1 international business


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1 international business

  2. 2. Almost any large organization you work for, will have international operations or to be affected by the global economy – So, we need to understand this increasingly important area to be better assess career opportunities and to interact effectively with other managers<br />2<br />REASONS WHY WE MUST STUDY IB<br />
  3. 3. 3<br />GLOBAL ISSUES<br />
  4. 4. 4<br />
  5. 5. REASONS WHY WE MUST STUDY IB<br />2. Preparation for small companies to involved in international business – using foreign-made materials or equipment, competing with foreign firms, and perhaps even selling in foreign markets.<br />5<br />
  6. 6. REASONS WHY WE MUST STUDY IB<br />3. To keep peace with our future competitors. Foreign student study and be trained to be a manager. So, we need to ensure our global skills and knowledge will aid our career to compete.<br />6<br />AP – Raland Brooks, of Washington, who has been looking for work since February, makes notes about a job opening …<br />
  7. 7. REASONS WHY WE MUST STUDY IB<br />To stay abreast of the latest business techniques and tools, because no single country has a monopoly on good ideas.<br />7<br />
  8. 8. REASONS WHY WE MUST STUDY IB<br />5. To obtain cultural literacy because cultures and political systems need to be understand and appreciating the similarities and differences.<br />8<br />many communities populated by various ethnic groups<br />
  9. 9. INTERNATIONAL BUSINESS<br />9<br />
  10. 10. INTRODUCTION<br />All business transactions, private and governmental that involve two or more countries<br />Private companies undertake such transactions for profit<br />Governments may or may not do the same in their transactions<br />The goal :<br /> PRIVATE BUSINESS<br />To increase or to stabilize profits<br />Success is influenced by:<br />- Foreign sales<br />- Foreign resources<br /> GOVERNMENT BUSINESS:<br />May or may not be profit oriented<br />10<br />
  11. 11. WHY COMPANIES ENGAGE IN IB<br />In operating internationally, a company should consider its:<br />MISSION:<br />What the company will seek to do and become over the long term<br />OBJECTIVE:<br />Specific performance targets to fulfill the mission<br />STRATEGY:<br />The means to fulfill its objectives<br />11<br />
  12. 12. To expand sales<br />To acquire resources<br />To diversify their sources of sales and supplies<br />To minimize competitive risk<br />To have diplomatic collaboration<br />To increase job opportunity<br />To establish and control of RM and foreign exchange<br />WHY COMPANIES ENGAGE IN IB ctd..<br />12<br />
  13. 13. MODE OF ENTRY TO INTERNATIONAL BUSINESS<br />Licensing<br />Franchising<br />Exporting<br />Turnkey Projects<br />Management Contracts<br />Contract Manufacturing<br />Joint Venture (FDI)<br />Wholly Owned Subsidiaries (FDI)<br />Strategic Alliances<br />13<br />Nonequity - <br />No financial resources<br />Equity based <br />
  14. 14. LICENSING<br />A contractual arrangement in which one firm grants access to its patents, trade secrets, or technology to another.<br />Licensor = firm that give the patents, trade mark, product formula or technology <br />Licensee = firm that used the patents, trade mark, product formula or technology. Will pay royalties of license fees to licensor<br />Ex: Coca cola, Disney, Pierre Cardin, Hyundai Electronics and Samsung Electronics<br />14<br />
  15. 15. FRANCHISING<br />A contractual arrangement in which one firm grants access to its patents, trade secrets, or technology to another and will provide operational & managerial help to franchisee<br />Franchisor= firm that give the patents, trade mark, product formula or technology <br />Franchisee= firm that used the patents, trade mark, product formula or technology. Will pay royalties of license fees to licensor<br />Give franchisor franchising fee and regular payment of a percentage of sales<br />Ex: McDonald’s, Pizza Hut, KFC, Hilton<br />15<br />
  16. 16. TURNKEY PROJECTS<br />Is an port of technology, management expertise, and capital equipment<br />The contractor agrees to design and erect a plant, supply the process technology, provide the necessary suppliers and etc. before handing it o the owner<br />The contractor have responsibilities to design, construction and operation of the project<br />Usually made with government who have large public service and construction project such as building hospital, highway and ports<br />Ex: Monorel in India, Building In Dubai<br />16<br />
  17. 17. EXPORTING<br />Indirect Exporting<br /><ul><li>The exporting of goods and services through various types of home based exporters</li></ul>Direct Exporting<br />- The exporting of goods & services by the firm that produces them<br /><ul><li>Export business is handled by someone within the firm (such as sales manager)</li></ul>Ex: UMW Toyota, Petronas<br />17<br />
  18. 18. CONTRACT MANUFACTURING<br />Arrangement in which one company contract with another company to produce product<br />The company will take responsibility to market the product with their own brand after produce the product<br />Company that give contract will get royalties<br />Ex: Sapura Crest Petroleum assembly the production plant in Saudi Arabia and Indonesia<br />18<br />
  19. 19. JOINT VENTURE (FDI)<br />Two or more firm will form a partnership<br /> - share ownership, risk, profit and control<br />Ex: FORD & Volkswagen to join operation in Argentina & Brazil<br />Ex: General Mills & Nestle to join operation in Europe<br />19<br />WHOLLY OWNED SUBSIDIARIES (FDI)<br /><ul><li>A company that wishes to own a foreign subsidiary and company take full responsibility (get all profit and faced all risk)</li></li></ul><li>20<br />STRATEGIC ALLIANCES<br /><ul><li>Partnerships between competitors, customers, or suppliers that may take one or more various forms (such as joint venture etc.)
  20. 20. Ex: Japan’s Panasonic, Germany’s Siemens, Korea’s Samsung & Swedish-Japanese SonyEricsson subsequently joined as equity partners in this alliances</li></li></ul><li>EXTERNAL FACTORS THAT INFLUENCE INTERNATIONAL BUSINESS<br />Economy forces<br />Geographical influences<br />Political & Legal Practice<br />Technologies<br />Culture (Values, attitudes and belief)<br />21<br />
  21. 21. FACTORS INFLUENCE THE GROWTH OF INTERNATIONAL BUSINESS<br />Expansion of technology<br />Development of institution<br />Liberalization and government policies<br />An increased in global competition<br />22<br />
  22. 22. GLOBALIZATION<br />23<br />
  23. 23. DEFINITION<br />The term “globalization” describes the increased mobility of goods, services, labor, technology and capital throughout the world<br />Globalization is a term for the horizontal and vertical integration of manufacturing and trade on an international level<br />24<br />
  24. 24. TOPIC TO BE DISCUSS<br />Advantage of globalization towards business<br />Disadvantage of globalization towards business<br />Globalization, big companies forcing small companies to compete at an unfair level<br />Globalization, international companies growing more powerful than some countries<br />Globalization, created opportunities to small medium size enterprise to success internationally<br />Globalization gives threat to small business to expand business globally<br />Impact of globalization to world consumer.<br />25<br />
  25. 25. Advantage of globalization towards business<br />Increase resources, resources can be acquire from other country<br />Everybody can involve at any level of business at any country<br />Increase target market due to big no. of population<br />Communication among people in different country more efficient<br />Easy to locate/ market at any place of world<br />Increase country collaboration<br />Investment in different mode in different country.<br />Every country have chance to develop and increase the level of economy<br />Business can share the technology, professionalism, and expertization.<br />26<br />
  26. 26. Disadvantage of globalization towards business<br />Puncakegawatanekonomi – akibatkebergantunganekonomiterhadapsatu-satunegarasahaja.<br />Tidaksemuamaklumatperniagaan yang diperolehiitutepat- penyaluranmaklumatperniagaan yang salahkeseluruhdunia<br />Hilangkeaslian yang terdapatpadaprodukakibatperubahan yang terpaksadibuatuntukmemenuhicitarasapenggunanegara lain.<br />27<br />
  27. 27. Globalization, big companies forcing small companies to compete at an unfair level<br />Small company can’t compete at foreign level due to less chances given. <br />Business more focusing on big companies rather than small company due to ability of big company to compete.<br />Small company have to increase promotion which incur higher cost and small company difficult to afford.<br />Less confident towards service or product offered by small company.<br />Big company concurred/ monopoly the business<br />Less opportunities given to small company to compete at international level.<br />Less government support for small companies to do business at international level. <br />28<br />
  28. 28. Globalization, international companies growing more powerful than some countries<br />Certain country have high purchasing power, this give an opportunities to companies to increase sales volume.<br />Different strategy used to enter different market in different country.<br />Different economic level in different country give impact to MNC to grow in certain country<br />Different government support in different country create opportunities or threat to international business to grow at international level.<br />29<br />
  29. 29. Globalization, created opportunities to small medium size enterprise to success internationally<br />Diversify the product due to different market in different country.<br />Create global collaboration with different country<br />Gain technology and expertise from other country<br />Exchange resources with other country<br />Compete at international level<br />30<br />
  30. 30. Globalization gives threat to small business to expand business globally<br />Due to law and legislation differ among country<br />Different culture give an impact to adapt or to create new product<br />Technology changes at different country<br />Different system management have to follow might create problem<br />31<br />
  31. 31. Impact of globalization to world consumer<br />Large size of consumer <br />Consumer are expose to different types of product or services due to different culture offered by home companies<br />Consumer help to stabilize the economy of the country<br />Fund flow among country more easier using technology<br />Consumer can purchase product or service in different currency<br />Different price of product and service due to different exchange rate make difficult consumer to purchase<br />Consumer can get more information about varieties product or services through internet<br />Consumer can explore information of product and services worldwide<br />Sometimes information delivered not accurate or consumer wrong interpret.<br />Consumer have different alternative to choose the market<br />Can create new demand among consumer due to different lifestyle in different world.<br />32<br />
  32. 32. MULTINASIONAL CORPORATIONS (MNCs)<br />33<br />
  33. 33. INTRODUCTION<br />Is a company engaged in producing and selling goods or services in more than one country.<br />Its own production, distribution, service and other units in many nations.<br />Plans the utilization of its resources on the global scale.<br />It consists of a parent company located in the home country.<br />MNCs seek to maximize its revenue at international level rather than national level.<br />34<br />
  34. 34. THEORY OF THE MNCs<br />Product and Factor Market Imperfections<br />Financial Market Imperfections<br />35<br />THE STRATEGY OF MN ENTERPRISES<br /><ul><li>Innovation – based multinationals
  35. 35. The mature multinationals</li></li></ul><li>WHY MNCs SHOULD SURVIVE<br />Cost reduction<br />Economies of scale<br />Multiple sourcing<br />Knowledge seeking<br />Keeping domestic customers<br />36<br />
  36. 36. ASSIGNMENT P4504<br />Find out the article related to International business from business magazine, newspaper cutting, business jurnal or any related web site.<br />Discuss the issue from the article and try to elaborate the mode of entry of the company’s/ MNC’s engage to international business level.<br />Date to submit:<br />37<br />
  37. 37. Find ONE (1) Small Medium Enterprises (SMEs) in Malaysia or Malaysian Entrepreneurs which involved in International Business.<br />Identify the mode of entry of the company’s engage to international business level.<br />Date to submit:<br />38<br />ASSIGNMENT P4504<br />