INTERNATIONAL ENTREPRENEURSHIP

By:-

Ajeet Kumar

INTERNATIONAL VS DOMESTIC ENTREPRENEURSHIP

International entrepreneurship : International entrepreneurship is defined as development of international new ventures or start ups that from their inception engage in international business, thus viewing their operation domain as international from the initial stages of international operation.

Example of Global Entrepreneurship….

Tech industry are strong example of successful global entrepreneurship. Companies such as Microsoft, Apple, Google and yahoo all evolved from small startups with limited funding into massive multinational corporations. The reason for the rapid growth of these companies is that the demand for these technology- operating systems, search engines, office software and smartphones is universal in developed nations.

Domestic Entrepreneurship : Domestic entrepreneur are distinguished by their emphasis on a production expansion strategy and customer specialization strategy. The production specialization strategy consists of focusing on limited geographical markets. The customer specialization strategy incorporates the production of a specialty product that is purchased infrequently. Thus, for both of the domestic strategies, a consistent “closeness” between the producer and consumer is implied. This may be an important basis underlining the new venture's decision to compete in an exclusive domestic context.

DIFFERENCE BETWEEN INTERNATIONAL AND DOMESTIC ENTREPRENEURSHIP

•Economic system : when an entrepreneur is operating in national level he is required to understand economic conditions with in country, but at international level he should be having information about economic system of countries he running business which includes currency rate, phase of business cycle etc.

•Cultural sensitivity : entrepreneur operating at national level should understand cultural issues persisting in home country and at international level he has to understand and manage cultural diversity of customers as well as employees in company.

•Technological environment : even though technology is advanced at larger scale , still there are technological variations persisting in various countries depending on time of implementation, updation of technology etc. which has to be analysed by entrepreneur and accordingly plan in business operations.

•Government policy : entrepreneur going in for internationalization of business have to study domestic as well as international policy, as restriction laid in home country for export of goods affect trade of entrepreneur and restriction in host country on entering of new entrepreneurs in their company.

Political and legal environment : politics and laws play a critical role in international business as well as domestic business. Entrepreneur should be aware about political and legal environment in the domestic as well as international market.

Nature ofInternational Entrepreneurship

International entrepreneurship is a process of conducting business activities across national boundaries.

It includes exporting, licensing, or opening a sales office in another country.

Main purpose is to satisfy the needs and wants of target consumers.

IMPORTANCE OF INTERNATIONAL ENTREPRENEURSHIP TO FIRM

Increased sales and profit : when the entrepreneurs are not able to earn profit or demand for their product in domestic market they can sell their products in foreign market where life cycle of product is in favourable condition. E.g. Apple earned more profits from international business than in local market US in the year 1994. ( $ 390 million foreign market / $ 310 in Indian market .

Lower manufacturing cost : if manufacturing cost of product increase in home country, then company can opt host country for production process where resources are cheaper.

E.g. Mc Donald's.

Advantage of cheap labour : quantity and quality of labour is one of the major challenge for every business, if the labour is cheap in foreign countries then company can outsource required labour if organization is into foreign operations. E.g. increasing cost of labour in china has forced companies to search for other options for outsourcing company activity to other countries where cost of labour is less.

Utilization of talent : when entrepreneur are not able to get required talented work force in country, then they can hire employee from host country which has talent.

Expansion of domestic market : international business causes domestic market to expand beyond national boundaries. When the domestic market has been fully tapped then company can go for expansion of business to market their products in international market. E.g. Sony

Globalization of customers : When customers in country prefer purchasing foreign brand products then domestic companies have to go for internationalization of business to keep in pace with competition to attract customers. E.g. Tata Motors begin to operate in international market after entry of foreign competitors in Indian market like ford.

Globalization of competitors : international business motivates companies to face competition on global level which in turn leads to growth of market, pursuing global scale efficiencies etc.

Expansion and diversification of business : entrepreneurs whose core business strategy is expansion and diversification of business, international business is one of the primary platform to achieve these objectives.

Attracts customers in domestic market : international business improves image of the company in domestic market and attracts more customers in domestic market due to internationalization of business. E.g. Ranbaxy