Managing Global Business-

Market and Non-market strategy

Kshitij Awasthi
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 Globalization

• Growth in technology specially communication technology

• Greater interdependence amongst nations for growth

• Globalization of Production

• Efficient factors of productions (inputs material; Labor)

• Market for product and services

• Growth and Profitability needs

• Higher growth in developing economies; near-saturation in

developed economies for many products and services
• https://www.youtube.com/watch?v=3oTLyPPrZE4
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 International Business and the
Roman Empire
• Pax Romana, or Roman Peace ensured that
merchants were able to travel safely and rapidly.
• Common coinage simplified business transactions.
• Rome developed a systematic law, central market
locations, and an effective communication system; all
of which enabled international business to flourish in
the Roman Empire.
• The growth of the Roman Empire occurred mainly
through the linkages of business 4
 International Business and the
Roman Empire (cont.)
• The decline of the Roman Empire can be
attributed in part to:
• infighting and increasing decadence
• the Pax Romana being no longer enforced
• the decline of use and acceptance of the common coinage
• declining levels of communication
• As a result, former Roman allies cooperated with
invaders. 5
 United States: A Global Leader

• The United States has developed a world

leadership position due to:
• its use of market-based transactions in the Western
world
• a broad flow of ideas, goods, and services across
national borders
• an encouragement of international communication and
transportation
• Pax Americana, an American sponsored and enforced 6

peace
 The Smoot-Hawley Act

 The the 1930’s, the U.S. passed the Smoot-Hawley

Act, which raised import duties to reduce the
volume of goods coming into the U.S.

 The act was passed in the hope that it would restore

domestic employment.

 The result was a worldwide depression and the

collapse of the world financial system. 7
 Global Links Today

• International business has created a network of

global links that bind countries, institutions, and
individuals with trade, financial markets, technology,
and living standards.
• For example, a reduction in coffee production in Brazil
would affect individuals and economies worldwide.

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 Global and Regional Integration

• World Trade Organization (WTO)

• General Agreement on Tariffs and Trade (GATT)
• Regional Agreements
• North American Free Trade Agreement (NAFTA)
• U.S.—Central American Free Trade Agreement (CAFTA)
• Free Trade Agreement of the Americas (FTAA)
• European Union (EU)
• Association of Southeast Asian Nations (ASEAN)
 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
 Definition of International Business

• Lack of consensus on definition

• “International business is defined as organization that buys
and/or sells goods and services across two or more national boundaries,
even if management is located in a single country.”

• “International business consists of transactions that are devised and

carried out across national borders to satisfy the objectives of
individuals, companies, and organizations.”*

• Spectrum of International Business is very broad

• Trade, licensing, subsidiary, Foreign direct Investment…

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 How IB is different from a domestic business

• More complex environment in IB

• Legal and political system
• Culture and society
• Inflation
• Higher uncertainty in case of IB
• Rules of the game often ambiguous, contradictory
• Subject to rapid change, as compared to the domestic
environment
• ‘International business is really not like playing a whole new ball
game, however, it is like playing in a different ballpark’
• Domestic business is a special limited case of international
business
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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
Opportunities and Outcomes of International Strategy

Location
Choices

Demand

Supply