International-Business-Dr-R-Chandran-E-book

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International Business- Dr. R. Chandran
of taking any risks. By removing exchange control restrictions and draconian
codes of business and providing an environment conductive to foreign trade,
small countries like Malta, Cyprus and Mauritius have today transformed
themselves into foreign trade economies.
b) Host Country Economy.
When a firm from one country enters any other country, the following major
criteria are taken into account:
1. Size of the market
Many multinational firms are thinking of entering India, China, Brazil
and Indonesia, because of their large potential markets. Coca cola,
Pepsi, Hewlett Packard and Samsung are looking to India as a future
destination keeping in mind the size of population which represents
the size of the market.
2. Gross Domestic Product (GDP)
GDP is an indicator o the health of the economy; it also determines pr
capita income. A country with a high GDP is an attractive destination
for any international businessman. If a constant growth rate is
maintained, such a country would always be a magnet for investors.
Thailand, Malaysia and Indonesia were attractive during the 1990’s
due to a very high growth rate in GDP, until the currency crisis
affected their economies.
3. Industrialization
Many firms in the developing world were interested in entering into
Europe or the USA. The recent trend amongst companies in India is
towards Latin America specially, Brazil, Argentina, Chile. This is due
to the industrialization program, which is taking place in these
countries. It is obvious that industrialization brings about prosperity
and affluence.
4. Banking
Banking is the only channel through which remittances take place,
and hence is a major infrastructure for international business.
European, American and far East economies have highly effective
banking systems. Sub –Saharan Africa and commonwealth
Independent states (CIS) are not able to provide good banking
Only for Private Circulation