International Business and Management

Chap 1: Globalization and International Business

LO1: Definition and connection between globalization and international business

Globalization refers to the widening set of interdependent relationships among
people from different parts of a world that happens to be divided into nations.
-> All activities.
International business is all the commercial transactions between two or more
countries.
-> economic related.
Study international business due to the profitability it can gain.

LO2: Drivers of globalization and IB

Globalization is growing, but less pervasive than expected.
It has economic and noneconomic dimensions.
It is stimulated by several factors, notably the size of the country, income of the
citizens and variance among globalization aspects.
Factors in increased globalization:
1. Increase in application of technology:
Due to the need for innovation, firms globalize in order that they can apply modern
technology.
2. Liberalization of cross-border trade and resource movements:
With the provision of resources from different nations,
- Consumers can buy goods at a lower price.
- Competition from multinational companies drives domestic ones.
- A country lowering their barriers can convince others to do the same.
3. Development of services that support international business: bank credit
agreement,etc.
4. Growth of consumer pressures:
5. Increase in global competition
6. Changes in political situations and government policies: Gov prefer
international business
7. Expansion of cross-national cooperation:
- Gain reciprocal advantages
- Multinational problem solving: deal with the problems that one country
cannot
- To deal with areas of concerns that lie outside any nation’s territories.
LO3: Criticism of IB and globalization
1. Threats to national sovereignty
- The questions of local objectives and policies: International agreements can
somehow damage the benefits of citizens’ benefits.
- The question of small economies’ overdependence: China
- The question of cultural homogeneity
2. Environmental stress
3. Income inequality
4. -> Personal stress: lose jobs

LO4: Why engage in IB?

- Sales expansion: enter a bigger market
- Acquisitions of resources:
- Reduce risks: reduce the risk of failing in one country.

LO5: IB operating models

- Export and import of merchandise
- In terms of services,
+ Service export refers to the provider and receiver of payment.
+ Service import refers to the recipient and payer of the service.
We discuss the most important sectors of business:
- Tourism and Transportation
- Service performance: companies outsource their employees into the
international market, referred to as turnkey operations. Companies also pay
fee as a management contract for personnel outsourcing.
- Asset use:
+ Property intelligence as licensing contracts, the earnings is called royalties.
+ Franchising is a mode of business where franchisor (Teamviewer) and
franchisee (ManUtd).

Investment is considered as national service export and import because it

represents the uses of assets. Two forms:
 - FDI: When two or more companies share the ownership of an FDI -> The
operation is a joint venture. (there are also non-equity joint venture).
- Portfolio investment: is non-controlling financial interest in another entity. It
usually take two forms: stock or loans to the company.

International company refers to a company that operates in many countries.

All mentioned types including: licensing agreements, joint ventures is so called
collaborative arrangements.
MNE refers to any company with FDI. However, some argue that MNE needs to invest
a minimum amount of money to be. Also called MNC, TNC (Transnational company).

LO6: Factors affecting the ability to operate abroad

- Physical and social factors. Firms when going abroad should alter their
strategies in order to function effectively.
+ Geographical factors: weather, population,
+ Political policies:
+ Legal policies: domestic law and international law
+ Behavioral factors: anthropology (nhân loại học) , psychology and sociology
+ Economic factors
- Competitive factors:
+ For productors: price and differentiation
+ Resource and experience
+ Competitors faced in each market