INTRODUCTION International business is a term used to collectively describe all commercial transactions that take place between two or more nations. It refers to all those business activities which involves cross border transactions of goods, services, resources between two or more nations. It can be either the buying (importing) or selling (exporting) of goods or services on a global basis. In the achievement of the strategic objectives of a self-reliant and dynamic economy, the government considers a substantial expansion in export earnings to be of great importance.
Exports enable the country to pay for critical imports, new technological inputs and setup the pace of economic development. International trade necessarily requires interaction with governmental agencies, and most all governments wish to expand their country’s role in international trade, entrepreneurs can look to governments themselves for a great deal of information. There are some non-governmental resources to expand the knowledge of entrepreneurs about international trade •The federation of international trade associations provides portals to trade leads, market research, a global trade shop and even a job bank. Search engines such as google or yahoo provide a huge database of information that will require selectivity to retrieve the most helpful information. •The large network of international trade market places, providing trade leads and new business contacts. INTERNATIONAL BUSINESS SCENE For an Indian entrepreneur to go to international business is not easy, they has to cross many hurdles. India is a small player in overall global exports. Exports from India value wise are less than 0. 8%. Exports from India since last two years are growing by 20% despite low growths in agriculture and industry.
The external factors that affect lower growth rates are: •Recessionary conditions in USA. •Low or no growth in Japan. •Distributing conditions in west Asia. •Progressive strengthening of rupee against dollar. There are constraints which an entrepreneur has to face. They are: • Price competition in the global market due to various reasons. •Indian entrepreneur has to meet the challenges of continuous deficiencies on the infrastructural front especially lack of regular quality power, lack of cheap power supply, inadequate physical infrastructural such as roads and efficiently run ports. High cost of funds and high service charge of banks. Though credit rates are coming down for the competing countries, the export credit is still costly. •Appreciating Indian rupee. India is on high export growth trajectory making many entrepreneurs to look for global markets. Government of India is giving boost to export from time to time in its exim policies. Particular focus is on agro exports. The high growths of exports are expected by the agricultural and agri-products sector and growing service.
The export of services is growing where Indian entrepreneurial talent is seen in action. Thus, country has large reservoir of entrepreneurial talent and efforts are under way to go international. During the reforms period India has opened up with its policies to help liberalization, privatization and globalization. Every effort is made by governments and industry to go to global markets. In recent past the result of growing economy is seen due to these steps. They are: •Indian global trade is increasing at 20% growth since last 3 years. Growth in GDP and per capita incomes. •The percentage of Indian trade in global level is 0. 8% is low. •In the new knowledge industries like IT (Information Technology), BPO (Business Process Outsourcing), R&D (Research & Development) and BT (biotechnology) the progress of India is impressive at global level. •Lots of Indian entrepreneurs are taking up lead in establishing knowledge based industries in various parts of globe. •Indian entrepreneurs are developing niche products. •There is positive outlook and supporting ambiance for international trade and industry.
INFRASTRUCTURAL SETUP The government has setup adequate and appropriate institutions mainly to assess export promotion in particular. They are: •Export promotion council – promotion of specific commodities or groups. •Commodity board for coffee, tea, cardamom, rubber, coir, silk, handicraft and handloom. •Board of trade, Advisory council of trade zonal advisory committee. • The Indian Institute of packaging. • The Indian Institute of foreign trade. • Export Houses and trading houses. NATURE OF INTERNATIONAL ENTREPRENEURSHIP
International entrepreneur is doing business across his or her national boundaries. The activities that are necessary to satisfy the customers that an entrepreneur targets across another countries involving exporting goods and services, opening sales offices, subsidiaries, manufacturing or joint ventures and development of business. Historically India is known as an exporter of specialized items like spices, silk, handicrafts to many countries. For about past one century trade and manufacturing business exist with European countries.
Since independence India started exporting to many countries agri-produce, basic minerals and metals, manufactured items and services. It takes careful and fairly complex consideration, before a business decides to open operations abroad and become a multinational corporation. The company needs to ask what advantages are related to expanding abroad and how foreign operations should be run. In addition, the choice of foreign location should be based on a thorough scanning of the environment in several candidate countries. India adopted globalization since 1991.
Since then, Indian companies are going all over globe for business and industry. Foreign investors and technology providers are helping Indian entrepreneurs to take up new ventures in Information Technology and other manufacturing activities. Indian entrepreneurs are also choosing joint ventures, acquisition and strategic partnership to grow faster. Even today Europe remains big partner of trade with India. The future commercial strength of India depends on the ability of Indian entrepreneurs to take advantage of large markets that are developing outside
India. Further, incentives and subsidies are provided for an entrepreneur to encourage them. INCENTIVES The term incentive means encouraging productivity. It is a motivational force which makes an entrepreneur to take a right decision and act upon it. Broadly, incentives include concessions, subsidies and bounties. Economic incentives (both financial and non-financial) push an entrepreneur towards decisive decision and action. SUBSIDY Subsidy denotes single lump-sum which is given by a government to an entrepreneur to cover the cost. BOUNTY
The term bounty denotes a bonus or financial aid given to an industry to help it to compete with other units in country or in a foreign market. The objective of incentives is to motivate an entrepreneur to set up a new venture in the large interest of the nation and the society. TYPES OF PARTICIPATION International entrepreneur has different choices of engagement of his new venture. The options are different levels of ownerships and controls. The options are licensing, franchising, joint ventures, foreign direct investments and strategic partnerships.
The choice of one of above alternates by an entrepreneur depends on: •Target market environment. •The market potential. •Decision regarding marketing mix. •Customers trust in the brand. •Policies of government. •Competitor activities. •Resource availability at competitive prices. •Advantage of flexibility and resilience to meet market changes. •Dynamism of entrepreneur and his team. IMPORTANCE OF INTERNATIONAL ENTREPRENEURSHIP The importance of Entrepreneurship may be summarized as faster development of business, accessing large markets, attaining cost advantage of large scale manufacturing.
Use of cheaper resources to get market advantages, earning money for the expertise in the areas of technology, consultancy, management, manufacturing and the like. India meets global export, today, only a small fraction that is less than one percent. Roughly 99% of the total world market for all products and services for Indian entrepreneur is outside India. To achieve growth potential the large growing markets in India attract an entrepreneur. Indian companies and Indian entrepreneurs are also meeting the global competition by acquisitions, joint ventures, etc.
This is seen more in the areas of information technology, business process outsourcing and pharmaceutical industries. WORLD TRADE ORGANIZATION AND ENTREPRENEUR In the reforms period that is from year 1991 onwards Indian entrepreneur is moving to international entrepreneurship in a big way taking advantage of the trade liberalization and development of global trade across borders. The modern communication and growth in IT, BT and BPO industries are helping Indian entrepreneurs to grow global with his skills and less capital on hand.
WTO has helped in the areas of: •Removal of trade restrictions. •Low tax regime across globe. •Agreements on TRIPS (Trade-related aspects of Intellectual Property Rights) and TRIMS (Trade Related Investment Measures). •Growth of service industries. •Market access to number of advanced countries without discrimination or trade restrictions like, large duties or procedural hassles. INDIANS IN INTERNATIONAL VENTURES Indians are making headlines in international entrepreneurship in many countries in last two decades.
Information technology has given a boost in this direction. IT ventures needless capital and results are seen faster. IT companies need in-depth knowledge of IT, process in the industry and management skills. Indian entrepreneurs have made a mark in this area in USA. Some of the examples of international entrepreneurship are: •Co-founder of Sun Micro Systems is Vinod Khosla in USA. •Creator of Pentium chip is Vinod Dahm in USA. •Founder and creator of Hotmail is Sabeer Bhatia in USA. •Lord Swraj Paul established Caparo group in UK.
The group has large interests in steel companies in many countries. •Many software companies are started in USA and UK by Indian entrepreneurs. For example, two young software entrepreneurs recently made a headline for their entrepreneurial work in camera phones. EXAMPLES •Government of Punjab agricultural department and Mahindra group signed an agreement for ‘contract framing’. •Similar ‘contract framing’ agreement was signed by two companies ICICI and Hindustan Lever for growing Wheat and Basmati Rice in Haryana and Madhya Pradesh. Rallis and ICICI have signed for big retail chains ‘Food World’. Strategic partnering helps an entrepreneur to go international by combining strengths of allies and direct their competitive energies towards common rivals in the market place. The strategic alliance helps an entrepreneur in: •Getting access to new markets in a new country. •Get access to local distribution network. •Advantage of additional finance resources. •To reduce risk in a new venture. •To reduce competition. Improve production technologies, improve quality. •Access to management know-how and know new fields of manufacturing and services. •Large-scale, improved performance, training and market expansion. On the negative side the strategic alliance has following pitfalls: •Free access to information make trade secrets goes to others. •Incompatibility of the partners – the cultural differences between the partners. •Autonomy – the loss of autonomy to an entrepreneur. •Changes in market or products may bring the strategic partnership to a close.
CONCLUSION Over the last decade the role of entrepreneurs in international business has become a key emerging issue. With the help of international trade the countries are able to acquire commodities, which they cannot produce locally due to the non availability of factors of production in sufficient quantity and due to high costs of production. It has also resulted in the improvement in means of transport in all parts of the world. The global economy seems to be recovering after the recent economic shock.
The Indian economy, however, was hit in the latter part of the global recession and the real economic growth has witnessed a sharp fall, followed by lower exports, lower capital outflow and corporate restructuring. Due to the strong position of liquidity in the market, large corporations now have access to capital in the corporate credit markets. India is now following different development strategies and doing better in key areas. India is expected to become the third largest economy in the next few decades contributing to more than half of world’s manufacturing output.