INTERNATIONALBUSINESS International business consists of all commercial transactions between two or more countries. Today global events and competition affect almost all companies large and small because most sell output to and secure supplies from foreign countries. Many companies also compete against products and services that come from abroad Thus most managers, regardless of industry or company size, need to approach their operating strategies from an international standpoint.
It refers to the integration of world economies through the reduction of barriers to the movement of trade, capital, technology and people
Forces driving globalisation Increase in and expansion of technology Liberalisation of cross border trade and resource movement. Development of services that support international business Growing consumer pressures Increased global competition Changing political situations Expanded cross national cooperation.
Arguments against globalization Threats to national sovereignty Economic growth and environmental stress Growing income inequality
Threats to national sovereignty Harm to the local objectives and policies Local overdependence Threat to cultural homogeneity
Economic growth and environmentalstress As globalization brings in growth, it consumes more non renewable resources and increases environ mental damage. Water pollution through toxic and pesticide runoffs into rivers and oceans Air pollution from factory and vehicle emissions Deforestation
Growing income inequality GDP rising but the benefits do not percolate to level of the ordinary masses.
Why international business To create value for their organisation Expanding sales Acquiring resources Minimising risk
Modes of operation ininternational business Merchandise exports and imports Service exports and imports Investments
Merchandise exports and imports Merchandise exports are tangible products that are sent out of a country Merchandise imports are goods bought in a country Because we can actually see these goods as they leave and enter the country, we sometimes call them visible exports and imports.
Service exports and imports When we refer to non product international earnings we use the term service exports and imports. The company or individual that provides the service and receives payments makes a service export. The company or individual that receives the service and pays for it makes a service import. It can be of three forms :- Tourism and transportation, Service performance , Asset use.
Investments Foreign investment means ownership of foreign property in exchange for a financial return such as interest and dividends. It can be of two forms :- Direct investment & Portfolio investments.
How international business differsfrom domestic business Physical and social factors• Geographic influences• Political policies• Legal policies• Behavioral factors• Economic forces
The competitive environment• Competitive strategy for products• Company resource and experience• Competitors faced in each market