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Globalizationand Internationalbusiness.pptx
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- 2. Introduction 𝗈 Globalization isthe ongoing process that deepens and broadens the relationships and interdependence among countries 𝗈 International business is a mechanism to bring about globalization 𝗈 International business consists of all commercial transactions—including sales, investments, and transportation—that take place between two or more countries 𝗈 increasingly foreign countries are a source of both production and sales for domestic companies 1-3
- 3. Introduction 𝗈 It isimportant to study international business because 𝗈 Most companies are either international or compete with international companies 𝗈 Modes of operations may differ from those used domestically 𝗈 The best way of conducting business may differ by country 𝗈 An understanding helps you make better career decisions 𝗈 An understanding helps you decide what government policies to support 1-4
- 4. Introduction Factorsin International BusinessOperations 1-5
- 5. ForcesDriving Globalization 1 . Increasein and application of technology 2. Liberalization of cross-border trade and resource movements 3. Development of services that support international business 4. Growing consumer pressures 5 . Increased global competition 6. Changing political situations 7. Expanded cross-national cooperation 1-6
- 6. Measuring Globalization 𝗈 Globalizationcan be difficult to measure 𝗈 The A.T. Kearney/Foreign Policy Globalization Index ranks countries by 𝗈 Economic dimensions 𝗈 Technological dimensions 𝗈 Personal contact 𝗈 Political dimensions 𝗈 recently ranked Singapore and Hong Kong asmost globalized 1-7
- 7. Costsof Globalization 𝗈 Threatstonational sovereignty 𝗈 lose freedom to “act locally” 𝗈 Economic growth and environmental stress 𝗈 growth consumes nonrenewable natural resources and increases environmental damage 𝗈 Growing income inequality and personal stress 𝗈 promotes global superstars at the expense of others 𝗈 Offshoring involves the transferring of production abroad 𝗈 it can be beneficial because it reduces costs 𝗈 but, it also means that jobs move abroad 𝗈 Yet, offshoring may also create new, better jobs at home 1-9
- 8. Why Companies Engagein IB 𝗈 To expand sales 𝗈 pursuing international sales increases the potential market and potential profits 𝗈 To acquire resources 𝗈 may give companies lower costs, new and better products, and additional operating knowledge 𝗈 To diversify or reduce risks 𝗈 international operations may reduce operating risk by smoothing sales and profits, preventing competitors from gaining advantage 1-11
- 9. Why Companies Engagein IB 𝗈 These three reasons 𝗈 sales expansion 𝗈 resource acquisition 𝗈 risk minimization guide all decisions about whether, where, and how to engage in international business 1-12
- 10. Modesof Operations inI B 𝗈 Merchandise exports 𝗈 goodsthat are sent out of a country 𝗈 Merchandise imports 𝗈 goodsthat are brought into a country Sometimes referred to as visible exports and imports 𝗈 Service exports 𝗈 providerand receiverof payment 𝗈 T u rnkey Operation and Management Contracts 𝗈 Asset Use 𝗈 L icensing and Frenchising 𝗈 Service imports 𝗈 recipient and payer of payment 𝗈 Examples 𝗈 Tourism and transportation 𝗈 Service performance 1-14
- 11. Modesof Operations inI B Investments: 𝗈 Foreign DirectI nvestment (FDI) in a foreign 𝗈 investor takes a controlling interest company 𝗈 Joint Venture 𝗈 Portfolio Investment 𝗈 a non-controlling financial interest in another entity 1-15
- 12. Typesof International Organizations 𝗈 Collaborativearrangements 𝗈 Joint ventures 𝗈 Licensing arrangements 𝗈 Management contracts 𝗈 Minority ownership 𝗈 Long-term contractual arrangements 𝗈 Strategic alliance 𝗈 companies that work together, but the agreement iscritical to at least one partner 𝗈 an agreement that does not involve joint ownership 1-16
- 13. Typesof I nternational Organizations 𝗈 Multinationalenterprises(MNEs) 𝗈 take a global approach to markets and production or have operations in more than one country 𝗈 Sometimes they are referred to as 𝗈 multinational corporations (MNCs) 𝗈 multinational companies (MNCs) 𝗈 transnational companies (TNCs) 𝗈 In foreign markets, companies may have to adapt their typical methods of doing business 𝗈 foreign conditionsmay dictate a particularmethod 𝗈 operating modes may be different from those used domestically 1-17
- 14. Why I B isDifferent 𝗈The external environment affects a company’sinternational operations 𝗈 Managers must understand social science disciplines and how they affect functional businessfields 𝗈 Consider 𝗈 physical factors 𝗈 social factors 𝗈 competitive factors 1-19
- 15. Physical and SocialFactors 𝗈 Geographic influences 𝗈 natural conditions influence production locations 𝗈 Political policies 𝗈 determines where and how business occurs 𝗈 Legal policies 𝗈 influence how a company operates 𝗈 Behavioral factors 𝗈 may require changes in operations 𝗈 Economic forces 𝗈 explain differences in costs, currency values, market size 1-20
- 16. The Competitive Environment 𝗈 Competitivestrategy for products 𝗈 Cost strategy 𝗈 Differentiation strategy 𝗈 Focusstrategy 𝗈 Company resourcesand experience 𝗈 market leaders have more resources for international operations 𝗈 Competitors faced in each market 𝗈 local or international 𝗈 So, a company’scompetitive strategy influences how and where it can best operate 𝗈 Itscompetitive situation may differ from country to country in termsof itsrelative strength and which competitors it faces 1-21
- 17. Looking to theFuture 𝗈 Three major perspectives on the future of international businessand globalization 𝗈 Further globalization isinevitable 𝗈 International business will grow primarily along regional rather than global lines 𝗈 Forces working against further globalization and international business will slow down both trends 1-23