International Business an overview

Transcription

1 International Business an overview International business is all commercial transactions private (for profit) and governmental (for profit or political reasons) - between two or more countries 1

2 Example of globalisation Kia Sorento CD players manufactured by Matsushita, Japan optical-pickup units China electronic components added Thailand Semi-finished products sent for final assembly Mexico completed CD players trucked US port CD players installed in Kia Korea 2

3 Why study international business? International business is a growing portion of the world s total business (currently 25% of world production is sold outside its country of origin) Mode of operating international business (exporting and importing) is different from domestic business While conducting international business the external conditions are diverse and complex 3

4 Globalization Defined Globalization: the ongoing social, economic, and political process that deepens and broadens the relationships and inter-dependencies amongst nations their people, their firms, their organizations, and their governments Globalization refers to the reduction and removal of barriers between national borders in order to facilitate the flow of goods, capital, technology, services and labor International business facilitates the globalization process. 4

5 The Forces Behind Globalization Increased expansion and technological improvements in transportation and communications networks Liberalization of cross-border trade and resource movements (Why do governments encourage liberalization?) Development of services (banking and finance) that support international business activities Growing consumer demand for foreign products Increased global competition Changing political and economic situations Expanded cross-national treaties and agreements 5

6 Why companies engage in international business To expand sales To acquire resources To minimize risk Rapid increase in and expansion of technology Liberalization of government policies on cross border movement of trade and resources Development of institutions/services that facilitate international trade Growing consumer pressures Changing political situations Increased global competition Expanded cross-national cooperation 6

7 Reasons That Firms Engage in International Business To expand sales Volkswagen [Germany] Ericsson [Sweden] Michelin [France] Nestlé [Switzerland] IBM [USA] Seagram [Canada] Sony [Japan] [continued] 7

8 Reasons That Firms Engage in International Business To acquire resources Products, components, services Foreign capital Technologies Information To minimize risk Take advantage of business cycle differences amongst countries Diversify suppliers across countries Counter competitors advantages 8

9 Modes of international business Importing and Exporting merchandise and services Tourism and transportation Licensing and franchising Turnkey operations Management contracts Direct and portfolio investment 9

10 International Business Terminology Strategic alliance: a collaborative arrangement of critical importance to one or more of the alliance partners Multinational enterprise [MNE]: a firm that takes a global approach to its foreign markets and production Multinational corporation [MNC] and transnational company [TNC] may be used in the same context. 10

11 Implications/Conclusions Managing an international business differs from managing a domestic business because: Geographic influences Political policies and political disputes Legal policies Behavioral policies Economic forces Competitive strategy for products Company resources and experience Competitors faced in each market 11

12 countries and cultures are different international business operations are more complex than domestic operations A company s own competitive strategy influences how and where it can best operate From one country to another, a company s relative competitiveness will vary because of the differences in the local and foreign competitors that are present. 12