Upload
fransisca-lestari
View
220
Download
0
Embed Size (px)
Citation preview
7/28/2019 Ch01 Gone Globalization
1/27
International BusinessChapter One
Globalization & International Business
2004 Prentice Hall, Inc
7/28/2019 Ch01 Gone Globalization
2/27
CHAPTER OBJECTIVES
To define globalization and international business and hoaffect each othersTo understand why companies engage in international business anwhy international business growth has acceleratedTo comprehend criticisms of globalizationTo become familiar with modes a companies can use to accomplits global objectivesTo grasp the role social science discipline play in understandinwhy international business is different from domestic business
7/28/2019 Ch01 Gone Globalization
3/27
WHY ARE GLOBALIZATION ANDINTERNATIONAL BUSINESS IMPORTANT ?
Globalization is process of growing interdependenceamong countriesInternational Business is all commercialtransactions between two or more countries
Private business: the goal is to make profitGovernment business: may or may not motivated byprofit
7/28/2019 Ch01 Gone Globalization
4/27
WHY ARE GLOBALIZATION ANDINTERNATIONAL BUSINESS IMPORTANT ?
Studying international business is important because:Most companies either are international or compete withinternational companiesMode of operation may differ from those used domesticallyThe best way of conducting business may differ by country
An understanding helps you make better career decisions An understanding helps you decide what governmentalpolicies to support
7/28/2019 Ch01 Gone Globalization
5/27
WHY ARE GLOBALIZATION ANDINTERNATIONAL BUSINESS IMPORTANT ?
The conduct of international business depends oncompanies objectives and the means with which they carrythem out. The operation affect and are affected by:
PhysicalSocietal
Competitive environmentSee Figure 1.1
7/28/2019 Ch01 Gone Globalization
6/27
Operations and Influences
7/28/2019 Ch01 Gone Globalization
7/27
The Force Behind GlobalizationRapid increase in and expansion of technology
Transportation is quicker while costs are lower Communication enables control from afar
Liberal of cross-border on trade and resources movement. Although global competition bring more efficiently, it also require us to work harder (See Figure 1.2 )
Development of service (bank, postal system, and packaging service)that support international tradeGrowing consumer pressures (they want more, new, better, anddifferentiated products)Increased global competitionPolitical relationships have improved among some major economipowers
Countries cooperate more on transnational issues
7/28/2019 Ch01 Gone Globalization
8/27
Cross-National Cooperation
Countries willingly to cooperate for the following reasons:Gain reciprocal advantages by bilateral/multilateral agreement:
protect property, reduction in import restriction, etc. Attack problem jointly
Too big problem: Japan & U.S. ballistic missile defensetechnologySpill over problem: G8 coordinate economic policy (intererate)Environmental policy
Deal with extraterritorial concernNon coastal area of the ocean, outer space, and Antartica
7/28/2019 Ch01 Gone Globalization
9/27
CRITICISMOF GLOBALIZATIONThreats to national sovereignty
Sovereignty is freedom from external control As international difference diminish, countries can no longer maintain thetraditional ways of life that help unify generation and people within their community and therefore they lose their ability to act according their local bestinterest
Economic growth hurt the environment
Unless the positive consequences of globalization keep up with negative costsfrom growth, the sustainability of economic improvement will be problematic ithe future
Growing income inequalityWhenever people lose, absolutely or relatively, because of globalization, theyapt to be critics of globalization
7/28/2019 Ch01 Gone Globalization
10/27
Why Companies Engage in International Business
Expand salesVolkswagen (Germany)
Ericsson (Sweden)Nestle (Switzerland)
Acquire resources: foreign sourcingBetter components, services, productsForeign capitalTechnologies
InformationMinimize risk
Take advantage of the business cycle for products/servicesDiversify among international marketsDefense the domestic market
7/28/2019 Ch01 Gone Globalization
11/27
MODES OF INTERNATIONAL BUSINESS
Importing and exportingo Merchandiseso Services :
- Tourism and transportation(airlines, shipping companies, travel agencies, and hotels)
- Performance of services(banking, insurance, rental, engineering/turnkey operation,management services/ management contract)
- Use of assets : licensing and franchisingInvestmento Direct and portfolio investment
7/28/2019 Ch01 Gone Globalization
12/27
International Operations
7/28/2019 Ch01 Gone Globalization
13/27
Terms of International Companies
Multinational Enterprise (MNE): global approach tomarkets and production or one with operations in more thanone country:
Multinational Corporation (MNC)Transnational Company (TNC) used by UN
O S SS S
7/28/2019 Ch01 Gone Globalization
14/27
WHY INTERNATIONAL BUSINESS DIFFERSFROM DOMESTIC BUSINESS
Manager in international business must understand socialscience disciplines and how they affect all functional businessfieldsPolitical Policies:
Often determines where and how business can take placeLegal Policies:
Each country has its own laws regulating business. Agreements among countries setinternational law.
Behavioral / Cultural Factors:The interpersonal norms of a country may necessitate a companys alteratiooperations.Exp: The best outcome of a baseball game Japan: tie, U.S.: win
Economic Forces:Economic explain country differences in costs, currency value, and market size
Geographical Influences:
Natural conditions affect what can be produced and where
7/28/2019 Ch01 Gone Globalization
15/27
Influences on International Business
7/28/2019 Ch01 Gone Globalization
16/27
Competitive Environment
A companys situation may differ amongcountries by:
Advantage in price , marketing , innovationNumber and comparative capabilities (market leader vschallenger)
Countries competitive differences
Exp: U.S. (big) vs Swedish (small) GE vs ElectroluxDependent on products , strategies , and countries inwhich the business operates
7/28/2019 Ch01 Gone Globalization
17/27
Competitive Environment
7/28/2019 Ch01 Gone Globalization
18/27
CHAPTER REVIEW
Define international business and how it differs from domesticbusinessExplain why companies engage in international businessIntroduce different international business models companies useIllustrate the role social science plays in understanding internationalbusinessProvide an overview of patterns for international expansionDescribe the forces that affect international business
7/28/2019 Ch01 Gone Globalization
19/27
INFLUENCES ON INTERNATIONAL BUSINESS
External InfluencesPhysical/Societal factors
Political policies and legalpracticesCultural factors
Economic factorsGeographical influences
Competitive environment
OperationsObjectivesStrategyMeans
7/28/2019 Ch01 Gone Globalization
20/27
Globally integrated company : integrated operationslocated in different countriesMultidomestic company : multinational companies thatallow local responsiveness
7/28/2019 Ch01 Gone Globalization
21/27
National Operations for InternationalCompanies
Multidomestic strategy: countries operate autonomouslyGlobal strategy: integrate various country operations into ainternational headquarters controlTransnational strategy: integrate various countryoperations while dispersing the location of control
7/28/2019 Ch01 Gone Globalization
22/27
Management in International Business
In additional to domestic business managementskills , international business managementrequires
Social science understandingPolitical science appreciationLegal awareness
And an innate ability in:
AnthropologySociologyPsychologyEconomicsGeography
7/28/2019 Ch01 Gone Globalization
23/27
EVOLUTION OF STRATEGY IN THEINTERNATIONALIZATION PROCESS
Most of the patterns in Figure 1.7 are product of riskminimization behavior. A company typically does not abandon its early modes ofoperating abroad when it adopts other mean of operatinginternationally.Leapfrogging of expansion : many new companies are beginninwith a global basisExp: Inns and bed-and-breakfast enterprises(Put Web pages on the Internet and have attracted some of theirclients from abroad)
7/28/2019 Ch01 Gone Globalization
24/27
Patterns of Internationalization
Figure 1.7
7/28/2019 Ch01 Gone Globalization
25/27
COUNTERVAILING FORCES
1.Standardized vs Responsive Practices
Global standardization advantagesReduced costs in development and manufacturingEconomies of scale since fixed costs are spread over more units of production
Responding to national preferences Adjusting operating, marketing, and design to meet specificnational preferences
7/28/2019 Ch01 Gone Globalization
26/27
COUNTERVAILING FORCES (Cont)
2. Country vs Company CompetitivenessCountry moderate companies fulfillment of global efficiencyobjectives because of those countries rivalry with other countrInternational business manager must balances dual roles :o they are managers with global efficiency objectives;
o they are a member of a given society that hasnational rather than global objectives.
7/28/2019 Ch01 Gone Globalization
27/27
Maximizing Global Profits
Profits must be balancedby:
International rivalryCross-national treatiesand agreementsEthics