CurrenL 1rends ln lnLernaLlonal 8uslness

International Business has become global because practically all 200 countries oI the world now
engage in international trade and investment to a signiIicant degree. This trend is Iacilitated by
easier and cheaper communication and transportation as well as by countries opening their
borders to Ioreign goods, services, capital, labor, technology and Iirms. This development is
threatened by wars, political upheavals, economic recessions and anti-Ioreign Ieelings - as has
always happened in the history oI business and is now expressed in opposition to "globalization."
International business is a complex topic, because the environment it operates in is constantly
changing. First, businesses are constantly pushing the Irontiers oI economic growth, technology,
culture, and politics, which also change the surrounding global society and global economic
context. Secondly, Iactors external to international business (e.g. developments in science and
inIormation technology) are constantly Iorcing international businesses to change how they
operate.
CrowLh ln lnformaLlon and CommunlcaLlon 1echnology
lnformaLlon and communlcaLlon Lechnologles also known as lC1 are changlng Lhe landscape ln
whlch buslnesses operaLe lC1 lncludes phones Lhe lnLerneL compuLers and oLher hardware
and dlglLal servlces LhaL faclllLaLe Lhe exchange of lnformaLlon across wlde geographlc areas
Aslde from engenderlng an enLlre new generaLlon of buslnesses (eg Lhe 1ech boom of Lhe
laLe 1990s Lhe growLh of Coogle Amazon ?ahoo eLc) lC1 has also reshaped how buslnesses
operaLe by provldlng Lhem wlLh fasL organlzed and (mosLly) quallLy lnformaLlon from a
number of sources (eg Lhlnk abouL how lhone MlcrosofL Cfflce and emall lmpacL dally
buslness operaLlons) ln Lhe words of [ournallsL 1homas lrledman Lhe world ls flaL because
of Lhe lmpacL of lC1s on globallzaLlon


CrowLh ln Lmerglng MarkeLs
1he growLh of emerglng markeLs (eg lndla Chlna 8razll and oLher parLs of Asla and SouLh
Amerlca especlally) has lmpacLed lnLernaLlonal buslness ln every way 1he emerglng markeLs
have slmulLaneously lncreased Lhe poLenLlal slze and worLh of currenL ma[or lnLernaLlonal
buslnesses (eg Ceneral LlecLrlc WalMarL and MlcrosofL) whlle also faclllLaLlng Lhe
emergence of a whole new generaLlon of lnnovaLlve companles Accordlng Lo A speclal reporL
on lnnovaLlon ln emerglng markeLs by 1he LconomlsL magazlne 1he emerglng world long a
source of cheap labour now rlvals Lhe rlch counLrles for buslness lnnovaLlon
lncreaslng lnfluence of SLaLes on lnLernaLlonal 8uslness
lnLernaLlonal buslness ls lncreaslngly lnfluenced by pollLlcs and governmenL lor example Lhe
global recesslon from 2008 Lo 2010 led Lo Lhe uS naLlonallzlng (even lf Lemporarlly) ma[or uS
companles llke Ceneral MoLors and ma[or sLaLes llke Chlna and Lhe unlLed klngdom passed
economlc sLlmulus packages LhaL were each valued aL leasL 3 percenL of Lhelr respecLlve Cus
(Cross uomesLlc roducL) lan 8remmer Lhe resldenL of Lhe leadlng pollLlcal rlsk flrm 1he
Lurasla Croup argues LhaL Lhe recenL era has heralded ln a new era of SLaLe CaplLallsm
whlch wlll drasLlcally change how buslnesses concelve of Lhe global economy and Lhe ablllLy for
buslnesses Lo remaln Lruly lndependenL
lL ls observed LhaL whlle forelgn dlrecL lnvesLmenL conLlnues Lo domlnaLe lnLernaLlonal
buslness
lnLernaLlonal conLracLlng as ouLsourclng ls growlng rapldly ln slgnlflcance as one of Lhe
key cosLreduclng elemenLs ln Lhe sLraLeglc opLlons of mulLlnaLlonal enLerprlses
1he sysLemlc naLure of MnLs neLworks leads Lo Lhe emergence of asymmeLrlc properLles of
and synerglsLlc relaLlons beLween Lhe consLlLuenL elemenLs (PCs reglonal PCs subsldlarles
and ouLsource parLner flrms eLc) ln concerL Lhe varlous neLwork nodes responslble for
manufacLurlng value added LransformaLlons and Lhe lnLerrelaLlonshlps accounLable for
economlc LransacLlons comprlse whaL has been referred Lo as Lhe 'global facLory'

lrom an lul or lnLernaLlonal conLracLlng perspecLlve CC are noLhlng new wlLh one
excepLlon 1he lncreaslng complexlLy of Lechnoeconomlc acLlvlLy whlch enabled Lhe
'componenLlzaLlon' of producLlon LhaL ls Lhe sllclng up of lndusLry sLages of producLlon and
flrm value chalns lnLo dlfferenL subsLages and Lhelr subsequenL global dlsLrlbuLlon over
geoeconomlc space buL wlLhln Lhe organlzaLlonal boundarles of MnLs ls now havlng Lhe
same lmpacL on servlces Lhrough dlglLlzaLlon of daLa lnformaLlon sLaLlsLlcs and knowledge
and lnformaLlon and communlcaLlons Lechnologles (lC1s) 1he relocaLlon of lnLernaLlonal
producLlon beglnnlng clrca 1973 ls belng added Lo by Lhe lnLernaLlonal relocaLlon of servlces
provlslon 1hls laLLer Lrend began ln earnesL clrca 1990 and ls conLlnulng apace
(l) slnce Lhe 1960s Lhe raLe of world Lrade growLh has ouLpaced LhaL of world
ouLpuL growLh
(ll) beLween 1980 and 2000 Lhe raLe of lul growLh ouLpaced LhaL of world Lrade
growLh
(lll) approxlmaLely LhreequarLers of world Lrade are held lnLernally wlLhln Lhe
lnLernaLlonal operaLlons of MnLs
1hls ls manlfesL as geospaLlally
dlsLrlbuLed and operaLlonally lnLegraLed and managed as crossborder
collaboraLlve lnLra and lnLerflrm relaLlons
(lv) Lhe growLh of verLlcally lnLegraLed lnLralndusLry Lrade whlch accounLs for
abouL 30 per cenL of world Lrade aL abouL 40 per cenL slnce 1973 has ouLpaced
LhaL of lul growLh
(v) Lhe growLh of flnanclal caplLallsm whlch has ouLpaced world ouLpuL growLh (aL
leasL unLll 'Lhe greaL recesslon' of 2008 arguably) 1haL ls Lhe raLlo of global
flnanclal asseLs Lo annual world ouLpuL has soared from 109 per cenL ln 1980 Lo
316 per cenL ln 2003 ln 2003 Lhe global sLock of core flnanclal asseLs
reached $140000 bllllon
MnLs lul exporLlmporL Lrade ln lnLermedlaLe producLs and SCC as well as Lhe flnance
caplLal LhaL enables global Lrade have Lherefore become Lhe preponderanL lnLegraLlng facLors
ln Lhe world economy lurLhermore Lrade ln lnLermedlaLe producLs and SCC resulLlng from
lul have become slgnlflcanL ln lmprovlng Lhe efflclency of resource allocaLlon
speclallzaLlon valuechaln dlsaggregaLlon and producLlvlLy ln hlghercosL locaLlons (PCLs)
as well as LCLs
1he currenL crlsls looks seL Lo acceleraLe Lhe shlfLlng of Lhe anchor of Lhe world economy from
Lhe
uS Lo Asla wlLh Lhe fuLure focus belng on Lhe fasLer growlng economles of Chlna lndla vleLnam
and lndonesla
1he nexL decade ls llkely Lo see Lhese Aslan economles playlng a leadlng role ln drlvlng global
growLh and a shlfLlng lnexorably easLwards of Lhe cenLre of economlc power As an lnLegral parL
of
Lhe global economlc sysLem all of Lhe counLrles ln Lhe reglon are golng Lo see a slowdown and
many companles are already feellng knock on effecLs
Powever an equal cerLalnLy ls LhaL Lhese economles wlll emerge sLronger and fasLer Lhan Lhelr
wesLern counLerparLs and are undoubLedly golng Lo be key drlvers of global demand over Lhe
nexL
decade
1hls shlfL ln economlc power has farreachlng lmpllcaLlons for global corporaLlons who unLll
now
were focuslng on Lhe developed wesLern markeLs and used Aslan markeLs as a sourclng or
exporL

AcLlvlLy WrlLe a one page summary of currenL Lrends ln lnLernaLlonal 8uslness
Submlsslon ls due on Wednesday lunch Llme (20/07/11)