Preface to the First Edition

International business emerged as an important academic discipline in the 1960s. The discovery of the transnational corporation led to a plethora of new issues in academic learning and research. The traditional TNC was a large gigantic global corporation which made its way across the globe in incremental steps of foreign commitment and risk—beginning with trade in its geographical proximity and then moving on to more advanced modes of foreign market entry.

Some of the issues in international business pertained to: Why did firms run the risks of internationalizing? What were the sources of competitive advantage for TNCs over their domestic rivals? Were there distinctive patterns in the way that firms internationalized, and did these differ according to the national origins of TNCs? Such were the ‘big questions’ that launched and sustained this field of study during its first few decades.

However, with the rise of postwar globalization, which accelerated during the 1980s and 1990s, things began to change. The nature of businesses and the modes of carrying on business such as increasing alliances and the contractual entry form of activity underwent radical transformation. This led to businesses acquiring a more global character. Many more firms internationalized, some staying quite small, despite growing as they internationalized, giving rise to the notion of the ‘born global’ firm. This was a pattern quite different from the earlier phase where firms had to be firmly established and large in order to negotiate the perils of internationalization.

Now, in the 21st century, the impact of globalization is being felt as many new kinds of international ventures are emerging, and as the possibilities for networking and expanding through partnerships as well as mergers and acquisitions are growing. The world of global business has found new growth drivers in the BRICS and the CIVETS and interesting developments as trade liberalisation is simultaneously accompanied by growing trade and economic integration. The global economy also suffered the worst economic crisis since the days of the Great Depression and continues to battle its after effects. These developments offer new opportunities, new entry points into the global economy, and new pathways for international expansion, and are doubtless involved in the reasons why so many firms have been able to accelerate their internationalization. For the subject to thrive, it is necessary that the frameworks utilized in IB studies be modified and updated in view of the recent economic and political changes.

International Business is directed at undergraduate students of commerce and business and takes into account developments in the world of global business, weaving them with the principles and concepts that are at the heart of the subject. It has a strategic emphasis in that it outlines strategies, policies and tools for cross-functional problem solving. It presents a global perspective of business with a special focus on emerging economies. It focuses on businesses and its realities in both the advanced and emerging economies of the world, and reconciles business realities and academic perspectives. Using an integrated approach that goes beyond traditional thought, it helps students to correlate concepts with different dimensions of the subject. It brings the latest developments in the field of international business practices and research to the student with a practical focus to enable its easy assimilation. It intertwines the latest findings, economic developments, business realities with the subject matter to impart a clear understanding of the subject matter.

The textbook is divided into six units which provide current and up-to-date information on all areas of international business:

• Unit I provides the introduction to the basic concepts of International Business, and the globalising business environment. It also contains the link between globalisation and evolution of the international business enterprise. It explores different facets of the international business environment—economic, cultural, social and political. This aims to clearly bring out the differences in the multifaceted business environment and its complexities for the TNC. It also discusses the different modes of foreign entry for a TNC.
• Unit II deals with the basic framework of international trade. It introduces the student to broad trends in international trade, linking it up with theoretical explanations and the different types of barriers that nations and firms face in free trade. It then explores issues in multilateral regulation of trade and measures of trade promotion and trade fiancé. The section concludes with a discussion on regional economic integration.
• Unit III focuses on the International Monetary Environment. It begins with a discussion of the international financial system, followed by the role of international financial institutions—the IMF and the World Bank and concludes with the issues in International Balance of Payments.
• Unit IV explores issues in International Investment developing the concept of Foreign Direct Investment (FDI) and the different forms it can take. It then distinguishes between FDI and Foreign Portfolio Investment—FPI. The chapter concludes with a discussion of India’s FDI experience.
• Unit V highlights important functional areas and their complexities in the international business environment. It highlights the growing importance of the emerging markets as destinations of international business as well as the strategies adopted by TNCs from the emerging markets in their international forays such as Marico in the MENA region.
• Unit VI introduces readers to contemporary issues pertaining to the environment and the growth of the outsourcing industry as a driver of international business. It covers topical issues pertaining to the environment, outsourcing and e-commerce all of which have emerged as important issues in the twenty-first century that are changing the face of international business.