International business involves commercial transactions between two or more countries that differ from domestic business. It allows for the flow of goods, services, capital, labor, and technology across borders. Managing international business requires understanding how political, legal, economic, geographic, social, and competitive factors in foreign environments can influence business operations and strategies. Firms pursue international business to expand sales, acquire resources, diversify risk, and minimize competitive threats.

1. Presented by Sugihar to, SH. MM
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2. International Business - all
commercial transactions between
two or more countries
Involves modes of business that
differ from those at the
domestic level
Foreign conditions diversity
company’s external
environment
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3. International business
consists of transactions that
are devised and carried out
across national borders to
satisfy the objectives of :
INDIVIDUALS
COMPANIES
ORGANIZATIONS
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4. Causes the flow of ideas, services,
and capital across the world
Offers consumers new choices
Permits the acquisition of a wider
variety of products
Facilitates the mobility of labor,
capital, and technology
Provides challenging
employment opportunities
Re-allocates resources, makes
preferential choices, and shifts
activities to a global level
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5. Will an idea, good, or service fit
into the international market
Should trade or investment be used
to enter a foreign market
Should supplies be obtained
domestically or abroad
What product adjustments are necessary
to be responsive to local conditions
What are the threats from
global competitors
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6. © SUGIHARTO, SH.MM GICI Business School

7. Expand sales greater purchasing
power in the world as a whole
Acquire resources of products,
services, components
also, foreign capital, technologies,
information
Diversify sources of sales and
supplies, takes advantage of business
cycle differences among countries
Minimize competitive risk to prevent
competitor from gaining advantages
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8. EXPANSION OF TECHNOLOGY
transportation and communication are quicker and
less costly
Liberalization of cross-border movements
Government barriers reduced because:
desire for better access to greater variety
of goods and services
domestic producers forced to be more
competitive
lowered trade barriers to their own exports
Development of supporting services by business
and governments to:
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9. Development of supporting services by
business and governments to:
Ease the flow of goods and
services sold abroad
Reduce risks of International
Business
Increase in global competition,
the firms have become more
global to maintain
competitiveness
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10. j
MERCHANDISE EXPORTS
AND IMPORTS
Are the most common international
economic transaction, especially for
smaller companies. And …
Major source of international revenue
and expenditures for most companies
SERVICE EXPORTS AND IMPORTS
NONPRODUCT INTERNATIONAL
EARNINGS
Tourism and transportation
Performance of services for a fee
Use of assets by others - Licensing
Agreements
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11. j
INVESTMENTS - ownership of foreign
property in exchange for financial return
Foreign direct investment
Investor gains a controlling interest in
foreign company by joint venture or
mixed venture another option is
Portfolio investment
International Companies
the terminology
Strategic alliance
collaborative arrangement of critical
importance to the competitive viability of
one or more partners
Multinational enterprise (MNE)
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12. j
LICENSING - official or legal permission
to carry on an activity
A permit from an authority to own or use
something, do a particular thing or carry
on a trade through agreement between
licensed entity (Licensee) and granting
authority
FRANCHISING - A marketing system
revolving around a two-party agreement,
whereby the franchisee conducts
business according to the terms
specified by the franchisor
Single franchise owner
Master franchisee
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13. OPERATIONS AND INFLUENCES
External Influences
The Operations
PHYSICAL AND
SOCIETAL FACTORS
OBJECTIVES
Political policies and
legal practices
Cultural factors
Economic forces
Geographical
influences
Sales expansion
Resource acquisition
Diversification
Competitive risk
minimization
STRATEGY
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14. OPERATIONS AND INFLUENCES
MEANS
External Influences
COMPETITIVE
ENVIRONMENT
Major advantage in
price, marketing,
innovation, or other
factors
Number and
comparative,
capabilities of
competitors
Competitive
differences by country
MODES
Importing and
exporting
Tourism and
transportation
Licensing and
franchising
Turnkey operations
Management
contracts
FUNCTION
Marketing
Finance
Production
Accounting
Overlying
alternatives
Choice of
countries
Organization
and control
mechanisms
Human
resources
Direct and portfolio
investment
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15. MEASURING GLOBALIZATION
Note: # learn anything about Globalization, the
terms, the definition, and its History. Those will
be part on Final examination
Foreign Aid
POLITICAL ENGAGEMENT
Treaties
Organizations
Peacekeeping
ECONOMIC INTEGRATION
PERSONAL CONTACT
International Trade
Foreign Direct investment
Travel and Tourism
Telephone
Transfer Payment
Internet users
TECHNOLOGICAL CONNECTIVITY
Hosts
Secure servers
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16. GLOBALIZATION Good OR Bad ?
Threats to national sovereignty
Economic growth and
environmental stress
Growing income inequality and
personal stress
Offshoring – transferring of production
abroad
is controversial in terms of who benefits
when costs are reduced and whether the
process exchanges good jobs for bad
ones
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17. OPERATIONS AND INFLUENCES
The EXTERNAL INFLUENCES
Physical and societal factors
P O L I T I C A L that affect whether and how
International Business occurs
DOMESTIC AND
determines what managers can
I N T E R N A T I O N A L L A W do in International Business
ECONOMICS
determines The types of investment
G E O G R A P H Y determine location and availability of
world’s resources
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18. OPERATIONS AND INFLUENCES
The EXTERNAL INFLUENCES
Physical and societal factors
To operate within a company’s
external environment, its managers
must have :
knowledge of business operations
a working knowledge of social
sciences ….
and how they affect all
functional business fields
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19. The EXTERNAL INFLUENCES
OPERATIONS AND INFLUENCES Competitive environment
Varies by industry, company, and country
Strategies differ across companies
e.g., importance of controlling labor cost
e.g., influence of local and international competitors
Size of market differs across
countries
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20. Risk Minimization
Evolution of Strategy in
International Process
PATTERNS OF EXPANSION
Passive to active pursuit of
International Business opportunities
– initially wait for foreign
opportunities
Limited to extensive modes of
operations – begin with
importing or exporting
operation
foreign operations viewed as
risky international commitments
evolve gradually
External to internal handling of
International Business – rely on
intermediaries at first
Few to many foreign locations
Similar to dissimilar business
environments
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21. THANK YOU FOR LISTENING
1st Meeting
International Business
STIE GICI Business School
January 2014
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