This document discusses several key concepts in international business including: 1) Internationalization refers to the increasing importance of international trade and relations between nations, while globalization is the effective erasure of national boundaries for economic purposes. 2) Several theoretical models are presented to explain international business and trade, including mercantilist theory, absolute advantage, comparative advantage, Hecksher-Ohlin theory of factor endowments, product life-cycle theory, new trade theory of economies of scale, and Porter's national competitive advantage theory. 3) Country-specific advantages and organization-specific advantages influence a firm's international expansion strategies, with considerations for retaining ownership and control versus integrating or sharing activities.

1. 1

2. • International Business – the main theoretical
concepts
• Internationalization of companies – def?
• Different theoretical models to explain international
business and trade
• Method international expansion
• Retain ownership and control
• Regionalization
• Shearing or even shedding
2
International Business

3. • Increase in globalization since 1970s
• Prior to that – Singapore phenomenon
• Export/Import balance
• 16th century – gold and silver
• Portfolio approach
• Standardizing product range
• Product varieties
© Dr . Steyn Heckroodt
International Business

4. • Internationalization refers to the increasing importance
of international trade, international
relations, treaties, alliances, etc. Inter-national, of
course, means between or among nations. The basic
unit remains the nation, even as relations among
nations become increasingly necessary and important.
Globalization refers to global economic integration of
many formerly national economies into one global
economy, mainly by free trade and free capital
mobility, but also by easy or uncontrolled migration. It
is the effective erasure of national boundaries for
economic purposes.
4
Herman E. Daly
International Business

5. • Mercantilists theory
• Absolute advantage (Interregional trade)
• Comparative advantage (International trade)
• Hecksher-Ohlin (Factor endowments)
• Product life-cycle theory (US)
• New trade theory (Economies of scale)
• Porter’s national competitive theory
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International Business

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7. 7

8. 8

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10. • Mercantilists theory
• Absolute advantage (Interregional trade)
• Comparative advantage (International trade)
• Hecksher-Ohlin (Factor endowments)
• Product life-cycle theory (US)
• New trade theory (Economies of scale)
• Porter’s national competitive theory
10
International Business

11. 11
Porter

12. 12
© Dr Heckroodt, S
Source: Amended from Heckroodt, S. Strategic
Thinking – GAME OVER. Epubsa.co.za
Basic and advanced factors
Advanced –
direct
correlation
with
competitive
ability

13. • Size
• Managerial ability
• Skills
• Extend of up- and downstream integration
• Combination of CSA & OSA
• Costs and risks
• Distance, culture, administrative/political, geo
graphical and economic dynamism
© Dr . Steyn Heckroodt
International Business

14. Countryspecificadvantages
Organisation specific advantages
High
Medium
Low
Medium HighLow
Retain most
up- and downstream
control
Integrate most
up- and downstream
activities and share
or relinquish – in part –
control
Retain upstream
control and
relinquish or share
downstream control
only
No go zone

15. Short
lead times
Long
lead times
Supply
characteristics
Demand characteristics
Hybrid
De-couple through
postponement
Continuous
replenishment
Predictable Unpredictable
Lean plan and
optimize
Agile quick
response

16. © Dr . Steyn Heckroodt
Trader
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Master
Trader X
International Business – informal and/or second economies