Unit IV

Foreign Direct Investment

4.1 Foreign Direct Investment – Need, Impact and Indian Policies for FDI

Introduction

Foreign direct investment (FDI) is the investment of funds by an organization from one country to another with the aim of establishing "permanent interests". According to the OECD (Organization for Economic Co-operation and Development), perpetual interest is determined when an organization wins at least 10% of voting rights in another organization. For example, the actions of an Indian company such as Ola, which opens another headquarters in Sydney, Australia, are considered to bring FDI to Australia.

Reinvestment of profits from overseas businesses, as well as in-house lending and borrowing to overseas subsidiaries is also classified as FDI.

The meaning of FDI is not limited to international capital movements. The definition also includes the international movement of capital-complementary elements such as skills, processes, management and technology.

There is a difference between FDI and FPI (Foreign Portfolio Investments), where investors buy stocks of foreign companies. FPI only means the injection of stocks, not the establishment of lasting profits.

FDI can be a green field. In this case, the organization creates a subsidiary concern in another country, where it builds its business operations from scratch. Investing in Greenfield provides your organization with the highest degree of control. You can build production plants according to specifications, hire and train personnel according to company standards, and design and monitor operational processes.

Alternatively, FDI is a brown field (organization expands through cross-border mergers, acquisitions and joint ventures) and can lease or purchase existing facilities for its production. The obvious advantage of investing in a brown field is that you can not only engage in construction activities, but also save on start-up costs and time. Adding equipment to existing facilities is also a target for brown field investment.

It is difficult to exaggerate the global and macroeconomic importance of FDI. According to UNCTAD (United Nations Conference on Trade and Development), global FDI reached about $ 1.8 trillion in 2015.

Need:

There are many methods FDI can gain beneficiaries:

1. Increased employment and financial growth

Job advent is the maximum apparent benefit of FDI. It is likewise one of the maximum essential motives why nations, mainly growing nations, are looking to entice FDI. Increasing FDI will increase production and carrier industries. This will create jobs and decrease the unemployment of knowledgeable younger humans and the unemployment of professional and unskilled employees. Increasing employment results in multiplied earnings and will increase the buying strength of the population. This boosts the use of financial system.

2. Human assets development

This is one of the much less apparent blessings of FDI. Therefore, its miles frequently understated. Human capital refers back to the information and abilties of the workforce. The abilities received and bolstered thru education and revel in aid the use of schooling and human capital quotient. Once developed, human capital is in flux. It is viable to broaden human assets of different agencies and has a ripple effect.

3. Development of the rear area

This is one of the maximum essential blessings of FDI for growing nations. FDI makes it viable to convert the rear area of the use of commercial center. This will increase the socio-financial system of the area. The Hyundai Unit in Slipelumbudur, Tamil Nadu, and India exemplifies this system.

4. Providing finance & technology

Recipient agencies have get admission to the modern day investment tools, technology and operational practices across the world. Over time, the creation of more recent and superior technology and tactics will unfold them to the nearby financial system and enhance the performance and effectiveness of the industry.

5. Increase in exports

Not all merchandise produced thru FDI is meant for home intake. Many of that merchandise have a worldwide market. The advent of 100% export-orientated gadgets and unique financial zones has in addition helped FDI buyers to sell exports from different nations.

6. Exchange fee stability

The consistent float of FDI to rustic results in a non-stop float of forex. This allows the use of primary financial institution keep snug forex reserves. This ensures a strong alternate fee.

7. Stimulation of financial development

This is any other very essential benefit of FDI. FDI is a supply of country wide outside capital and better earnings. At least a few nearby labor, substances and gadget can be applied whilst the manufacturing facility is built. When creation is complete, the manufacturing facility will rent nearby personnel to in addition make use of nearby substances and services. Therefore, humans hired in such factories can spend extra money. This will create extra jobs.

These factories also can generate extra tax sales for the authorities and inject them into the development and development of bodily and monetary infrastructure.

8. Improved capital float

Capital inflows are mainly useful for nations with constrained home assets and constrained get admission to investment in worldwide capital markets.

9. Creation of aggressive market

FDI allows overseas agencies construct aggressive surroundings and breaks home monopolies via way of means of encouraging overseas agencies to go into the home market. A healthful aggressive surroundings allows agencies to usually beautify their system and product offerings, thereby using innovation. Consumers additionally have get admission to an extensive variety of merchandise at aggressive prices.

For multinationals, FDI in India is a manner to get admission to new intake and manufacturing markets, thereby increasing their have an impact on and commercial enterprise operations. You have get admission to constrained assets inclusive of fossil fuels and valuable metals, in addition to professional and unskilled employees, control know-how and abilties. FDI additionally permits agencies to lessen manufacturing prices via way of means of having access to less expensive assets and direct get admission to uncooked cloth reassets as opposed to buying uncooked substances from 0.33 parties. Companies that enforce FDI frequently have diverse tax blessings. This can take place in case your us of a permits tax credit on overseas earnings, or if the recipient us of a permits tax credit and blessings for agencies struggling FDI in that us of a. In addition, this could take place if the recipient us of a has a extra worthwhile tax code than its personal us of a.

Impact

Impact of FDI

The impact of FDI on the domestic economy depends primarily on domestic policy, the type of FDI it receives and the power of domestic companies. FDI

Host countries and these effects may vary from country to country. Identifying and assessing the impact on the host economy is not trivial, but tentative, but some demarcation is essential. The problem of quantitatively measuring the impact

The percentage of FDI inflows is appropriate here, as most developing countries are interested in going to FDI instead of fonna1 contracts for foreign loans. However, when analyzing the impact of FDI, it should be kept in mind that FDI flows are recorded in financial flows and the mayor may not be responding to changes in capital formation . The literature on FDI is widespread that FDI can serve two purposes (Fry1993).

First, it is an additional investment in the host country's domestic investment, which can raise the level of investment in the host country's economy.

Second, it can increase the foreign exchange reserves of the host country and alleviate the foreign exchange shortage of the host country's economy.

FD1 is expected to increase domestic investment, provide additional funding for existing current account deficits, or achieve a combination of the two. However, the linear combination of these two effects should always be one in total. Hence, the impact of FDI on the host country's economy, can come from two directions. FDI, on the one hand, may affect the actual sector of the economy as an additional investment in existing domestic investment, and on the other hand, it may affect the financial sector of the economy as additional funding for existing current account deficits. On this line, the impact of FDI on the host country can be measured through two effects of FDI on the host country's economy: the actual impact and the financial impact (Chai 1998).

Indian Policies for FDI

The layman understands foreign direct investment only in investments made by foreign companies or individuals within that company. Most people are unaware of the vastness of this term, and the magnitude of the impact of FDI in India that we know today.

Through foreign direct investment, foreign companies take ownership of businesses located in other countries. Before 1991, there was no foreign direct investment in India, and India was a closed economy that was trying to form an economy after gaining independence from British rule.

In India, we have developed two routes that allow the government to make foreign investments in India: government routes and automated routes. Government-routed investments require government approval, but automated-route investments do not require government approval.

Current State of FDI in India

The new India was opened to world economic trade in 1991 and brought about a series of reforms not only in India's business but also in the development of the country. Overall, India's FDI rules and policies were generous in attracting high foreign investment in the country, although the government often made various amendments to FDI policy, depending on the situation.

Prime Minister Narendra Modi has made great efforts to make India the number one destination for foreign investment and has worked to enhance the image the world has of India. FDI is a very important factor in making India a superpower in the future and has been booming since the last decade.

In 1991, Manmohan Singh enacted the Foreign Exchange Control Act (FEMA), which is regulated in accordance with India's trade policy.

This is the beginning of foreign investment in India, and since it began, India has gained a high percentage of foreign investment from various countries.

Current status of FDI in India

Increasing the influx of foreign investment into the country has always been the government's main objective, and they are making the necessary reforms to attract FDI to India.

The country with the highest FDI in India in 2020 is Singapore with an investment of Rs 103.6 billion. Other countries below Singapore in terms of India's FDI are Mauritius, the Netherlands, the United States, Japan, France, the United Kingdom, Cyprus, and Germany.

India's startup economy was looking for capital investment for ventures and gained its wings through foreign direct investment. Many countries have shown confidence in Indian start-ups, provided the necessary capital, and are now known to be India's top unicorns.

Through FDI, various innovations, technology and software advances have been brought to the country, and employment opportunities have been enormous through FDI. Employment opportunities were tough in the past, but there are still increasing requirements for employment opportunities in India, but now India's employment rate is significantly improved by FDI, which creates employment and prospers citizens.

With India's population and increasing purchasing capacity, India has become a perfect destination for the establishment of manufacturing sectors and the consumer market for commodities. India is rich in natural resources and human resources, a strong banking system, and a free foreign investment policy that attracts foreign investors.

The main benefits India has gained through foreign direct investment are high employment opportunities, rural development, technological development, and economic development.

Laws / policies governing FDI in India

The Government of India continues to modify foreign direct investment policies according to the business environment. During the pandemic, the government imposed restrictions on foreign investment by India's neighbors, which India shares its borders, as the border conflict with China and the pandemic create severe business survival.

The government is constantly taking steps to secure domestic companies and is also taking steps to attract foreign investment in the country. India's FDI is under the protection of the Ministry of Commerce and Industry's Bureau of International Trade Promotion.

Changes will be made in the FDI policy through press notes / press releases notified by the Reserve Bank of India.

Banned FDI activities in India include nuclear power, railroad operations, gambling and betting, chit funds, real estate and tobacco product manufacturing. Such bans are in place to ensure the security and defense of the country.

The main features of FEMA are:

Activities such as payments and receipts outside India, as well as foreign exchange and foreign securities transactions are restricted. It is FEMA that empowers the central government to impose restrictions.

Free transactions of current account subject to reasonable restrictions that may be imposed.

Without FEMA's general or specific permission, MA restricts transactions involving foreign exchange or foreign securities, and payments from abroad to India. Transactions should only be made through authorized persons.

Foreign exchange transactions under the current account balance by authorized persons may generally be restricted by the central government in the public interest.

Although foreign exchange sales or withdrawals are made through authorized persons, the law authorizes the RBI to impose some restrictions on capital account transactions.

Residents of India may take foreign exchange, securities, or real estate abroad if the currency, securities, or assets lived outside India or were owned or acquired when they were inherited outside India. Allowed to own or own. He / she is from someone who lives outside India.

The regulations under FEMA are as follows:

Forex Control (Checking Accounts) Regulations, 2000

Forex Control (Allowable Capital Account Transactions) Regulations, 2000

Foreign exchange control (transfer or issuance of foreign securities) regulations, 2004

Forex Control (Foreign Currency Account by Indian Residents) Regulations, 2000

Forex Control (Acquisition and Transfer of Real Estate in India) Regulations, 2018

Forex Control (Establishment of Branch or Office or Other Office in India) Regulation, 2000

Forex Control (Methods of Receipt and Payment) Regulations, 2016

Forex Control (Export of Goods and Services) Regulations, 2000

Forex Control (Forex Realization, Repatriation, and Abandonment) Regulations, 2000

Forex Control (Foreign Currency Possession and Retention) Regulations, 2000

Forex (arbitrage and appeal) rules,

Forex Control (Borrowing and Lending) Regulations, 2018

Forex Control (Cross-border Merger) Regulations, 2018

Forex Control (Transfer or Issuance of Securities by Residents Outside India) Regulations, 2017

Forex Control (Asset Remittance) Regulations, 2016

Forex Control (Deposit) Regulations, 2016

Forex Control (Establishment of Branch or Liaison Office or Project Office or Other Office in India) Regulations, 2016

Previously there was a foreign exchange regulation law, but it was replaced by the foreign exchange control law passed in 1999.

The main reason why the previous legislation governing foreign direct investment in India was changed because it became incompatible with the country's liberalization promotion policies.

The Foreign Exchange Control Law complies with the framework of the World Trade Organization and decided to enact the Money Laundering Prevention Law in 2002.

The laws / rules / guidelines that regulate FDI in India are:

Foreign Contribution (Regulation) Law, 2010,

Foreign Contribution (Regulatory) Regulations, 2011

In addition, other notifications, orders, etc. issued from time to time under it.

FCRA, FCRA in 1976, abolished after the arrival of 2010

FDI has brought tremendous benefits to India in the development of the country, and India is predicted to emerge as a strong economy in the coming years. Together with FDI, India will follow the path of development and serve people in India's major developments.

Key takeaways:

1. Foreign direct investment (FDI) is the investment of funds by an organization from one country to another with the aim of establishing "permanent interests".
2. FDI can be a green field
3. Alternatively, FDI is a brown field (organization expands through cross-border
4. Mergers, acquisitions and joint ventures) and can lease or purchase existing facilities for its production.
5. Job advent is the maximum apparent benefit of FDI. It is likewise one of the maximum essential motives why nations, mainly growing nations, are looking to entice FDI.
6. Recipient agencies have get admission to the modern day investment tools, technology and operational practices across the world.
7. Capital inflows are mainly useful for nations with constrained home assets and constrained get admission to investment in worldwide capital markets.
8. For multinationals, FDI in India is a manner to get admission to new intake and manufacturing markets, thereby increasing their have an impact on and commercial enterprise operations.
9. The impact of FDI on the domestic economy depends primarily on domestic policy, the type of FDI it receives and the power of domestic companies.
10. It can increase the foreign exchange reserves of the host country and alleviate the foreign exchange shortage of the host country's economy.
11. Through foreign direct investment, foreign companies take ownership of businesses located in other countries.
12. In 1991, Manmohan Singh enacted the Foreign Exchange Control Act (FEMA), which is regulated in accordance with India's trade policy.
13. Increasing the influx of foreign investment into the country has always been the government's main objective, and they are making the necessary reforms to attract FDI to India.
14. The Government of India continues to modify foreign direct investment policies according to the business environment.
15. Free transactions of current account subject to reasonable restrictions that may be imposed.
16. Previously there was a foreign exchange regulation law, but it was replaced by the foreign exchange control law passed in 1999.

4.2 Developments and Issues in International Business; Role of IT in international business; International business and ecological considerations. Outsourcing and its impact

Developments and Issues in International Business

International enterprise improvement develops thru the same old approaches of exchange, overseas direct investment, capital flow, migration, and technological development in growing nations. To attain sustainable worldwide enterprise improvement, enterprise experts frequently should discover methods to evolve to the lifestyle and society wherein they run and perform their businesses. With big boom possibilities created with the aid of using rising mid-sized nations inclusive of Brazil, Russia, India, China and South Africa (BRICS nations), many groups in advanced nations might be capable of offer items and offerings to customers in those nations. I'm intervening. Business improvement experts offer the vital legal, economic and cultural bridges among providers and customers.

International enterprise improvement and worldwide strategic control keep conforming as economic, social and cultural globalization maintains and nations turn out to be extra incorporated thru networks of exchanges. Global groups that appoint enterprise improvement experts in a couple of places that proportion precisely the equal understanding, ethics, practices, and requirements enjoy the sharing of understanding and ethics. These groups, just like the societies wherein they perform, are in a tremendous function for boom.

Professionals engaged in worldwide enterprise improvement (not like home or home efforts) want to accumulate particular competencies associated with the use of a wherein they do enterprise. This consists of a know-how of the goal us of a's economy, history, lifestyle, law, enterprise practices and exchange patterns. It additionally consists of a vast know-how of troubles not unusual place to all worldwide paintings, inclusive of worldwide travel, hazard mitigation and worldwide contracts. Most groups surprising with worldwide enterprise improvement or geographically surprising with the assist of third-celebration consulting corporations specializing in both cross-cultural paintings and particular nations. Some governments also are offering help on this place to groups searching for to create jobs of their very own nations with the aid of using selling exports.

International enterprise improvement and worldwide strategic control industries permeate present markets, frequently developing new ones with the aid of using introducing new services and products to businesses, individuals, non-earnings organizations, and authorities’ agencies. It is a specialised subject to do.

Topics not unusual place to worldwide enterprise improvement encompass ethics, philosophy, economics, politics, marketing, control, and technology. International enterprise improvement experts have understanding of strategic relationships, licensing, partnerships, highbrow property, new technologies, honest practices, cultural differences, worldwide marketing, statistics control, understanding control, finance and marketing and marketing legality. All of those have an effect on enterprise improvement within. Culture and its economy. Specific initiatives frequently tasked with worldwide enterprise improvement experts encompass growing merger / acquisition strategies, figuring out and reviewing goal groups, growing strategic grounds for transactions, making sure regulatory compliance, and cross-cultural communication.

International business issues and challenges

Every country has its own policies, laws, cultures and regulations. In addition to these, differences in time zones, currencies, languages, etc. also present problems and challenges in international business. The following are issues and challenges in conducting international business.

1. Language barrier

When considering doing business internationally, it is of utmost importance to take it into consideration. Language barriers don't just mean communication problems. However, you should also consider whether the product name fits well in a foreign language. For example, when entering China, Mercedes-Benz chose a local name similar to "Benz": Bēnsǐ. But in local language, it meant "to die in a hurry." After that, the car manufacturer needs to change its name to Bēnchí, which means "run".

b.    Difference in culture

Every country has its own traditions and culture. And for success, it is important for foreign companies to respect their culture. Culture includes holidays, food, festivals, social values ​​and more. For example, McDonald's does not serve beef or pork in India for religious reasons. In addition, fast food chains offer a variety of vegetarian options in India more than any other country.

c.     Global team management

When you are doing business internationally and doing business in many countries, you have to deal with employees from different backgrounds. Managing these employees is undoubtedly a challenge due to their different languages, cultures and time zones. However, frequent communication with the global team can overcome this barrier. Helps to slowly dissolve the difference.

d.    Currency exchange and inflation

Exchange rates are the value of one country's currency and the other's currency. The exchange rate between the two countries is not constant or constantly changing. Exchange rates should be considered when making financial decisions, as final payments may increase or decrease and affect business profits.

Inflation needs to be considered in addition to the exchange rate. Inflation rates vary from country to country and can affect product prices.

e.     Determine the structure of the company

One requirement to grow on the international arena is to determine an efficient company structure. Having an efficient structure allows companies to make quick and appropriate decisions. One of the important things to consider when deciding on the structure is the location of the headquarters and the number of offices the company has.

For example, Coca-Cola is one of the most efficient corporate structures in the world. Coca-Cola is divided into continental groups, each group headed by the President.

f.       Foreign policy and policy

National politics and policy play an important role in corporate performance. New political policies, such as taxes and labour law, can have a direct impact on a company's costs. Therefore, it is important to strictly follow the politics and policies of the country in which the company operates.

For example, suppose the Chinese government begins to subsidize a local car maker. This allows local businesses to adopt aggressive pricing. Such a policy would be unfair to foreign automakers operating in China.

g.    International accounting

Without proper accounting, a company can be very difficult to run. And for international business, accounting becomes even more important. Adhering to international accounting standards is not an easy task as it requires a great deal of effort to comply with various tax systems. However, companies can overcome this challenge by hiring the right accounting professionals.

h.    Product price

Setting product prices in overseas markets is a major issue. To set the right price, companies need to consider their costs, logistics costs, and the price of the same product from local competitors. In addition, when pricing a product, you need to consider how to position the product as a low-cost product or a luxury brand.

For example, European low-priced furniture dealer was initially unable to win the market in China. This is due to low-priced products from local dealers. IKEA was then able to move production to China and reduce the price of its products.

i.       Payment method

When doing business abroad, companies need to choose a payment method that is convenient for their local customers. In addition to convenience, businesses need to understand and understand the costs of different payment methods before making the final choice. Companies also need to ensure that the payment method they choose is reliable, secure and secure. It would be nice if the company offers global payment methods such as PayPal and local payment methods such as Yandex Money in Russia.

j.       Supply chain risk

Having a short and efficient supply chain is a key requirement for a company to succeed in foreign markets. However, managing these supply chains is not an easy task due to different regions and regulations.

k.    Environmental concerns

When a company starts a business abroad, it is very important to comply with environmental standards. In addition, special efforts must be made to reduce the environmental problems in the area in which we do business. Company ignorance or evasion to address such issues can seriously damage the brand image and damage the business. Also, local social groups will make it difficult for the company to run smoothly.

l.       The last word

There are several challenges to international business, but companies can easily overcome them with concentration and determination. An easy way to overcome these challenges is to respect the culture and traditions of the country in which you do business. And when a company overcomes these challenges, it offers unlimited business opportunities, including volume, revenue, profit, goodwill, and brand.

Role of IT in international business

Innovation is a great way to succeed in this digital age. The path of innovation in business is to use the world's new or proven technologies to do different, smarter, or better things that make a positive difference in value, quality, or productivity. It means that. The technology that has already been proven in the last two decades is, of course, information technology (IT). It has dramatically changed the lives of individuals and organizations. Today, online shopping, digital marketing, social networking, digital communications, cloud computing, etc. are the best examples of the changes brought about by the wave of information technology. Today, accurate business planning, effective marketing, global sales, systematic management, real-time monitoring, immediate customer support, and long-term business growth cannot be achieved at optimal levels without IT.

The importance of IT in business

The success of every business depends on specific factors. Some of them are accurate analyzes, choosing the right technology and vision for the future. Research over the last two decades has shown that organizations that invest in technology and choose the path of innovation gain market share, financial figures, and overall competitiveness. Information technology is the only technology that provides the opportunity to analyze specific data and plan your business journey accordingly. It also provides many tools to solve complex problems and plan business scalability (future growth). Today, digital marketing has proven to be a great tool for sitting in remote offices and homes to promote your products and services to the global market. And thanks to cloud computing and modern communications, you can form a global organization to manage and monitor virtual offices around the world. Now let's take a brief look at how information technology plays an important role in different stages of the business.

1. Decision making

Speed ​​and accuracy are central to making the right decisions for your business. All successful organizations need to go through a comprehensive market research process that enables management to make the right decisions. Market research can be conducted in a variety of ways, through online research, forums, blogs, group discussions on the World Wide Web, and of course, face-to-face interviews. Today, big data, Google Analytics, and Microsoft CRM Dynamics are also great tools for extracting useful information that can influence decision making. These online tools not only provide real-time responses from potential audiences, but also ensure data accuracy by minimizing the risk of human error.

b.    Marketing and business growth

At the heart of business success is marketing, which allows management to first identify target audiences and then observe their trends and needs. Overall marketing covers public relations, advertising, promotions and sales that will impact subsequent business growth. Many types of marketing help reach potential customers. But here's a quick look at digital marketing, a dream we had in the past without internet technology. Digital marketing is a modern phenomenon that allows us to promote our products and services around the world. It's a broad term that includes many concepts such as search engine optimization (SEO), pay-per-click (PPC), blogs, discussion forums, email shots, SMS, MMS, social media marketing, and smart phone app advertising. Currently, the web market is booming. Most entrepreneurs are moving at a very fast pace because they understand that long-term business success is not possible without a digital presence on the Internet. Every year, millions of new websites are added to the Internet.

c.     Customer support and satisfaction

A higher level of customer satisfaction is the key to success that cannot be achieved without a real-time customer support process. Business success depends on knowing your customers' needs, trends, behaviours, and satisfaction. Effective communication is the best tool for understanding customer requirements, problems, and their solutions. Thanks to internet technology that has made it possible to communicate in real time with millions of potential or existing customers. IT provides many channels for communicating with customers without the snow or rain. These channels include email, webinar, social media, member portals, online newsletters, and text or multimedia messaging via smart phones. Business organizations typically use customer relationship management systems (CRMs) to hold valuable data to understand customer behaviour and future needs.

d.    Resource control and globalization

Resource control performs an essential function withinside the fulfilment of your business. When it involves medium or big organizations, its miles very tough for pinnacle control to control all sources manually. These sources might also additionally consist of tangible, financial, or human sources. Information generation has performed a key function in automating those complicated issues via way of means of enforcing user-pleasant answers. Ten years ago, maximum aid control answers have been desktop-primarily based totally. Thanks to net and cloud technology that permits software program engineers to install cloud-primarily based totally corporation aid planning (ERP) answers. Administrators can now use their private computers, laptops, tablets, or smart phones to control or reveal their organization's sources definitely everywhere withinside the world. This idea brought the idea of globalization. Most multinational agencies withinside the world (Microsoft, Google, Amazon, McDonalds, etc.) use those cloud-primarily based totally answers to control their digital or bodily places of work and personnel across the world.

International business and ecological considerations.;

Ecological environment: A serious problem in international business!

Modern industry and internationalization have provided people with unparalleled material prosperity in history. It also created an environmental threat unmatched by current and future generations. The very technology that allowed people to manipulate and control nature also polluted the environment and rapidly depleted natural resources.

As the 21st century begins, several established environmental trends are shaping the future of civilization. This includes population growth, rising temperatures, falling water tables, shrinking arable land per capita, disruption of fisheries, shrinking forests, and loss of flora and fauna.

Between 1950 and 2000, the world's population increased from 2.5 billion to 6.1 billion, an increase of 3.6 billion. The second trend affecting the world is the rise in temperature due to the rise in atmospheric concentrations of carbon dioxide (CO2).

Moderate temperature rises over the last few decades have been the melting of ice caps and glaciers. Ice coverage is shrinking in the Arctic, Antarctica, Alaska, Greenland, the Alps, the Andes, and the Tibetan Plateau.

One of the least noticeable trends shaping the future is the decline in water table. About 1,000 tonnes of water are needed to produce a ton of grain, which is equivalent to 160 million tonnes of grain, half of the US grain yield. On the consumption side, the food supply of 480 million of the world's 6 billion people is generated by unsustainable use of water.

Also, making it more difficult to adequately respond to projected population growth over the next few decades is the global shrinkage of arable land per capita.

Mankind also relies heavily on the sea for food. From 1950 to 1997, marine catches increased from 19 million tonnes to over 90 million tonnes.

All three parallel trends: lower water table, smaller per capita cultivated area, and flat marine fish catches all make it much harder to keep up with future growth in global food demand. It suggests that.

The problems posed by these environmental threats are so unmanageable and difficult that many observers believe they cannot be resolved.

Mankind will not work on it until he suffers so much that many of the things he currently depends on are destroyed. The problems are so diverse and vast, the means of solution far exceed the resources of science and technology know-how that people have relied on, and there is no time to avoid an imminent catastrophe.

In the current scenario, environmental issues bring the following large and complex ethical and technical aspects to the international business community:

1) Degree of environmental damage caused by current and projected industrial technologies.

2) The magnitude of the threat to people's welfare.

3) Values ​​that people must give up in order to stop or delay such damage.

4) Whose rights are violated by pollution and who should be held responsible for paying for environmental pollution?

5) Time interval for availability of natural resources.

Outsourcing and its impact

The company I chose is a major American insurance company. It primarily supports East Coast personal and residential medical and non-life insurance requirements. Although it has businesses in other parts of the country, it has a high market share in the east and is a market leader. One of the major problems facing the company is due to intensifying competition and constant pressure to reduce premium rates. There is no tendency to lower the rate, but there is some pressure not to increase it. At the same time, there is increasing pressure to raise the company's key expenses. The company's main costs come from employee compensation and facility rental and maintenance. These rates have consistently increased each year, but premium rates have not been able to increase proportionately. To address this issue, you need to increase the amount of business your marketing is targeting or reduce your company's operating costs. Market conditions and aggressive marketing may allow the company to offer special offers again, but the surest way to save on operating costs is to reduce them.

One way to reduce operating costs is to outsource most of your back office operations. Especially when jobs are given to countries where labour costs are about 25-30% of the US compensation system, the savings are tremendous and the company can show better annual profits to shareholders. .. By doing this, the company can become more aggressive in the market, gain better market share and increase the company's overall profitability. Outsourcing had its own supporters and opponents within the company. This study looks at the potential of outsourcing to help get out of the company's deadlock.

Hypothesis

Outsourcing saves about 40-50% of the company's labour costs when it comes to back office processing. We provide almost matching services that are currently available in-house. There is no significant difference between the services provided by the provider and the services provided by the internal staff.

Methodology

The investigation is performed as follows:

Read the literature on what supports and does not support outsourcing, and identify and list the points on both sides.

Lists the strengths and weaknesses of outsourcing systems.

Based on these, the final decision / conclusion are reached.

Outsourcing issues

Here are some of the main issues companies faces when outsourcing their back office to a company that has clear operational benefits and saves at least 40-50%:

The right person to process a treatise is an important factor. It is very important for a company to have people who understand the situation in a country like the United States and handle the ways that people in the United States do. This understanding of the US environment can only be brought to outsourcing partners by repeated training, and perhaps after 4-6 months of operation (Ken Strauss2007). Only then can the person visualize what is happening in the United States.

The security of the transferred information should not be compromised under any circumstances. For processing done within the insurance company's office, there may be very little information about the client. On the other hand, when information is passed on to people in other countries, their ethical standards and practical discipline can differ. This can result in jeopardizing customer information and market conditions and can have a fatal impact on the customer and the company as a whole.

People are managed according to local techniques and management practices. This can also cause personnel issues in the company. Human resource development issues and such management issues can affect not only the processing of work, but the overall performance of the company.

Key takeaways:

1. International enterprise improvement develops thru the same old approaches of exchange, overseas direct investment, capital flow, migration, and technological development in growing nations.
2. Professionals engaged in worldwide enterprise improvement (not like home or home efforts) want to accumulate particular competencies associated with the use of a wherein they do enterprise.
3. Topics not unusual place to worldwide enterprise improvement encompass ethics, philosophy, economics, politics, marketing, control, and technology.
4. Every country has its own policies, laws, cultures and regulations. In addition to these, differences in time zones, currencies, languages, etc. also present problems and challenges in international business.
5. Every country has its own traditions and culture.
6. Exchange rates are the value of one country's currency and the other's currency.
7. National politics and policy play an important role in corporate performance.
8. Setting product prices in overseas markets is a major issue.
9. When doing business abroad, companies need to choose a payment method that is convenient for their local customers.
10. When a company starts a business abroad, it is very important to comply with environmental standards.
11. Innovation is a great way to succeed in this digital age
12. The success of every business depends on specific factors. Some of them are accurate analyzes, choosing the right technology and vision for the future.
13. Speed ​​and accuracy are central to making the right decisions for your business.
14. A higher level of customer satisfaction is the key to success that cannot be achieved without a real-time customer support process.
15. Resource control performs an essential function withinside the fulfilment of your business.
16. Modern industry and internationalization have provided people with unparalleled material prosperity in history.
17. One of the least noticeable trends shaping the future is the decline in water table.
18. Mankind will not work on it until he suffers so much that many of the things he currently depends on are destroyed.
19. One way to reduce operating costs is to outsource most of your back office operations.
20. Outsourcing saves about 40-50% of the company's labour costs when it comes to back office processing.
21. The right person to process a treatise is an important factor
22. People are managed according to local techniques and management practices.

Reference:

1. Peng and Srivastav Global Business, Cengage learning.
2. Daniels John D. Lee H Radenbaugh and David P. Sullivan. International Business Pearson Education