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Chapter 1: An Overview of International Business

2004 Prentice Hall. 1-2. Chapter Objectives. Discuss the meaning of international businessExplain the importance of understanding international businessIdentify and describe the basic forms of international business activitiesDiscuss the causes of globalization. 2004 Prentice Hall. 1-3. The Bus

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Chapter 1: An Overview of International Business

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    1. ©2004 Prentice Hall 1-1 Chapter 1: An Overview of International Business International Business, 4th Edition Griffin & Pustay

    2. ©2004 Prentice Hall 1-2 Chapter Objectives Discuss the meaning of international business Explain the importance of understanding international business Identify and describe the basic forms of international business activities Discuss the causes of globalization

    3. ©2004 Prentice Hall 1-3 The Business of the Olympics Intense reflection of international business Government of games by IOC Competition for hosting Revenue sources for the Olympics Broadcast rights Corporate sponsorships

    4. ©2004 Prentice Hall 1-4 What is International Business? Business transactions between parties from more than one country Parties may include Private individuals Individual companies Groups of companies Governmental agencies

    5. ©2004 Prentice Hall 1-5 How Does International Business Differ from Domestic? Currency conversion Legal systems Culture Availability of resources

    6. ©2004 Prentice Hall 1-6 Why Study International Business? Large organizations Foreign-owned subsidiaries Small businesses Competitors Business techniques and tools Cultural literacy

    7. ©2004 Prentice Hall 1-7 International Business Activities Exporting and Importing International Investments Licensing, Franchising, and Management Contracts

    8. ©2004 Prentice Hall 1-8 Exporting and Importing Exporting: selling of products made in one’s own country for use or resale in other countries Importing: buying of products made in other countries for use or resale in one’s own country

    9. ©2004 Prentice Hall 1-9 53% of Boeing’s aircraft sales are to foreign airlines

    10. ©2004 Prentice Hall 1-10 Visible and Invisible Trade Trade in Goods Merchandise exports and imports Visible trade Trade in Services Service exports and imports Invisible trade

    11. ©2004 Prentice Hall 1-11 International Investments Capital supplied by residents of one country to residents of another 2 categories: Foreign direct investments Portfolio investments

    12. ©2004 Prentice Hall 1-12 Other Forms of International Business Activity Licensing: firm in one country licenses the use of its intellectual property to a firm in a second country in return for a royalty payment Franchising: firm in one country authorizes a firm in another country to utilize its operating system and intellectual property

    13. ©2004 Prentice Hall 1-13 Management Contracts A firm in one country agrees to operate facilities or provide other management services to a firm in another country for an agreed-upon fee Common in upper-end international hotel industry

    14. ©2004 Prentice Hall 1-14 This Beijing restaurant is one of 430 that McDonald’s has built in China

    15. ©2004 Prentice Hall 1-15 Variations of Organizations Multinational Corporation (MNC) Multinational Enterprise (MNE) Multinational Organization (MNO)

    16. ©2004 Prentice Hall 1-16 Multinational Corporations (MNCs) Engage in foreign direct investment Own and control foreign assets Buy resources in multiple countries Create goods and services in multiple countries Sell goods and services in multiple countries

    17. ©2004 Prentice Hall 1-17 Table 1.1 The World’s Largest Corporations – 2002

    18. ©2004 Prentice Hall 1-18 Motives for Globalization To leverage core competencies To acquire resources and supplies To seek new markets To better compete with rivals

    19. ©2004 Prentice Hall 1-19 Environmental Change and Globalization Changes in Political Environment Technological Changes

    20. ©2004 Prentice Hall 1-20 Framework of Book The World’s Marketplaces International Environment Managing International Business Managing International Business Operations

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