09-Jul-18

Last Class Discussions

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Chapter 01 • International Business

• Globalization
Overview of International Business • Emergence of Global Institutions
and Globalization
• Drivers or Factors of Globalization

Md. Kaysher Hamid

Md. Kaysher Hamid

Lesson Outline Drivers or Factors of Globalization

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• Drivers or Factors of Globalization • Increase in and application of technology

• Costs of Globalization • Liberalization of cross-border trade and resource movements

• Reasons for Engaging in International Business • Development of services that support international business

• Modes of Operations in International Business • Growth of consumer pressures

• External Environmental Factors Affecting International Business

Md. Kaysher Hamid Md. Kaysher Hamid

 09-Jul-18

Drivers or Factors of Globalization Costs of Globalization / The Globalization Debate

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• Increase in global competition • Supporters of Globalization believe that increased trade and

• Changes in political situations and government policies cross-border investment mean

• Expansion of cross-national cooperation o Lower prices for goods and services

o Greater economic growth
o Higher consumer income, and more jobs

Md. Kaysher Hamid Md. Kaysher Hamid

Costs of Globalization / The Globalization Debate Nestle Chocolate Brought to You by Child Slavery
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• Critics worry that globalization will cause

o Threats to national sovereignty
 Local objectives and policies
 Small economies’ overdependence
 Cultural homogeneity
o Environmental degradation
o Growing income inequality and personal stress
o Offshoring

Md. Kaysher Hamid Md. Kaysher Hamid

 09-Jul-18

Why Companies Engage in International

Pollution Outsourced to China Returns to US
Business
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• Expanding sales
o Increases the potential market and profits
• Acquiring resources
o Lower costs
o New or better products
o Additional operating knowledge
• Reducing risk
o Smoothing sales and profits
o Preventing competitors from gaining advantages

Md. Kaysher Hamid Md. Kaysher Hamid

Modes of Operations in International Business Modes of Operations in International Business

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• Merchandise exports and imports • Merchandise exports

• Service exports and imports o Goods that are sent out of a country

• Investments • Merchandise imports

o Goods that are brought into a country

• Sometimes referred to as visible exports and imports

Md. Kaysher Hamid Md. Kaysher Hamid

 09-Jul-18

Modes of Operations in International Business Modes of Operations in International Business

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• Service exports • Investments

o Provider and receiver of payment
o Foreign Direct Investment (FDI)
• Service imports
o Recipient and payer of payment  Investor takes a controlling interest in a foreign
• Examples company
o Tourism and transportation o Portfolio Investment
o Service performance
 A non-controlling financial interest in another entity
 Turnkey operations and Management contracts
o Asset use
 Licensing and Franchising

Md. Kaysher Hamid Md. Kaysher Hamid

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Md. Kaysher Hamid