global Strategic Management

The 10-P framework for globalization symbolizes the aspirations and needs of employees and organizations in the new competitive settings. It comes a long way from the initial impetus provided to the subject by Michael Porter in his book Competitive Strategy (1980), and goes beyond his purely industrial organization perspective. The framework operationalizes the 4-Diamonds for a nation’s competitive advantage of Porter. The 10-P framework integrates theory of strategic management and practice of business policy and provides a structure for the practicing manager to evaluate competitiveness at regular intervals.

The 10-P framework explores a fine `fit’ between the soft and hard strategic choices.… Read the rest

Abey Francis

Modes of Entry into International Business with Advantages and Disadvantages

The different types of entry modes, to penetrate a foreign market, arise due to globalization. The latter has drastically changed the way business conduct at international level. Owing to advances in transportation, technology and communications, nowadays practically every business of any size can supply or distribute goods, services, or intellectual property. However, when companies deal with international markets, it is complicated as the companies must be prepared to surmount differences in currency issues, language problems, cultural norms, and legal and regulatory regimes. Only the largest companies have the capital and knowledge to overcome these complications on their own. Many other businesses simply do not have the means to efficiently and affordably deal with all those variables in foreign jurisdictions, without a partner in the host country.… Read the rest

Abey Francis
Exit mobile version