intern

ation

al bu

siness, 5

th edition

chapter 1an overview of international business

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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

• Comprehend the growing role of emerging markets in the global economy

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The Business of the Olympics

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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

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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

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How Does International BusinessDiffer from Domestic?

• Currency conversion

• Legal systems

• Culture

• Availability of resources

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Why Study International Business?

• Large organizations

• Foreign-owned subsidiaries

• Small businesses

• Competitors

• Business techniques and tools

• Cultural literacy

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International Business Activities

• Exporting and Importing

• International Investments

• Licensing, Franchising, and Management Contracts

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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

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Figure 1.1 Exports as a % of GDP

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Visible and Invisible Trade

• Trade in Goods

– Merchandise exports and imports

– Visible trade

• Trade in Services

– Service exports and imports

– Invisible trade

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Exporting at Boeing

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International Investments

• Capital supplied by residents of one country to residents of another

• Two categories:

– Foreign direct investments

– Portfolio investments

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Other Forms of International Business Activity

Managementcontracts

FranchisingLicensing

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Variations of Organizations

Multinational Corporation

Multinational Enterprise

Multinational Organization

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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

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Table 1.1 The Largest MNCs

• ExxonMobil

• Wal-Mart

• Royal Dutch Shell

• BP

• General Motors

• Chevron

• DaimlerChrysler

• Toyota Motor

• Ford Motor

• ConocoPhillips

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Motives for Globalization

• To leverage core competencies

• To acquire resources and supplies

• To seek new markets

• To better compete with rivals

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Environmental Change and Globalization

Changes in Political

Environments

TechnologicalChanges

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Figure 1.2 World Exports as a % of World GDP

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Figure 1.3 Foreign Direct Investment Relative to World GDP

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Globalization and Emerging Markets

• Argentina

• Brazil

• China

• India

• Indonesia

• Mexico

• Poland

• South Africa

• South Korea

• Turkey

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Framework of Book

• The World’s Marketplaces

• International Environment

• Managing International Business

• Managing International Business Operations