3. Globalization is the growing integration
of the world’s economy.
It is suggested that economic decision
taken in one part of the world will
affect other parts of the worlds
Business need decision-making on
what is happening in the world market
rather than the national market.
What Is
Globalization?
6. What is a multinational
company?
A multinational company is an
organization which owns or controls
production or services facilities
outside the country in which it is
based. This means that they do not
just export their products abroad, but
actually produce their products in
7. What is a multinational
company?
It is commonly understood that a
company is called a multinational
company provided it operates in more
than four countries.
Examples of multinational companies
are :
1. Coca Cola,
2. Toyota
3. Honda
8. What is International
Business?
International business consists of
transactions that are devised and
carried out across national borders to
satisfy the objectives of individuals,
companies, and organizations.
10. Need for International
Business?
–The flow of ideas, services, and
capital across the world
–Offers consumers new choices
–Permits the acquisition of a wider
variety of products
11. Need for International
Business?
–Facilitates the mobility of labor,
capital, and technology
–Provides challenging employment
opportunities
–Reallocates resources and shifts
activities to a global level
15. Export Trade
When the businessman/Govt. of one
country sells commodities to foreign
market.
Textile Products (Faisalabad)
Fruits/Vegetables/Rice/Wheat
(Sindh,Punjab)
Sea Food/Dry Food.
Surgical/Cutlery .(Wazirabad, Gujraat,
Gujranwala)
Sports Items (Sailkot).
16. Enter port Trade
When the businessman/Govt. of one
country import some goods from
another country, and export the same
goods to third one.Importing Goods
ExportingGoods
17. Strategic Alliance
Partnership between different
organizations to pool the resources,
information and expertise to develop
new product or production facilities.
Common reason for entering into a
strategic alliance is to obtain the
advantage of another company's
innovations without having to invest
in new research and development.
19. Strategic Alliance
(Revenue)
S
t
a
r
b
u
c
k
s
Starbucks is the leading brand of Coffee .
In 1993 with Baranes and Nobel Bookstores for In-house
Coffee Shops.
In 1996 with PEPSI to distribute and sell the coffee based
drink “Frappacino” in bottles
In 1998 with United Airlines to Sell coffee on flights with logo
on the cups.
In 2000 with Kraft Foods to sell and marketed coffee beans in
grocery stores.
In 2006 with NAACP to achieve the and social and economic
goals.
20. Strategic Alliance (R&D)
E
L
I
-
L
I
L
L
Y
Lilly, world‘s pharmaceutical giant believe power in
partnership and .
Belgium based Company Galapagos to develop treatment for
Osteoporosis.
Canada Base Company BioMS to develop treatment for
multiple Sclerosis.
Japan Based Company Kyowa Hakko Kogayo for Cancer
Treatment.
Working with certain Asian Companies
21. Strategic Alliance
(Miscellaneous)
1. In 2012, LG Electronics (LG) and Intel
entered into a strategic alliance to adopt
and jointly promote Intel Wireless Display
(WiDi) technology. Intel WiDi will be
embedded into next year’s LG Cinema 3D
Smart TVs, making them the first in the TV
industry to feature Intel WiDi technology.
2. Some airlines within these alliances have
gone further and combine flight
operations while dividing marketing and
so on.
22. Joint Venture
Joint ventures are business
agreements in which parties agree to
develop a new entity and new assets
by contributing equity for a finite
time.
23. Entrepreneurial Joint Venture
(Google)
While graduate students at Stanford University, Larry
Page and Sergey Brin came up with a novel idea for a
search engine. They quit graduate school and founded
Google in 1998. Their entrepreneurial venture paid off
big time—
24. Joint Venture
Mitsubishi Group
(Engineering & Manufacturing)
Caterpillars
(Tractor Manufacturers)
Brog-Warner
(Land Mover & Industrial
Refrigeration Marketing Co.)
Heavy
Industries thus
benefited from
its partners'
expertise in
marketing and
after-sales
service
Now Mitsubishi having been formed into a separate com
But Before……
25. Franchising
Franchises offer the opportunity to own
a small business without reinventing
the wheel.
Small-business owners pay companies
for the rights to use their trademarks,
services and products in return for
support and company guidelines on
26. Franchising
McDonalds Corporation
Dick and Mac two brothers opened
McDonald, a chain of their restaurants
in 1955.
Currently international quick-service
restaurant company.
Symbol of quick-service hamburgers,
fries, chicken, breakfast items, salads
28. Franchising
Year U.S. Canadian International Company
Owned
2013 12,628 1,135 14,344 6,627
2012 12,605 1,152 14,125 6,598
2011 12,546 1,125 13,407 6,439
2010 12,477 1,097 12,764 6,399
2009 12,221 1,070 12,510 6,357
McDonalds
Franchise Units
29. Franchising
Startup Costs, Ongoing Fees
and Financing
Franchise Fee: $45,000 (PKR 4770,000)
Term of Franchise Agreement: 20 years,
renewable
Financial Requirements
Liquid Cash Available: $750,000 (PKR
79600,000)
30. Franchising
This Franchise Supports
FranchiseesTraining: Available at headquarters: 1 week. At local
McDonald's restaurant : 12-24 months.
Ongoing Support: Newsletter, Meetings, Toll-free phone
line, Grand opening, Internet, Security/safety procedures,
Field operations/evaluations, Purchasing cooperatives,
Lease Negotiation
Marketing Support: Co-op advertising, National media,
Regional advertising,
Other marketing support: Restaurant-specific support
31. Franchising
• Pizza Hut Inc.
College students Wichita, Kansas, Frank
and Dan Carney were approached by a
family friend with the idea of opening a
pizza parlor.
First Pizza Hut opened its doors in 1958.
Pizza Hut has locations throughout the
world serving its specialty pizzas.
36. Foreign Direct
Investment (FDI)
Direct investment in foreign country by
setting up a separate and production
facility.
Malaysia and China largely contribute
in this regard.
38. Global Challenges
Global Business forces cerate
challenges which influence the
business strategy are following:-
• Political Competition
• Social Finance
• Technology HR
The
Multinational
Corp.
Home Country
Stakeholder
Pressures
Host Country
Stakeholder
Pressures
39. Political Challenges
• Political Change – regime change through coup,
violence, etc. Change in government through
democratic election can influence future business
strategy.
– e.g. the opportunities that are now available in
Russia and Eastern Europe following the
collapse of communism
• Political Uncertainty – in countries like Zimbabwe,
Sudan, Venezuela. Political uncertainty can lead
to a fall in investment by businesses and
influence decisions on expansion and business
ventures
• War/Terrorism – create uncertainty
40. Political Challenges
• Politically sensitive products include those that:
1. effect on the environment,
2. exchange rates
3. national and economic security
4. affect public health, e.g., genetically modified
(GM) foods
41. Economic Challenges
• All these factors need to be considered in any global
business :
– Tax Systems
– Investment Considerations and Allowances
– Sophistication of Financial Markets – ease with which
capital can be moved and raised
– Commodity Prices – oil, energy, metals
– Monetary and Fiscal Policies – interest rates, tax
regimes, government aid
– Internal Regulation and Bureaucracy
– Exchange Rates
– Interest rat
– Business cycle phase
– Inflation / Deflation Rat
– Transportation and Communication System
– HR
– Capital/Labour Intensive Technique
43. Social Challenges
• Religious
Considerations –
appropriateness of
some business ventures
– e.g. selling condoms
in staunchly Catholic
countries
• Impact on local
communities of
business development –
availability of jobs,
training, environmental
impact for these
communities
• Impact on the
The impact on the local environment not
only affects human communities but can
also inflict widespread ecological
damage. This imposes social costs on
the environment but also can cost the
business large sums in legal costs and
compensation.
44. Technological Challenges
• Availability and developments in technology can
have a powerful influence on global business
strategy:
• e.g.
– Access to bandwidth
– PC ownership
– Technology and sales – processing payments
and sales
– Compatibility of technologies in Business
Management – accounting systems, language
differences, etc.
– System security & Maintenance.
– Availability 24/7.
