BUSINESS IN A GLOBAL

ENVIRONMENT
 GROUP THREE

1. AHMAD FAJAR
2. RIO PANCA PUTRA
3. AGUNG KURNIAWAN
4. ARISWANDI
5. FIRMAWATI
6. ANDI NURUL KUSMAWARDANI
 A.THE GLOBALIZATION OF
BUSINESS

Global change has brought issues relating to big business and small business.

Where this change gives a real picture is the shifting of businesses that are

limited to domestic (national) businesses which are exacerbated, due to various

interests such as cultural differences, distance and time towards an integrated

global business system or cooperation that are interrelated with one another. And

this situation is unprecedented by business managers where this global business

has an impact and also new challenges.

  ABSOLUTE AND COMPARATIVE ADVANTAGE

1. Absolute Advantage
Nation has an absolute advantage if :
oit’s the only source of a particular product
oit can make more of a product using the same amount of or fewer resources than other
countries.
2. Comparative Advantage
When a country can produce a product at a lower opportunity cost compared to another
nation. Opportunity costs are the products that a country must decline to make in order to
produce something else. A comparative advantage exists when a country can produce a
product at a lower opportunity cost than other nations.
 To evaluate the impact of its international trade, a nation looks at two key indicators: balance
of trade and balance of payments.
• Determine a country’s balance of trade by subtracting the value of its imports from the value of
its exports.
1. If a country sells more products than it buys, it has afavorable balance, called a trade surplus.
2. If it buys more than it sells, it has an unfavorable balance, or a trade deficit.
• The balance of payments is the difference, over a period of time, between the total
flow coming into a country and the total flow going out.
1. As in its balance of trade, the biggest factor in a country’s balance of payments is the
money that comes in and goes out as a result of exports and imports.
2. But balance of payments includes other cash inflows and outflows, such as cash
received from or paid for foreign investment, loans, tourism, military expenditures,
and foreign aid.
 B.OPPORTUNITIES IN INTERNATIONAL
BUSINESS
A strategy which acts as the basis for firms to sell its products and services

beyond the domestic market is called as an international strategy. International

business helps in introducing their culture and helps the customers in becoming

habituated to the familiar trends, by this the firms can also gain huge market share

and provides a scope for global communication.

• Benefits of international strategy:
a) Increased market size

b) Economies of scale

c) Return on investment

• Factors that provide a basis for international business level strategy

The factors which help in international business level strategy are firm’s strategy,
structure, factors of production, demand conditions, relating and supporting industries.
International expansion is achieved by exporting products, participating in licensing
arrangement, forming strategic alliances, making acquisitions and establishing new
wholly subsidiaries.
• Five modes of international expansion are
a) Exporting
The process of producing goods in the home country or third country and transporting those produced
goods to other countries
b) Licensing
Licensing is a method of market entry; a company can gain market presence without any equity
investment.
c) Strategic Alliances
Strategic alliance refers to cooperation between two or more companies
d) Nature of Strategic Alliance
Strategic alliance refers to cooperative agreements between the companies.
e) Acquisition
Mergers and acquisition are used as a base for the domestic firms to enter into the international business.
For the purpose of entering into the international business, domestic firms chose a foreign firm and merges
with it.
 C.THE GLOBAL BUSINESS ENVIRONMENT

• The Cultural Environment

Differences in communication styles reflect differences in culture: the system of shared beliefs, values, customs,
and behaviors that govern the interactions of members of a society. Cultural differences create challenges to
successful international business dealings.

• Language
English is the international language of business. The natives of such European countries as France and Spain
certainly take pride in their own languages aAdvertising messages and sales appeals must take this fact into
account. More than one English translation of an advertising slogan have resulted in a humorous (and perhaps
serious) blunder. and cultures, In many countries, only members of the educated classes speak English
• Time and Sociability
Americans take for granted many of the cultural aspects of our business practices. These
habits stem from a broader cultural preference: we don’t like to waste time. (It was an
American, Benjamin Franklin, who coined the phrase “Time is money.”)
• High- and Low-Context Cultures
• Intercultural Communication
Different cultures have different communication styles a fact that can take some getting
used to. For example, degrees of animation in expression can vary from culture to culture
In summary, learn about a country’s culture and use your knowledge to help improve the
quality of your business dealings. Learn to value the subtle differences among cultures, but
don’t allow cultural stereotypes to dictate how you interact with people from any culture.
Treat each person as an individual and spend time getting to know what he or she is about.
 D. TRADE CONTROLS
The debate about the extent to which countries should control the flow of foreign goods and investments
across their borders is as old as international trade itself. Governments continue to control trade.

Types of trade restrictions:

a) Tariffs

Tariffs are taxes on imports. Because they raise the price of the foreign-made goods, they make them
less competitive.

b) Quotas

A quota imposes limits on the quantity of a good that can be imported over a period of time. Quotas are
used to protect specific industries, usually new industries or those facing strong competitive pressure from
foreign firms.
 A common rationale for tariffs and quotas is the need to combat dumping the
practice of selling exported goods below the price that producers would normally
charge in their home markets (and often below the costs of producing the goods).

Some experts believe that governments should support free trade and refrain
from imposing regulations that restrict the free flow of products between nations.

Others argue that governments should impose some level of trade regulations on
imported goods and services.
 E. REDUCING INTERNATIONAL TRADE BARRIERS
A number of organizations work to ease barriers to trade, and more countries are joining
together to promote trade and mutual economic benefits.
• Trade Agreements and Organizations
Free trade is encouraged by a number of agreements and organizations set up to monitor trade
policies. The two most important are the General Agreement on Tariffs and Trade and the World
Trade Organization.
• General Agreement on Tariffs and Trade
After the Great Depression and World War II, most countries focused on protecting home
industries, so international trade was hindered by rigid trade restrictions. To rectify this situation,
twenty-three nations joined together in 1947 and signed the General Agreement on Tariffs and
Trade (GATT), which encouraged free trade by regulating and reducing tariffs and by providing a
forum for resolving trade disputes.
 Providing monetary assistance to some of the poorest nations in the world is the shared goal of
two organizations: the International Monetary Fund (IMF) and the World Bank. Several
initiatives have successfully promoted free trade on a regional level. In certain parts of the world,
groups of countries have joined together to allow goods and services to flow without restrictions
across their mutual borders. Such groups are called trading blocs.

The North American Free Trade Association (NAFTA) is an agreement among the
governments of the United States, Canada, and Mexico to open their borders to unrestricted trade.
The effect of this agreement is that three very different economies are combined into one economic
zone with almost no trade barriers.
 F. PREPARING FOR A CAREER IN INTERNATIONAL BUSINESS

No matter where your career takes you, you won’t be able to avoid the reality and reach of
international business. We’re all involved in it.

a) Plan Your Undergraduate Education

Many colleges and universities offer strong majors in international business, and this course
of study can be good preparation for a global career

b) Get Some Direct Experience

Take advantage of study-abroad opportunities, whether offered on your campus or by another

college. There are literally hundreds of such opportunities, and your interest in international
business will be received much more seriously if you’ve spent some time abroad.
c) Interact with People from Other Cultures

learn about the habits and traits of other cultures, and practice interacting with the

people to whom they belong.

d) Study a foreign language.

Thank you