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International Business

International Business

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International Business

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  1. International Business 10e Daniels/Radebaugh/Sullivan International Business Chapter One International Business: An Overview 2004 Prentice Hall, Inc 1-1

  2. Chapter Objectives • Define international business and how it differs from domestic business • Examine the forces that are driving globalization • Explain why companies engage in international business • Introduce different international business modes companies use • Provide an overview of patterns for international expansion • Describe the differences between international business and domestic business 1-2

  3. What is Globalization? What is International Business? • Globalization: The deepening relationship and broadening interdependence among people from different parts of the world, and especially among different countries. • International Business: All commercial transactions between two or more countries, whether they involve private or public parties. • The International environment is more complex and diverse than a firm’s domestic environment. 1-3

  4. Management in International Business • In additional to domestic business management skills, international business management requires • Social science understanding • Political science appreciation • Legal awareness • And an innate ability in: • Anthropology • Sociology • Psychology • Economics • Geography 1-4

  5. Why Engage in International Business • Expand sales • Volkswagen (Germany) • Ericsson (Sweden) • IBM (United States) • Acquire resources • Better components, services, products • Foreign capital • Technologies • information • Minimize risk • Take advantage of the business cycle for products/services • Diversify among international markets 1-5

  6. Reasons for Growth in International Business • Rapid increase in and expansion of technology • Transportation is quicker while costs are lower • Communication enables control from afar • Liberal government policies on trade and resources • Development of institutions that support international trade • Consumer pressures • Increased global competition 1-6

  7. Criticisms of Globalization • Economic Growth: Economic growth can result in both: positive and negative consequences. • Negative Consequences: • Using more nonrenewable natural resources. • Environmental pollution through toxic and pesticide waste, factory and vehicle emissions, and deforestation. • Positive Consequences: • Global cooperation to develop uniform standards to solve environmental problems. • Efficiency in the use of resources because of openness. • Access to technological developments, which reduce pollution and inefficient use of resources.

  8. Criticisms of Globalization Growing Income Inequality

  9. Modes of International Business • Importing and exporting • Tourism and transportation • Licensing and franchising • Turnkey operations • Management contracts • Direct and portfolio investment 1-7

  10. Levels/Terms of International Companies • Multinational Enterprise (MNE): global approach to markets and production • Multinational Corporation (MNC) • Transnational Company (TNC) • Globally integrated company: integrated operations located in different countries • Multidomestic company: multinational companies that allow local responsiveness 1-8

  11. National Operations for International Companies • Multidomestic strategy: countries operate autonomously • Global strategy: integrate various country operations into an international headquarters control • Transnational strategy: integrate various country operations while dispersing the location of control 1-9

  12. Operations and Influences 1-10

  13. External Influences Physical/Societal factors Political policies and legal practices Cultural factors Economic factors Geographical influences Competitive environment Operations Objectives Strategy Means Influences on International Business 1-11

  14. Influences on International Business 1-12