This document provides an overview of key concepts in international business and globalization. It discusses how international business differs from domestic business through cross-border and cross-cultural exchanges that introduce additional risks. Reasons for why firms internationalize include seeking growth opportunities and higher profits. While global operations provide strategic benefits, effectively managing complexity across diverse markets can introduce a "globalization penalty" if firms struggle to adapt. Risk mitigation has become a top priority for multinational enterprises.
,geert hofstead ,dimensions of natural culture ,un certainity avoidance index ,long term and short term orientation ,indulgence vs restraint ,power distance index ,masculinity vs femininity
> To define globalization and international business and show how they affect each other
> To understand why companies engage in international business and why international business growth has accelerated
> To discuss globalization’s future and the major criticisms of globalization
> To become familiar with different ways in which a company can accomplish its global objectives
> To apply social science disciplines to understanding the differences between international and domestic business
> To define globalization and international business and show how they affect each other
2. Theories of International Trade, Tariff and Non-tariff barriers and Trade ...Charu Rastogi
This presentation starts with an overview of the initial theories of international trade like mercantilism, theory of absolute advantage, theory of comparative advantage and factor proportions theory. It goes on to discuss trade barriers, tariff and non-tariff barriers and trade blocks.
02 The Cultural Environments Facing BusinessBrent Weeks
To understand methods for learning about cultural environments
To analyze the major causes of cultural difference and change
To discuss behavioral factors influencing countries’ business practices
To understand guidelines for cultural adjustment
Technological Environment - International Business - Manu Melwin Joymanumelwin
Technological change can have impact on the decisions taken by international business. Technological change can involve:
New process of production: new ways of doing things which rises productivity of factor inputs, as with use of robotics in car assembly techniques which has dramatically raised output per assembly line worker. For example around 80% of technological change has been process innovation.
New products: For example, online banking and many new financial services are direct result of advances in micro processor based technologies.
01 Globalization and International BusinessBrent Weeks
To define globalization and international business and show how they affect each other
To understand why companies engage in international business and why international business growth has accelerated
To discuss globalization’s future and the major criticisms of globalization
To become familiar with different ways in which a company can accomplish its global objectives
To apply social science disciplines to understanding the differences between international and domestic business
Cross cultural management involves managing work teams in ways that considers the differences in cultures, practices and preferences of consumers in a global or international business context. Many businesses have to learn to modify or adapt their approaches in order to compete on a level in fields no longer bound by physical geography with online interactions more common in business and other situations.
This revision presentation provides an overview of the topic of emerging markets. It highlights some examples of how businesses have pursued a growth strategy in emerging markets and also how developed economies have seen investment coming in the opposite direction. A brief overview of the methods and benefits/drawbacks of international expansion is also provided.
,geert hofstead ,dimensions of natural culture ,un certainity avoidance index ,long term and short term orientation ,indulgence vs restraint ,power distance index ,masculinity vs femininity
> To define globalization and international business and show how they affect each other
> To understand why companies engage in international business and why international business growth has accelerated
> To discuss globalization’s future and the major criticisms of globalization
> To become familiar with different ways in which a company can accomplish its global objectives
> To apply social science disciplines to understanding the differences between international and domestic business
> To define globalization and international business and show how they affect each other
2. Theories of International Trade, Tariff and Non-tariff barriers and Trade ...Charu Rastogi
This presentation starts with an overview of the initial theories of international trade like mercantilism, theory of absolute advantage, theory of comparative advantage and factor proportions theory. It goes on to discuss trade barriers, tariff and non-tariff barriers and trade blocks.
02 The Cultural Environments Facing BusinessBrent Weeks
To understand methods for learning about cultural environments
To analyze the major causes of cultural difference and change
To discuss behavioral factors influencing countries’ business practices
To understand guidelines for cultural adjustment
Technological Environment - International Business - Manu Melwin Joymanumelwin
Technological change can have impact on the decisions taken by international business. Technological change can involve:
New process of production: new ways of doing things which rises productivity of factor inputs, as with use of robotics in car assembly techniques which has dramatically raised output per assembly line worker. For example around 80% of technological change has been process innovation.
New products: For example, online banking and many new financial services are direct result of advances in micro processor based technologies.
01 Globalization and International BusinessBrent Weeks
To define globalization and international business and show how they affect each other
To understand why companies engage in international business and why international business growth has accelerated
To discuss globalization’s future and the major criticisms of globalization
To become familiar with different ways in which a company can accomplish its global objectives
To apply social science disciplines to understanding the differences between international and domestic business
Cross cultural management involves managing work teams in ways that considers the differences in cultures, practices and preferences of consumers in a global or international business context. Many businesses have to learn to modify or adapt their approaches in order to compete on a level in fields no longer bound by physical geography with online interactions more common in business and other situations.
This revision presentation provides an overview of the topic of emerging markets. It highlights some examples of how businesses have pursued a growth strategy in emerging markets and also how developed economies have seen investment coming in the opposite direction. A brief overview of the methods and benefits/drawbacks of international expansion is also provided.
The Retargeting Series: Foundational 3-Audience RetargetingSearch Scientists
Engage with the most qualified part of your sales funnel with this retargeting strategy. BOFU Retargeting involves hitting the bottom of your sales funnel, and serving them an offer to make it a no-brainer to convert.
The SMEs Entry Strategy and WTO Implication. This slides trying to analyze the market enter strategy, especially from developing country to developed country
International Business Actions Internationalisation T.docxmariuse18nolet
International Business: Actions
Internationalisation Theories and Practices (I)
Business College
School of Management
Key Questions
What approaches to global strategy do firms take?How do organisations internationalise? How does international business manage its internal operations globally? How does international business manage its external operations (e.g. relationship with the host country/communities)?
Key Learning ObjectiveThis session will help you to understand the concepts of:
1) Michael E. Porter’s Diamond Model
2) Global Strategy – Ghosal & Nohria Matrix
3) Born Global Concept
Michael E. Porter’s Diamond ModelPorter argues that nations can create factors that promote competitive advantage of nations as well as stronger level of FDI.
RMIT University
School of Management
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School of Management
Examples of National competitive AdvantagesAbundant, low-cost labor in ChinaMass of IT workers in IndiaHuge reserves of bauxite in AustraliaAbundant agricultural land in the USAOil in Saudi Arabia
RMIT University
School of Management
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School of Management
Michael E. Porter’s Diamond Model
RMIT University
School of Management
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School of Management
Michael Porter’s Diamond Model:
Sources of National Competitive Advantage
Firm strategy, structure, and rivalry – the presence of strong competitors at home serves as a national competitive advantage
Factor conditions – labour, natural resources, capital, technology, entrepreneurship, and know how
Demand conditions at home – the strengths and sophistication of customer demand
Related and supporting industries – availability of clusters of suppliers and complementary firms with distinctive competences
RMIT University
School of Management
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School of Management
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Industrial ClustersA concentration of suppliers and supporting firms from the same industry located within the same geographic area
Examples include: the Silicon Valley, fashion cluster in northern Italy, pharma cluster in Switzerland, footwear industry in Pusan, South Korea, and the IT industry in Bangalore, India
Can serve as a nation’s export platform
RMIT University
School of Management
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School of Management
National PolicyProactive economic development plan enacted by the government to nurture or support promising industries sectors. Typical initiatives:
Tax incentives
Investment incentives
Monetary and fiscal policies
Rigorous educational systems
Investment in national infrastructure
Strong legal and regulatory systems(Examples: Japan, Dubai, and Ireland)
RMIT University
School of Management
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School of Management
Activity 1: Diamond ModelPlease discuss the concept of Porter’s diamond model and apply it to one industry in one country.
RMIT University
School of Management
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School of Management
Bartlett and Ghoshal’s Model of Internationalization Strategy
RMIT University
School of Management
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School of Management
Source: Adapted from Bartlett and Ghoshal (1991)., Managing Acrocc Border, Harvar.
5. Phases of Globalization
Globalization is Not a New Phenomenon!
• 1st Phase: 1830, peaking around 1880; Aided by
railroads, ocean transport; resulting in the rise of
manufacturing and trading companies
• 2nd Phase: 1900, peaking late 1920s; Fueled by
electricity and steel; early MNEs
• 3rd Phase: 1948, peaking around 1970; GATT,
end of WW II, Marshall Plan; gradual reduction of
barriers to trade
• 4th Phase: 1980, peaking around 1997; Fueled
by Internet and other technologies: rapid
liberalization in Emerging Markets
• Next phase?
8. Acquisition of Do You Recognize These Brands? - 1
Some
American Companies
Date of
Brand Acquirer Country of Origin
Acquisition
New York Stock Euronext acquisition
Netherlands 2007
Exchange Euronext ICE
Deutsche Börse
Germany 2011
(failed)
Godiva
Yildiz Holding
Turkey 2008
(Ulker)
Anheuser-Busch
(Budweiser)
In-Bev Brazil 2008
Burger King Holdings
3G Capital Brazil 2010
Sara Lee
JBS SA Brazil pending
9. Acquisition of Some
Do You Recognize These Brands? - 2
American Companies
Country of Date of
Brand Acquirer
Origin Acquisition
Purina
Nestle Switzerland 2001
7-Eleven
Ito-Yokado Japan 2005
Gerber
Nestle Switzerland 1996
Car & Driver French Hachette
France
Filipacchi Médias, S.A.
Alka_Seltzer
Bayer Schering Pharma Germany 1979
ThinkPad
Lenovo China 2005
15. Examples of Country Risk
Google received over 1,000 requests from
governments to remove objectionable material
• Complied with ~ 54%
“Google’s Censorship Juggle,” WSJ, June 18, 2012
16. Source: Daalen, R. V., Mock, V. and Morris, B. (2013) “UPS quits takeover in Europe” The Wall Street Journal: Deals & Deal Market,
January 14.
17. • Instability
– Ex: Mexico
– Firms limiting investments in
Mexico due to drug-related
violence
– Electrolux chose to build
appliance factory ($190
million) in Memphis, TN.
rather than Mexico
– Whirlpool chose to build
factory in Cleveland, TN.
Rather than Mexico
“Companies Shun Violent Mexico,” WSJ, Dec. 17, 2010
18. Commercial Risk
• Less than optimal formulation and/or implementation of
strategies, tactics or procedures, e.g. partnering
selections, market entry timing, pricing, product
features, and promotional themes
• Ex: Danone (France) & Hangzhou Wahaha Group Co. China
In 2007, Danone’s JV with a local Chinese partner (Wahaha) failed
after the Chinese firm set up a mirror business in which it sold, on
the side, the products that the JV was marketing
• Failures in int’l markets are far more costly than
domestic business blunders
“Danone Pulls Out of Disputed China Venture,” WSJ, Oct. 1, 2009
20. Why Go International?
Seek opportunities for growth (IBM expects to earn
30% of its revenues from EMs by 2015; at Unilever EMs already
make up 56% of business. Aditya Birla Group operates in 40
countries, earns more than ½ of its revenues from outside India)
Earn higher margins and profits
Exploit brand equity on a global scale
Better serve customers abroad
Monitor & learn from competition abroad
Gain from new business partners
Be closer to supply sources, gain
flexibility in the sourcing of products
21. Three Strategic Benefits Accruing to Firms
from Global Operations
Efficiency (configure optimal supply chains)
Flexibility (better cope with diversity and
volatility of countries – diversify risks)
Learning (benefit from ideas, know-how,
partners, etc.; more MNEs have initiated R&D
centers abroad; vast reserves of skills &
knowledge, experience embedded in a global
workforce is a real asset!) (See CKR Ch 12)
22. Is There Such a Thing as ‘Globalization Penalty’?
Global companies scored lower than locally focused ones on:
‘executing on the ground;’ and building relationships with
governments and business partners (McKinsey 2012)
Where Firms struggle:
No single organizational model is best for all companies
Difficult to adapt products & services to local needs, given fairly
standardized business models of MNEs
Four tensions: Managing strategy, people, costs, and risks on a
global scale
Transferring lessons learned in one market to another
Deploying & developing talent in EMs
Global footprint magnifies complexity! Diversity of markets,
customers, and channels…
23. Risk Mitigation Rises to the Top of MNE Agenda
Geographically diverse business portfolio works as a
hedge against the volatility of local growth, country
risk, and currency risk. But…
Pursuing so many markets (including high-risk EMs)
takes global companies into unchartered waters …
Calling for new risk-management infrastructure
and skills …
Which, if they generate excessively risk-aversive
processes, will slow down decision making and
cause the firm to miss out on fast-developing
opportunities!
26. Who Participates in International Business?
• Multinational enterprise (MNE)
• Small and Medium-Sized Enterprise (SME)
• Born global firms
• State agencies & state-owned companies
• Not-for-Profit organizations; NGOs
• Logistics & shipping firms
• Service providers (banks, ad agencies,
research firms, law firms, payment facilitators)
• Investment firms; sovereign wealth funds
28. 2011 2012 Change
China 61 73 +12
EM Firms in Fortune Global 500
(2012)
BRICs 83 96 +13
All EMs 114 125 +11
Russia: 7
Hungary: 1 S. Korea: 13
Poland: 1
Turkey: 1 China: 73
Mexico: 3 Taiwan: 6
India: 8 Thailand: 1
Colombia: 1 Venezuela: 1 Malaysia: 1
Brazil: 8
29. Examples of Born Global Companies
• Groupon
– 2010: Groupon
expanded from one
country to 35
countries
– Groupon has more
than 40 million users
in 300 global markets
“What’s Next for Groupon?,” Advertising Age, Dec. 13, 2010
30. Examples of Born Global Companies - 2
• Groupon
– 40% JV with Gao
Peng in China
– Recently closed more
than 10 offices in
China, laid off
hundreds of
employees
“Groupon Stumbles in China, Closes Some Offices,”
WSJ, August 24, 2011
Editor's Notes
In the early 1990’s the Department of Defense launched a tri service combat aircraft recapitalization program called the Joint Strike Fighter (JSF), now designated the F-35.. The intent of the program was to leverage recent major National investments in technology, introduce true service interoperability and achieve economies of Commonality and Scale as legacy combat aircraft fleets were replaced. The ongoing National Security strategy to require coalition based operations had also surfaced significant capability gaps between US and allied air forces equipment. Component Commanders were impacted by these shortfalls and a decision was made to allow participation by selected allied Nations in the development and procurement of the JSF. The United Kingdom enjoyed a unique role in the start up of JSF as they had been part of a cooperative development program with the US Marine Corps called Advanced Short Takeoff and Vertical Landing, a program originally envisioned to replace the aging AV-8 Harrier fleet. The requirement for ASTOVL was one of the several earlier replacement programs included in the Operational Requirement for JSF. Seven additional countries were allowed to participate as Partners in the JSF Program. These countries joined the program following contract award in October of 2001. These relationships were codified in formal bi-lateral Government to Government agreements for the initial stage Additional strategic considerations: In addition to developing the ability to form future allied coalitions, there is a second strategically important aspect of the JSF F-35 program as an extension of US Foreign Policy in strategically important geographic regions. These are dominated by the Far East (Japan< Singapore and the Republic of Korea) and the Middle East (Israel). While these countries are not “Partners” and do not tend to participate in US Coalitions, they represent an extension of US Foreign policy in their regions. These countries will be allowed to participate in the project through the traditional Foreign Military Sales (FMS) processes.