International Business
Management
Chapter 1
An Overview of
International
Business
1-2
Assessment
• Final test: Group assignment (max of 3 students): 60%
• Process evaluation: 40%, includes:
• Individual activities (6 quiz, 2 group exercises, attendance) [20%]
• Individual in class test (quiz, question) [10%]
• Group presentation [10%]
Chapter Objectives
• Discuss the meaning of international business
• Explain the importance of understanding international business
• Identify and describe the basic forms of international business activities
• Discuss the causes of globalization
• Comprehend the growing role of emerging markets in the global
economy
The outline of chapter 1
• What is IB?
• Why study IB?
• IB activities
• Variations of organizations
• The era of globalization
• Framework of book
The outline of chapter 1
• What is IB?
What Is International Business?
• Business transactions between parties from more than one country
• Parties may include:
• Private individuals
• Individual companies
• Groups of companies
• Governmental agencies
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How Does International Business
Differ from Domestic?
• Boundaries
• Currency conversion
• Legal systems
• Culture
• Availability of resources
• Skills & Knowledge
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1-8
The outline of chapter 1
• What is IB?
• Why study IB?
• IB activities
• Variations of organizations
• The era of globalization
• Framework of book
Bringging the World into Focus_page 31
The early era of International Business
Why Study International Business?
• Provides the knowledge and skills that are essential for your career in today's
business environment
• Helps you make better career assessments
• Compete successfully with peers and future competitors
• Stay abreast of the latest business techniques and tools
• Obtain cultural literacy
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The outline of chapter 1
• What is IB?
• Why study IB?
• IB activities
• Variations of organizations
• The era of globalization
• Framework of book
International
Business Activities
• Exporting and Importing
• International Investments
• Licensing, Franchising, and Management Contracts
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Exporting and Importing
• Exporting: selling of products made in one’s own country for use or
resale in other countries
• Importing: buying of products made in other countries for use or
resale in one’s own country
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Visible and Invisible Trade
• Trade in Goods
• Merchandise exports and imports
• Visible trade
• Trade in Services
• Service exports and imports
• Invisible trade
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Invisible trade
International Investments
• Capital supplied by residents of one country to residents of another
• Two categories:
• Foreign direct investments
• Portfolio investments
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Other Forms of
International Business Activity
Management
contracts
Licensing Franchising
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1-18
Other Forms of
International Business Activity
Licensing is a contractual arrangement in which
a firm in one country licenses the use of its
intellectual property to a firm in another country
in exchange for a royalty payment.
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1-19
Other Forms of
International Business Activity
Franchising is a specialized form of licensing
which occurs when a firm in one country authorizes
a firm in another to utilize its operating systems
as well as its brand names, trademarks,
and logos for a royalty payment.
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1-20
Other Forms of
International Business Activity
A management contract is an arrangement wherein
a firm in one country agrees to operate facilities
or provide other management services
to a firm in another country for an agreed-upon fee
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1-21
The outline of chapter 1
• What is IB?
• Why study IB?
• IB activities
• Variations of organizations
• The era of globalization
• Framework of book
Variations of Organizations
Multinational Corporation
Multinational Enterprise
Multinational Organization
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Multinational Corporations (MNCs)
• Engage in foreign direct investment
• Own and control foreign assets
• Buy resources in multiple countries
• Create goods and services in multiple countries
• Sell goods and services in multiple countries
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Multinational Enterprises (MNEs)
• A multinational enterprise (MNE) is any business that has
productive/business activities in two or more countries
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What Is a Multinational Corporation?
What Is a Multinational Enterprise?
Table 1.1 The World’s Largest MNCs
• Chevron
Wal-Mart
• ING
Exxon
Group
Mobil
• Total
Royal Dutch Shell
• General
BP Motors
• ConocoPhillips
Toyota Motor
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1-28
The outline of chapter 1
• What is IB?
• Why study IB?
• IB activities
• Variations of organizations
• The era of globalization
• Framework of book
What is Globalization?
The Era of Globalization
Globalization: the inexorable integration of markets, nation-states, and
technologies…in a way that is enabling individuals, corporations and
nation-states to reach around the world farther, faster, deeper, and
cheaper than ever before
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Contemporary Causes of Globalization
• Strategic imperatives
• Environmental changes
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Contemporary Causes of Globalization
Strategic Imperatives
• To leverage core competencies
• To acquire resources and supplies
• To seek new markets
• To better compete with rivals
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Contemporary Causes of Globalization:
Environmental Causes
• Changes in the Political Environment
• Reduction of trade and investment barriers
• The collapse of European Communism
• The ideological and policy changes undertaken by China and India
• Changes in the Technological Environment
• Advances in Transportation
• Improvements in Information Processing
• Changes in Communications Technology
Chapter 1-34
Advances in Transportation
Improvements in Information Processing
Changes in Communications Technology
Globalization and Emerging Markets
BRIC
• Brazil
• Russia
• India
• China
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Globalization and Emerging Markets (continued)
Big Ten
Argentina Brazil China
South Korea Indonesia Mexico
Poland Turkey India
South Africa
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The outline of chapter 1
• What is IB?
• Why study IB?
• IB activities
• Variations of organizations
• The era of globalization
• Framework of book
Framework of Book
• The World’s Marketplaces
• International Environment
• Managing International Business Strategies
• Managing International Business Operations
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Case study
Demography is destiny
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Thank you!
