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Pborstor Part 1

1) International business involves transactions between two or more countries and makes up a large portion of global business. 2) Companies engage in international business to expand sales, acquire resources, and diversify sources of sales and supplies. 3) Reasons for the growth of international business include advances in technology, liberalization of trade policies, and increased global competition.

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60 views8 pages

Pborstor Part 1

1) International business involves transactions between two or more countries and makes up a large portion of global business. 2) Companies engage in international business to expand sales, acquire resources, and diversify sources of sales and supplies. 3) Reasons for the growth of international business include advances in technology, liberalization of trade policies, and increased global competition.

Uploaded by

arsha
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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INTERNATIONAL

BUSINESS; AN OVERVIEW
Case: Euro Disney

• 1992 debut – “Cultural Chernobyl”

• Why France?:
government concessions, central location
Popularity of french characters

• large number of adaptations

• Euro’s problems:
The leisure habits of Europeans; competition
The cost of visiting the park; U.S-French
agricultural trade animosity
I - Introduction
• International Business is all business transactions
that involve two or more countries.

• International Business comprises a large and


growing portion of the world’s total business.

• International Business usually takes place within a


more diverse external environment.

• Why Companies Engage in International Business


A) To Expand Sales: companie’s sales are dependent
on two factors: the consumers’ interest in their
product or services and the consumers’ ability and
willingness to buy them.

B) Acquire Resources: products, services, technology,


and information

C) Diversify Sources of Sales and Supplies

D) Minimize Competitive Risk: companies move


internationally for defensive reasons. Profits from one
market can be used to expand operations in other
markets.
Reasons for Recent International Business Growth

Expansion of Technology:
transportation, telecommunications;
Transportation and telecommunications costs are
more conducive for international operations.

Liberalization of Cross-Border Movements:


goods, services, labour, Capital

Development of Supporting Institutional Arrangements:


development by business and governments of
institutions that enable us to effectively apply that
technology.

Increase in Global Competition:


new products become global; Globalization of
production
Modes of International Business
A - Merchandise Exports and Imports: visibles and
invisibles

B - Performance of Services: fees; turnkey


operations; management Contracts

C - Use of Assets: licensing agreements; royalties;


franchising

D - Investments:
1) Foreign Direct Investment: gives the investor a
controlling Interest in a foreign company. It gives
access to:
- foreign markets
- foreign resources
- higher profits than exporting
- partial ownership
2) Portfolio Investment: stock in a company or
loans to a company or country in the form of
bonds, bills, or notes that the investor purchases.

E - Other Operational Definitions


- Strategic Alliances

F – MNCs, MNEs, TNCs, Global Company,


Multidomestic Company

External Influences on International Business

Understanding a Company’s Physical and Societal


Environment Managers need a working knowledge of
business operations, a working Knowledge of political
sciences, law, anthropoly, sociology, economics, and
geography.
Evolution of Strategy in the Internationalization Process

A) Patterns of Expansion: passive; external to internal


handling of the business; limited to extensive modes
of operations

B) Deepening mode of Commitment

C) Geographic Diversification (similar cultural


background)

D) Leapfrogging of Expansion: companies are starting


with a global focus.

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