Learning 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

What is international business?

International business consist of business transactions between parties from more than
one country.

Why study international business?

Catching up with foreign assignment

Compete successfully with peers and future competitors
Running your own SMEs
Obtain cultural literacy
Stay abreast of the latest business and tools

Why does company go global?

Leveraging core competency

Acquiring resources and supplies
Seeking new markets
Minimize risks and
Competing with rivals

Reasons for increased growth in globalization

Increase in and expansion of technology

Liberalization of cross-border trade and resource movements
Development of services supporting IB
Growing consumers pressures
Increased global competition
Changing global political situation
Expanded cross-national cooperation

Contemporary causes of globalization

What is globalization?
Manifestation of globalization
Intensification of the role of international trade
Growing importance of FDI (Foreign Direct Investment)
Causes of globalization
Strategic imperatives
The environmental causes of globalization
Globalization emerging markets

Strategic imperatives:

Leveraging a firm’s core competencies

Acquiring resources at low cost
Expanding into new markets
Competing with industry rivals

Environmental causes

Changes in the political environment

Reduction of trade and investment barriers
The collapse and policy changes undertaken by China and India
Changes in the technological environment
Advances in transportation
Improvements in information processing
Changes in communication technology

Review questions:

What is IB? how does it differ from domestic business?

Why it is important for you to study IB?
What are the basic forms of IB activity?
How do merchandise exports and imports differ from service exports and imports?
What is portfolio investment?
What are the basic reasons for the recent growth of international business activity?