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Ch1 IM

This chapter provides an overview of international business. It defines international business as commercial transactions between two or more countries and notes it is more complex than domestic business. The chapter examines the forces driving globalization and reasons why companies engage in international business, such as expanding sales and acquiring resources. It also introduces common international business modes like importing/exporting and direct foreign investment. Finally, it outlines factors that influence international business operations both externally, like political/legal systems, and internally.

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Emmanuel Mwandama
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30 views14 pages

Ch1 IM

This chapter provides an overview of international business. It defines international business as commercial transactions between two or more countries and notes it is more complex than domestic business. The chapter examines the forces driving globalization and reasons why companies engage in international business, such as expanding sales and acquiring resources. It also introduces common international business modes like importing/exporting and direct foreign investment. Finally, it outlines factors that influence international business operations both externally, like political/legal systems, and internally.

Uploaded by

Emmanuel Mwandama
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Daniels/Radebaugh/Sullivan

International Business 10e


International Business
Chapter One
International Business: An
Overview

2004 Prentice Hall, Inc


1-1
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
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
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
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
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
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.
Criticisms of Globalization
Growing Income Inequality
Modes of International Business
 Importing and exporting
 Tourism and transportation
 Licensing and franchising
 Turnkey operations
 Management contracts
 Direct and portfolio investment

1-7
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
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
Operations and Influences

1-10
Influences on International
Business
 External Influences  Operations
• Physical/Societal • Objectives
factors • Strategy
 Political policies and
• Means
legal practices
 Cultural factors
 Economic factors
 Geographical
influences
• Competitive
environment

1-11
Influences on International Business

1-12

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