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Presented by
R.Sumathi
1
The International Business
Imperative
2
 To understand the history and impact of
international business.
 To learn the definition of international business.
 To recognize the growth of global linkages
today.
 To understand the U.S. position in world trade
and the impact international business has on
the United States.
 To appreciate the opportunities and challenges
offered by international business.
3
 More and more firms around the world are
going global, including:
◦ Manufacturing firms
◦ Service companies (i.e. banks, insurance,
consulting firms)
◦ Art, film, and music companies
4
 International business:
◦ 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
◦ reallocates resources, makes
preferential choices, and shifts
activities to a global level
5
International business consists of
transactions that are devised and carried out
across national borders to satisfy the
objectives of individuals, companies, and
organizations.
6
7
Export-import trade
Foreign direct
investment
Licensing
Franchising
Management contracts
 How 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, and how can these
threats be counteracted?
8
 Pax Romana, or Roman Peace ensured that
merchants were able to travel safely and
rapidly.
 Common coinage simplified business
transactions.
 Rome developed a systematic law, central
market locations, and an effective
communication system; all of which enabled
international business to flourish in the
Roman Empire.
 The growth of the Roman Empire occurred
mainly through the linkages of business
9
 The decline of the Roman Empire can be
attributed in part to:
◦ infighting and increasing decadence
◦ the Pax Romana being no longer enforced
◦ the decline of use and acceptance of the
common coinage
◦ declining levels of communication
 As a result, former Roman allies
cooperated with invaders.
10
 The United States has developed a world
leadership position due to:
◦ its use of market-based transactions in the
Western world
◦ a broad flow of ideas, goods, and services
across national borders
◦ an encouragement of international
communication and transportation
◦ Pax Americana, an American sponsored
and enforced peace
11
 The the 1930’s, the U.S. passed the
Smoot-Hawley Act, which raised import
duties to reduce the volume of goods
coming into the U.S.
 The act was passed in the hope that it
would restore domestic employment.
 The result was a worldwide depression
and the collapse of the world financial
system.
12
 In the past 30 years, the volume of
international trade has expanded from
$200 billion to over $7.5 trillion.
 The sales of foreign affiliates of
multinational corporations are now twice
as high as global exports.
13
 International business has created a
network of global links that bind
countries, institutions, and individuals
with trade, financial markets, technology,
and living standards.
◦ For example, a reduction in coffee production
in Brazil would affect individuals and
economies worldwide.
14
 Total world trade declined dramatically
after 2000, but is again on the rise.
 The rate of globalization is accelerating.
 Regionalization is taking place, resulting
in trading blocs.
 The participation of countries in world
trade is shifting.
15
 Between the 1960’s and the 1990’s the
importance of manufactured goods
increased while the role of primary
commodities (i.e. rubber or mining) had
decreased.
 More recently, there has been a shift of
manufacturing to countries with
emerging economies.
 There has been an increase in the area of
services trade in recent years.
16
17
Exports and Imports of Goods and Services per Capita
for Selected Countries
Country Exports per Capita Imports per Capita
Australia
Brazil
China
Japan
Kenya
United Kingdom
United States
$4,296
379
222
4,165
91
4,767
3,472
$4,525
428
199
3,622
125
5,500
4,962
 U.S. international business outflows are
important on the macroeconomic level in
terms of balancing the trade account.
 On the microeconomic level,
participation in international business
can help firms achieve economies of
scale that cannot be achieved in domestic
markets.
18
19
0
5
10
15
20
25
30
All Plants Small Plants Large Plants
$
per
hour
Non-Exporters Exporters
 Because of globalization, for the first time
in history, the availability of international
products and services can be accessed by
individuals in many countries, from diverse
economic backgrounds.
20
 Part One introduces the importance of
international business and its global linkages.
 Part Two presents the environment of
international business, addressing culture,
policies, politics, and law.
 Part Three provides coverage of the theory of
international trade and investment and presents
balance of payments issues.
 Part Four discusses markets, financial systems,
economic integration, and emerging market
concerns.
21
 Part Five presents the strategy considerations
surrounding international business.
 Part Six targets the operational issues
surrounding international business, using an
implementation-riented perspective.
 Part Seven concludes the book with a focus on
the future of the field and the reader’s career.
22

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Sumathi.ppt

  • 3.  To understand the history and impact of international business.  To learn the definition of international business.  To recognize the growth of global linkages today.  To understand the U.S. position in world trade and the impact international business has on the United States.  To appreciate the opportunities and challenges offered by international business. 3
  • 4.  More and more firms around the world are going global, including: ◦ Manufacturing firms ◦ Service companies (i.e. banks, insurance, consulting firms) ◦ Art, film, and music companies 4
  • 5.  International business: ◦ 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 ◦ reallocates resources, makes preferential choices, and shifts activities to a global level 5
  • 6. International business consists of transactions that are devised and carried out across national borders to satisfy the objectives of individuals, companies, and organizations. 6
  • 8.  How 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, and how can these threats be counteracted? 8
  • 9.  Pax Romana, or Roman Peace ensured that merchants were able to travel safely and rapidly.  Common coinage simplified business transactions.  Rome developed a systematic law, central market locations, and an effective communication system; all of which enabled international business to flourish in the Roman Empire.  The growth of the Roman Empire occurred mainly through the linkages of business 9
  • 10.  The decline of the Roman Empire can be attributed in part to: ◦ infighting and increasing decadence ◦ the Pax Romana being no longer enforced ◦ the decline of use and acceptance of the common coinage ◦ declining levels of communication  As a result, former Roman allies cooperated with invaders. 10
  • 11.  The United States has developed a world leadership position due to: ◦ its use of market-based transactions in the Western world ◦ a broad flow of ideas, goods, and services across national borders ◦ an encouragement of international communication and transportation ◦ Pax Americana, an American sponsored and enforced peace 11
  • 12.  The the 1930’s, the U.S. passed the Smoot-Hawley Act, which raised import duties to reduce the volume of goods coming into the U.S.  The act was passed in the hope that it would restore domestic employment.  The result was a worldwide depression and the collapse of the world financial system. 12
  • 13.  In the past 30 years, the volume of international trade has expanded from $200 billion to over $7.5 trillion.  The sales of foreign affiliates of multinational corporations are now twice as high as global exports. 13
  • 14.  International business has created a network of global links that bind countries, institutions, and individuals with trade, financial markets, technology, and living standards. ◦ For example, a reduction in coffee production in Brazil would affect individuals and economies worldwide. 14
  • 15.  Total world trade declined dramatically after 2000, but is again on the rise.  The rate of globalization is accelerating.  Regionalization is taking place, resulting in trading blocs.  The participation of countries in world trade is shifting. 15
  • 16.  Between the 1960’s and the 1990’s the importance of manufactured goods increased while the role of primary commodities (i.e. rubber or mining) had decreased.  More recently, there has been a shift of manufacturing to countries with emerging economies.  There has been an increase in the area of services trade in recent years. 16
  • 17. 17 Exports and Imports of Goods and Services per Capita for Selected Countries Country Exports per Capita Imports per Capita Australia Brazil China Japan Kenya United Kingdom United States $4,296 379 222 4,165 91 4,767 3,472 $4,525 428 199 3,622 125 5,500 4,962
  • 18.  U.S. international business outflows are important on the macroeconomic level in terms of balancing the trade account.  On the microeconomic level, participation in international business can help firms achieve economies of scale that cannot be achieved in domestic markets. 18
  • 19. 19 0 5 10 15 20 25 30 All Plants Small Plants Large Plants $ per hour Non-Exporters Exporters
  • 20.  Because of globalization, for the first time in history, the availability of international products and services can be accessed by individuals in many countries, from diverse economic backgrounds. 20
  • 21.  Part One introduces the importance of international business and its global linkages.  Part Two presents the environment of international business, addressing culture, policies, politics, and law.  Part Three provides coverage of the theory of international trade and investment and presents balance of payments issues.  Part Four discusses markets, financial systems, economic integration, and emerging market concerns. 21
  • 22.  Part Five presents the strategy considerations surrounding international business.  Part Six targets the operational issues surrounding international business, using an implementation-riented perspective.  Part Seven concludes the book with a focus on the future of the field and the reader’s career. 22