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Globalization and International Business

International business involves commercial transactions between parties in different countries. It facilitates the process of globalization, or the increasing interdependence between nations through trade and investment. There are several drivers of globalization, including improved transportation and communication technologies as well as trade liberalization. However, some criticize that globalization can threaten national sovereignty and increase inequality. Companies engage in international business to access new resources, markets, and business opportunities abroad while also diversifying risks. They can enter foreign markets through exports, imports, foreign direct investment, strategic alliances, and more. Managing internationally is more complex than domestically due to differences between countries and cultures.

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Saif Mohammad Khan
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357 views11 pages

Globalization and International Business

International business involves commercial transactions between parties in different countries. It facilitates the process of globalization, or the increasing interdependence between nations through trade and investment. There are several drivers of globalization, including improved transportation and communication technologies as well as trade liberalization. However, some criticize that globalization can threaten national sovereignty and increase inequality. Companies engage in international business to access new resources, markets, and business opportunities abroad while also diversifying risks. They can enter foreign markets through exports, imports, foreign direct investment, strategic alliances, and more. Managing internationally is more complex than domestically due to differences between countries and cultures.

Uploaded by

Saif Mohammad Khan
Copyright
© Attribution Non-Commercial (BY-NC)
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

PART ONE BACKGROUND FOR INTERNATIONAL BUSINESS

International Business
Chapter One

Globalization and International Business

Globalization Defined
Globalization: the ongoing social, economic,
and political process that deepens and broadens the relationships and interdependencies amongst nationstheir people, their firms, their organizations, and their governments
International business facilitates the globalization process.
1-2

International Business Defined


International business: all commercial
transactions between parties in two or more countries Private firms are profit-oriented. Government organizations may or may not be profit-oriented.
The international business environment is more complex and diverse than the domestic business environment.
1-3

Fig. 1.1: International Business: Operations and Influences

1-4

The Forces Behind Globalization


Increased expansion and technological
improvements in transportation and communications networks Liberalization of cross-border trade and resource movements Development of services 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
1-5

The Criticisms of Globalization


Threats to national sovereignty Negative costs of economic growth Increasing income inequality
Antiglobalization forces may use both peaceful and violent means to stop or slow the globalization process. Offshoring (the transferring of production to foreign sites) is particularly controversial.
1-6

To acquire resources

Products, components, services Foreign capital Technologies Information


Take advantage of business cycle

To minimize risk

differences amongst countries Diversify suppliers across countries Counter competitors advantages
1-7

Modes of Entry into International Business


Merchandise exports and imports Service exports and imports Use of assets [licensing agreements]
[Foreign investment]
Foreign direct investment

1-8

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 this same context.
1-9

Implications/Conclusions
Managing an international business differs
from managing a domestic business because: -countries and cultures are different -international business operations are more complex than domestic operations
[continued]

1-10

A companys own competitive strategy


influences how and where it can best operate.

From one country to another, a companys


relative competitiveness will vary because of the differences in the local and foreign competitors that are present.

1-11

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