Khulna university

Business Administration Discipline

EMBA Program
Subject: International Business
Lecture 1, Date: 13 August, 2023
Topic: Introduction and Globalization

Course Teacher:
Dr. ATM Jahiruddin
Professor
1

International Business

• International business consists of all commercial

transactions—including sales, investments, and
transportation—that take place between two or more
countries
• Increasingly foreign countries are a source of both
production and sales for domestic companies
• Import: Goods and services purchased abroad and
brought into a country
• Export: Goods and services sold abroad and sent out
of a country

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Key Players in International Business

Large companies from the wealthiest nations

Firms from emerging markets

Small and medium-sized companies

Multinational corporation (MNC)

Born global firm

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Studying International Business is Important

• Most companies are either international or compete

with international companies
• Modes of operations may differ from those used
domestically
• The best way of conducting business may differ by
country
• An understanding helps you make better career
decisions
• An understanding helps you decide what
government policies to support

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International Business: Operations and Influences

1-5

Factors Contributing to Rapid Growth of

International Business

1. Increase in and expansion of technology

2. Liberalization of cross-border trade and resource
movements
3. Development of services that support
international business
4. Growing consumer pressures
5. Increased global competition
6. Changing political situations
7. Expanded cross-national cooperation

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 Companies Engage in International Business

• To Expand Sales: pursuing international sales

increases the potential market and potential profits
• To Acquire Resources: may give companies lower
costs, new and better products, additional
operating knowledge
• To Diversify or Reduce Risks: international
operations may reduce operating risk by
smoothing sales and profits, preventing
competitors from gaining advantage

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Modes of Operation in International Business

• Merchandise exports and imports

• Service exports and imports
– Tourism and Transportation
– Service Performance
– Asset Use
• Investments
– Foreign Direct Investment (FDI)
– Portfolio Investment

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 Multinational Enterprises

• Multinational Enterprises (MNEs) take a global

approach to markets and production. Sometimes they
are referred to as multinational corporations or
companies (MNCs) or transnational companies
(TNCs).

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Difference - International and Domestic Operations

• When operating abroad companies may have to

adjust their usual methods of carrying out
business.

• Foreign conditions often dictate a more suitable

method, and the operating modes used for
international business differ from those used on
a domestic level.

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Physical and Social Factors Affecting
International Business Operations

1-11

Competitive Factors Affecting International

Business

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 The Shrinking Globe

1500 -1840 1850 - 1930 1950s 1960s

Propeller Jet
Steam locomotives aircraft passenger
Best average speed of
average 65 mph. 300 - 400 aircraft,
horse-drawn coaches
Steamships average mph. 500 - 700
and sailing ships, 10
36 mph. mph.
mph.

1-4
 Businesses expanding beyond the border
• World trade increased more than 20 times between
’50 and ’98 and 25 time from ’70 to ’02
 FDI bilateral treaties up more than 10x from ’80 to
’02
 By 1998 60,000 parent companies:
– operated away from home markets through 500,000
subsidiaries / affiliates
– Produced US$11 trillion in global sales, 25% of
global output
 US, Japanese, Western European companies the
major investors in Europe, Asia, and North
America

Illustrative world trade flows ($billions)

194 Western Europe
intratrade: 1430
227
241
North America 200 Asia / Pacific Rim
intratrade: 465 intratrade: 632

382 393

279
365

381
140 Rest
of world
137
intratrade:
175
313
 Concepts of globalization - 1
• The tendency of world investment and business to
move from national and domestic markets to a
worldwide environment.
• A complex series of economic, social, technological,
cultural, and political changes seen as increasing
integration, and interaction between people and
companies in disparate locations.
• The integration of all national economies into one
global market, with one set of rules
• An ongoing process that deepens and broadens the
relationships and interdependence among countries.
International Business is a mechanism to bring about
globalization.

Concepts of globalization - 2
• The process of interaction and integration among people,
companies, and governments worldwide.
• As a complex and multifaceted phenomenon, which entails
the integration of local and national economies into a global,
unregulated market economy.
• The interweaving of markets, technology, information
systems and telecommunications systems in a way that
individual countries into one world
• A phenomenon by which the experience of everyday life, as
influenced by the diffusion of commodities and ideas, reflects
a standardization of cultural expressions around the world.

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 Concepts of globalization - 3
• Globalization: Trend toward greater economic,
cultural, political, and technological interdependence
among national institutions and economies
• Divided into three major areas according to the
academic literature:
– Economic globalization
– Cultural globalization
– Political globalization.

Measuring Globalization

• A.T. Kearney/Foreign Policy Globalization Index

– Economic
– Technological
– Personal Contact
– Political

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 Proponents of globalization - 1
• Development in the ICT sector
• Advancement in transportation and communication
technology.
• Increased global interactions comes the growth of
international trade, ideas, and culture.
• High rate of migration and cross border movement
• Fall of communism
• Liberalization of economy
• Change in values, norms and ideology
• International treaties and development agencies

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Impact

• Economic growth (increasing material

consumption) as sole desirable end
• Privatization and commodification of public
services, national and global commons
• Corporate deregulation and unrestricted
movement of capital across borders
• Increased corporate concentration
• Cultural and economic homogenization
Benefits
• Wider consumers choice
• Reduced cost and cheaper price
• High quality of living
• Collective productivity
• Labor mobility
• Improved learning
• Creates new market opportunities
• Levels uneven income streams
• Local buyers’ needs
• Global sustainability

Problems with globalization

• Economic growth and environmental stress
• Growing income inequality and personal stress
• Eliminates jobs in developed nations
• Lowers wages in developed nations
• Exploits workers in developing nations
• Increases wealth and efficiency in all nations
• Generates labor market flexibility in developed
nations
• Advances the economies of developing nations.
Global business
• Selling product throughout the global market with
little or no modification

Globalization Globalization
of markets of production

Dispersal of
Convergence in
production activities
buyer preferences in
worldwide to
markets around the
minimize costs or
world
maximize quality

Benefits of Globalization of Market

• Reduces marketing costs
• Creates new market opportunities
• Levels uneven income streams
• Local buyers’ needs
• Global sustainability
Benefits of Globalization of Production
• Access lower-cost workers
• Access technical expertise
• Access production inputs

Forces expediting global business

• General Agreement on Tariffs and Trade
(GATT)
• World Trade Organization (WTO)
• Other international organizations
– The World Bank
– The International Monetary Fund (IMF)
• Regional trade agreements
• Trade and national output
The Global Business
Environment

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