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![Page 1: 1-1 chapter 1 An Overview of International Business Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall International Business, 6th Edition.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d745503460f94a54d0f/html5/thumbnails/1.jpg)
1-1
chapter 1
An Overview
of
International
Business
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business, 6th E
dition
Griffin & Pustay
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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
• Comprehend the growing role of emerging markets in the global economy
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1-3
The Business of the Olympics
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1-4
The Business of the Olympics (continued)
• 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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1-5
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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1-6
How Does International BusinessDiffer from Domestic?
• Currency conversion
• Legal systems
• Culture
• Availability of resources
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1-7
Why Study International Business?
• Large organizations
• Foreign-owned subsidiaries
• Small businesses
• Competitors
• Business techniques and tools
• Cultural literacy
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1-8
International Business Activities
• Exporting and Importing
• International Investments
• Licensing, Franchising, and Management Contracts
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1-9
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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1-10
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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1-11
International Investments
• Capital supplied by residents of one country to residents of another
• Two categories:
– Foreign direct investments
– Portfolio investments
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1-12
Figure 1.1 Exports as a % of GDP
82.9
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35.7
75
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10
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40
50
60
70
80
90
Nether
lands
Thaila
nd
German
y
China
Canad
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Mex
ico
United
Kin
gdom
France
Indi
a
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nBraz
il
United
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cen
tage
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GD
P
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Other Forms of International Business Activity
Managementcontracts
FranchisingLicensing
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1-14
Variations of Organizations
Multinational Corporation
Multinational Enterprise
Multinational Organization
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1-15
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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1-16
Table 1.1 The World’s Largest MNCs
• Wal-Mart
• Exxon Mobil
• Royal Dutch Shell
• BP
• Toyota Motor
• Chevron
• ING Group
• Total
• General Motors
• ConocoPhillips
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1-17
The Era of Globalization
Globalization: the inexorable integration
of markets, nation-states, and
technologies…in a way that is enabling
individuals, corporations and nation-
states to reach around the world farther,
faster, deeper, and cheaper than ever
before
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1-18
Figure 1.2 World Exports as a % of World GDP
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1-19
Figure 1.3 Foreign Direct Investment Relative to World GDP
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1-20
Contemporary Causes of Globalization
Strategic Imperatives
• To leverage core competencies
• To acquire resources and supplies
• To seek new markets
• To better compete with rivals
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1-21
Environmental Change and Globalization
Changes in Political
Environments
TechnologicalChanges
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1-22
Globalization and Emerging Markets
BRIC• Brazil / Argentina
• Russia
• India
• China
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1-23
Globalization and Emerging Markets (continued)
Big Ten
Argentina Brazil China
South Korea Indonesia Mexico
Poland Turkey India
South Africa
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1-24
Framework of Book
• The World’s Marketplaces
• International Environment
• Managing International Business
• Managing International Business Operations
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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United
States of America.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall