The document discusses the importance and nature of international entrepreneurship. It notes that globalization has reduced distinctions between foreign and domestic markets. International entrepreneurship involves conducting business across national boundaries through activities like exporting, licensing, or opening foreign sales offices. Compared to domestic business, international business faces different economic, political, legal and technological environments across countries at varying stages of development. The document outlines some key factors international entrepreneurs must consider, such as currency differences, infrastructure, legal systems, and language barriers. It also lists common motivations for businesses to pursue global markets like profits, competitive pressures, and unique opportunities. Finally, it describes important traits of successful international entrepreneurs like embracing change, having a strong drive to achieve, establishing clear vision,

1. CHAPTER 1
IMPORTANCE OF
Prepared by:
Nurdiana Sukarna
UCSF Malaysia
2017

2. INTRODUCTION
• The advancement of the Pacific Rim and the new markets in the
Middle East provide a myriad of possibilities for entrepreneurs
wanting to start a new enterprise in foreign market.
• Distinction of between foreign and domestic market is becoming
less pronounced because there are more countries become
market oriented.
• What was once only produced domestically is now produced
internationally.

3. Pacific Rim Map

5. Yamaha pianos are now
manufactured in US
Nestle chocolate is
made all over the world.

6.  Half of the world population lives in Asia, with China
containing 20% world’s population. India alone is
twice the size in population of Latin America.
 There are also new market opportunities in South
America, Africa, Ukraine, Vietnam, Iraq and other
countries.
 The globalization throughout the world creates wealth
and employment benefit.
 Since 1950, global markets offer entrepreneurial
companies new market opportunities.

7. The Nature of International
Entrepreneurship

8.  International entrepreneurship is the ‘process of
an entrepreneur conducting business activities
across national boundaries. It may consists of
exporting, licensing, opening a sales offices in
another country.
 McDougall (1989) defined international
entrepreneurship as ‘the development of
international new ventures or start-ups that,
from their inception, engage in international
business, thus viewing their operating domain as
international from the initial stages of the firm
operations.

9. International Versus Domestic
Entrepreneurship
Table 1.1 International Versus Domestic: Factors
that are different
Economics
Language stage of economic development
Type of economic system
Political-legal environment
Language stage of economic development

10. Economics
 In a domestic business strategy, the entire country is
organized under a single economic system and has the
same currency.
 Creating a business strategy for a multicountry area
means dealing with differences in:
 Levels of economic development.
 Currency valuations.
 Government regulations.
 Banking, venture capital, marketing, and distribution
systems.
 These differences manifest themselves in each aspect of
the entrepreneur’s international business plan and
methods of doing business.

12. Stage Of Economic Development
 Certain factors significantly impact a firm’s
ability to successfully engage in international
business such as:
 Fundamental infrastructures.
 Banking facilities and systems.
 Educational systems.
 Legal system.
 Business ethics and norms.

13. Type Of Economic System
 Difficulties in doing business in economies
that are developing, or in transition.
 Use of barter or third-party arrangements in
these countries to increase business activity.
 Barter - A method of payment using non-money
items.
 Third-party arrangements - Paying for goods
indirectly through another source.

14. Political-Legal Environment
 Political risk analysis - An assessment of a
country’s political policies and its stability
prior to entry.
 Types of political risks:
 Operating risk (operational risk of
system/equipment)
 Transfer risk(restrictions on moving money out from
the country)
 Ownership risk (owner’s investment)
 Conflict and changes in the solvency of the country.

15. Political-Legal Environment (cont.)
 A country’s legal system regulates:
 Its business practices.
 The manner in which business transactions are
executed.
 The rights and obligations involved in any business
transaction between parties.
 Critical areas for every entrepreneur:
 Property rights.
 Contract law.
 Product safety.
 Product liability.

16. Language
 One of the biggest problems for the
entrepreneur is finding a translator.
 Significant problems can occur with careless
translation.
 Care should be taken to hire a translator
whose native tongue is the target language
and whose expertise matches that of the
original authors.

17. Technological Environment
 The variation and availability of technology are
often surprising, particularly to an entrepreneur
from a developed country.
 New products in a country are created based on
the conditions and infrastructure operate in that
country.

18. Motivations to Global
 Profits.
 Competitive pressures.
 Unique product(s) or service(s).
 Excess production capacity.
 Declining home country sales.
 Unique market opportunity.
 Economies of scale.
 Technological advantage.
 Tax benefits.

19. Traits Of An International
Entrepreneur
Embraces changes
 A global entrepreneur likes and even
embraces differences in people, as well
as the situations.
 He or she constantly seeks new and
exciting things and likes to ‘break the
mold’ and challenge corporate
orthodoxies.

20. Desire to Achieve
 A global entrepreneur has good
business savvy and a strong desire to
achieve.
 To succeed, an entrepreneur needs to
have profit/loss experience and an
ability to create value in a different
culture.

21. Ability To Establish a Vision
 A global entrepreneur needs to establish
a vision that employees and customers
understand.
 His employees should feel they are an
important part of the organization.
 He or she focuses more on outcomes
than processes, works long hours, high
energy level and doesn’t fear failure.

22. High Tolerance for
Ambiguity
 The passion for learning from a variety of
sources and viewing uncertainty as an
opportunity instead of threat allows a
global entrepreneur to develop mental
maps that will lead to achieving a
mission.

23. High Level of Integrity
 A global entrepreneur has an extremely
high standard for individual and company
integrity.
 These established standards are used
inside and outside of the company.
 The same ethical standards are expected
from all employees a d activities of the
venture.

24. Individuals are Important
 A global entrepreneur focuses on the
well-being of his or her employees and
acts as a nurturing coach.
 He or she focuses on building and
inspiring people and works effectively
with others in teams.

25. The Importance of Global Business
Market Share
 Through global business, businesses can access new
markets and customers
For example, if the United States enters into a Trans-Pacific
Partnership with China and other Asia-Pacific countries. U.S.-
based businesses will have a greater incentive to export and
sell their products in these countries. With a wider customer
base and market reach, a business has a higher potential to
make more sales and earn more profits, which it can then use
to expand operations into other foreign markets.

26. Production Costs
 A business needs capital to establish and run operations in
other countries.
 In the long run, however, globalization can lead to lower
business costs.
 According to Dr. Jean-Paul Rodrigue, a global studies
professor at Hofstra University, labor intensive businesses
in high-wage countries can achieve lower production costs
when they shift operations to lower-wage nations. This is
one of the reasons many American manufacturers are
sending work offshore to countries with low wages, such as
China and Vietnam.

27. Business Competition
 Global business enhances business competition. As
enterprises enter foreign markets, a face-off with local
businesses is inevitable.
 To outperform competitors and gain a larger market share,
businesses are forced to create products of higher quality
and sell them at relatively cheaper prices. This is
advantageous to consumers, as they are able to access a
wider variety of quality products at lower prices.

28. Developing nations
 Developing economies also can benefit from global business.
As foreign companies from industrialized nations enter new
market in developing nations whether it is through foreign
direct investment or franchising new job opportunities are
bound to be created for the locals.
 For example, the Economic Policy Institute notes that
between 2001 and 2013, the U.S. created at least 2.4 million
manufacturing jobs in China as a result of major companies
shifting their operations there. The creation of more jobs
stimulates economic development, which can make it easier
for developing nations to attract more foreign investors.