TASK

"ASSIGNMENT OF THE 14TH MEETING

INTERNATIONAL BUSINESS MATERIAL”

Teacher Lecturer :

Abror, SE, M.Si

Subject :

Introduction to Business
Arranged by:

Muhammad Fadli
NIM :

22059086

MANAGEMENT STUDY PROGRAM (NK)

PADANG STATE UNIVERSITY (UNP)
JL. PROF. DR. HAMKA, AIR TAWAR BARAT, KEC. PADANG
 "INTERNATIONAL BUSINESS"

A. International Business
International business is a business activity carried out between one country and
another.

B. The Nature of International Business

As mentioned above, international agreements are agreements negotiated across
national boundaries. The transaction is an international transaction. Transactions carried out
by a country with other countries are often referred to as international trade. On the other
hand, the business that a company in one country does with other companies or individuals in
another country is known as international marketing or international marketing. International
marketing is often interpreted as international business, although basically it has two
meanings. So that we can distinguish the existence of two international business transactions:
1. International Trade
International trade, or business between countries, is usually carried out in the
traditional way through imports and exports. These import and export transactions create a
TRADE BALANCE. A country can have a trade surplus or a trade deficit. A trade surplus
indicates that a country exports more than it imports from its trading partners. When the trade
balance is in surplus, other things being equal, more money flows to the country than it flows
to its trading partners. The scale of cash inflows and outflows between countries is often
referred to as the "BALANCE OF PAYMENTS". In this case, a balance of payments that is
also a surplus is often said to be a country experiencing an appreciation in the exchange rate.
Conversely, if a country experiences a trade deficit, it means that its imports exceed its
exports with other countries. Therefore,
2. International Marketing
International marketing which is often referred to as International Business is a
situation where a company can be involved in a business transaction with other countries,
other companies or the general public abroad. These international business transactions are
generally an attempt to market products overseas. In this case, the entrepreneur will be free
from trade barriers and import duty tariffs because there are no export-import transactions.
With direct entry and carrying out production and marketing activities in foreign countries,
no export-import activities occur. Products that are marketed are not only in the form of
goods but can also be in the form of services. International business transactions of this kind
can be reached in various ways, including:
 Licensing
 Franchising
 Management Contracting
 Marketing in Home Country by Host Country
 Joint Venturing
 Multinational Corporation (MNC)
All forms of international transactions mentioned above will require payment
transactions which are often referred to as Fees. In that case the Country or Home Country
must pay while the sender or Host Country will receive payment of the fee.
 The definition of international trade with international companies is often confused or
often considered the same, however, as we can see in the description above, it is indeed
different. The main difference lies in the treatment where international trade is carried out by
the State while international marketing is an activity carried out by companies. Besides that,
international marketing determines business activities that are more active and more
progressive than international trade.

C. Reasons for Carrying Out International Business

Some of the reasons for conducting international business include:
1. Specialization between nations
In relation to certain advantages or strengths and their weaknesses, a country must
make strategic choices to produce a strategic commodity, namely:
a. Utilizing as much as possible the power that turns out to be the most superior so
that it can produce it more efficiently and the cheapest among other countries.
b. Focusing on commodities that have the least weakness among other countries
c. Concentrating his attention on producing or controlling the commodity that has
the highest weakness for his country

1. Absolute advantage
A country can be said to have an absolute advantage if that country holds a monopoly
in producing and trading these products. This can be achieved if no other country can produce
these products so that country becomes the only producing country which is generally due to
its natural conditions, for example mining, plantation, forestry, agriculture and so on. Besides
natural conditions, absolute advantage can also be obtained from a country that is able to
produce a commodity that is the cheapest among other countries. Such an advantage would
generally not last long as technological advances would rapidly overcome more efficient and
lower-cost production methods.

2. comparative advantage
The concept of comparative advantage is a more realistic concept and is widely
available in international business. That is a situation where a country has a higher ability to
offer these products compared to other countries. Higher ability to offer a product can be
realized in various forms, namely:

a) Fees or lower bid prices.

b) Superior quality even though the price is more expensive.
c) Better continuity of supply.
d) Good stability of business and political relations.
e) Availability of better supporting facilities such as training facilities and
transportation.

A country in general will concentrate on producing and exporting the commodity in

which it has the best comparative advantage and then importing the commodity in which it
has the worst comparative advantage or the greatest weakness. We can see this concept
clearly and clearly if we try to examine the trade balance of our country (Indonesia), for
example. From the trade balance, we can see which commodities we export are those that
have a comparative advantage for Indonesia and what we import are those whose
comparative advantage is the weakest.

2. Business development considerations

Companies that are already engaged in a certain field of business in the country often
try to expand their market abroad. This will raise several considerations that encourage why a
company carries out or enters into international business:
a) Utilizing the capacity of machines that are still idle owned by a company
b) These products in the country have experienced a saturation level and may even
have experienced a decline phase, while overseas they are actually growing
c) Competition that occurs in the country is sometimes even sharper than the
competition for these products abroad
d) Developing new markets (overseas) is an easier action than developing new
products (domestically).
e) The international market potential is generally much wider than the domestic
market

D. Stages in Entering International Business

Companies that enter international business are generally involved or involve
themselves in stages from the simplest stages that do not contain risk to the most complex
stages and contain very high business risks. The stages are chronologically as follows:
1) Incidental Export
2) Active Export
3) License Sales
4) Franchising
5) Overseas Marketing
6) Overseas Production and Marketing

E. Incident Export
In order to enter into the world of international business, a company generally starts
from the earliest involvement, namely by conducting incidental exports. In this initial stage it
generally occurs when a foreigner arrives in our country and then he buys goods and then we
have to send them to that foreign country.

F. Active Export
The previous stage can then continue to develop and then establish routine and
continuous business relationships and even these transactions will become more active over
time. The liveliness of these business transaction relations is marked in general by the
growing number and types of international trade commodities. In this active stage, the state
companies themselves are starting to be active in carrying out the management of the
transaction. Unlike the initial stage where entrepreneurs only act passively. Therefore, this
stage is often referred to as the "active export" stage, while the first stage is called the
purchasing or "purchasing" stage.
G. Licensing
The next stage is the license selling stage. In this stage the immigrant country sells the
license or brand of its product to the receiving country. In this stage, only the brand or license
is sold, so that the receiving country can carry out a fairly extensive management of its
marketing and production processes including raw materials and equipment. For the purposes
of using the license, the company and the recipient country must pay a fee for the license to
the foreign company.

H. Franchising
The next stage is an even more active stage, namely a company in a country sells not
only the license or trademark, but also complete with all its attributes including equipment,
production processes, mixed recipes for the production process, quality control, quality
control of raw materials and finished goods. , as well as the form of service. This method is
often known as a form of "Franchising". In the case of this form of franchise, the receiving
company is referred to as a "Franchise" while the giving company is referred to as a
"Franchisor". This form is generally successful for certain types of businesses such as food,
restaurants, supermarkets, fitness centers and so on.

I. Barriers to Entering International Business

Doing international business, of course, will have more obstacles than in the domestic
market. Other countries, of course, will have various interests which often hinder the
implementation of international business transactions. Besides that, the customs or culture of
other countries will of course be different from their own country. Therefore, there are
several obstacles in international business, namely:
1) Trade restrictions and import duty tariffs
2) Differences in language, social culture / cultural
3) Political and legal/legislative conditions
4) Operational barriers

J. Language, Socio-Cultural/Cultural Differences

Differences in terms of language are often obstacles to the smooth running of
international business, this is because language is a vital communication tool, both spoken
and written language. Without good communication, it is difficult for business relationships
to run smoothly. This language barrier is currently decreasing thanks to the existence of an
international language, namely English. Even so, this language difference remains an obstacle
that must be watched out for and studied properly because an expression in a certain language
cannot be simply expressed (letterlijk) with the same word in another language. Even a
trademark or product name can have a different and very negative meaning for a particular
country. For example, the Chevrolet car factory gives the name of a type of car with the name
"Chevrolet's Nova", whereas in Spain the word "No Va" means "cannot run". Therefore it is
very difficult to market these products in the Spanish country.
Differences in socio-cultural conditions is a problem that must also be observed in
doing international business. For example, giving color to a product or its packaging must be
careful because certain colors that in one country have a certain meaning in another country
can have conflicting meanings. Cultural differences or habits also need to be considered. For
example, Japanese people have a habit of not wanting to approach women when buying at a
supermarket, so this has the consequence that items in the form of male cosmetic tools should
not be placed close to women's cosmetics, because male buyers will not approach them.

K. Political Obstacles, Law and Legislation

Unfavorable political relations between one country and another will also result in
limited business relations between the two countries. As an extreme example, America
carries out an embargo on trading commodities with communist countries. Legal provisions
or laws that apply in a country sometimes also limit international business. For example,
Arab countries prohibit goods containing pork or lard. Moreover, laws in their own countries
can also limit international business, for example Indonesia prohibits the export of raw or
semi-finished leather, as well as raw and semi-finished rattan and etc.

L. Operational Barriers
Another barrier to international trade or business is in the form of operational
problems, namely the transportation or transportation of traded goods from one country to
another. This transportation is often difficult to do because the two countries do not yet have
regular shipping lanes. This will result in the cost of transporting or shipping shipping for
these routes to be very expensive. The high cost of transportation is due to the fact that the
carrier ship only serves one country which is usually expensive, so the return of the ship from
the destination country will be empty. The journey of an empty ship in the vast ocean will be
very dangerous for the safety of the ship itself.

M. Multinational Companies
A multinational company is essentially a company that carries out activities
internationally or in other words carries out its operations in several countries. This type of
company is often called Multinational Corporations, which is usually abbreviated as MNC.
The era of globalization that is sweeping the world at this time where in that condition no
country in the world is free and unreachable by the influence of other countries. Every
country at any time will always be affected by the actions taken by other countries. This can
happen because at this time we are in the age of communication, so that in a very fast way
and even at the same time we can find out an event that is happening in every country
anywhere in this world.
From that situation, it was as if there were no more boundaries between one country
and another. Everyday life becomes more the same. With the current trend that the demands
or needs of people anywhere in the world are close to the same thing. The need for consumer
goods or for daily life tends not to differ from one country to another. The need for bath soap,
laundry soap, stationery, office supplies, clothing, as well as household furniture and so on is
not much different between the people of Indonesia and the Philippines, Japan, Korea, Arabs
or in Europe and America.
It is this tendency for similarities that encourages companies to operate
internationally. Such companies will try to find the cheapest factory locations to produce
these goods and then market them all over the world so that they will be more economical
and have higher competitiveness.