CHAPTER 11

We Live in a Global Econo

my
1-1 The Foundation of International
Business
1-2 International Business Basics

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INTERNATIONAL BUSINESS, 4e CHAPTER

LESSON 1-1 1
The Foundation of International Busin
ess
 Distinguish between domestic business and inte
rnational business.

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INTERNATIONAL BUSINESS, 4e
BASIS FOR COMPARISON
Meaning
DOMESTIC BUSINESS
A business is said to be dome
stic, when its economic trans
actions are conducted within
the geographical boundaries
of the country.
CHAPTER
INTERNATIONAL BUSINESS
1
International business is one
which is engaged in economic
transaction with several coun
tries in the world.

Area of operation Within the country Whole world

Quality standards Quite low Very high
Deals in Single currency Multiple currencies
Capital investment Less Huge
Restrictions Few Many
Nature of customers Homogeneous Heterogeneous

Business research It can be conducted easily. It is difficult to conduct resear

ch.
Mobility of factors of product Free Restricted
ion

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INTERNATIONAL BUSINESS, 4e CHAPTER

What Is International Business?

 All business activities needed to create, sh
ip, and sell goods and services across nati
onal borders
 Also called
 Global business
 International trade
 Foreign trade

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INTERNATIONAL BUSINESS, 4e CHAPTER

1
Why international business is imp
ortant?
 Material, Parts and Demand
(Cars and Oil; global dependency)
 Global opportunities (MacDonald)
 Improve political relations

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INTERNATIONAL BUSINESS, 4e CHAPTER

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When Did International Business
Start?
 China, India, and Japan 15,000 years ago
 Africa and South America thousands of ye
ars ago
 Eleventh century
 Fifteenth and sixteenth centuries
 Colonization

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INTERNATIONAL BUSINESS, 4e CHAPTER

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Selected Countries and Their Colo
nial Heritage
Year of Independen
Country Colonized By ce
Australia United Kingdom 1901
Brazil Portugal 1822
Cambodia France 1953
Canada France, United Kingdom 1867
Chad France 1960
Chile Spain 1818
Cyprus Turkey, United Kingdom 1960
El Salvador Spain 1821
Continued on next slide

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INTERNATIONAL BUSINESS, 4e CHAPTER

1
Selected Countries and Their Colo
nial Heritage
Continued from previous slide
Year of Independen
Country Colonized By ce
Iceland Norway, Denmark 1944
Mexico Spain 1821
Mozambique Portugal 1975
Namibia Germany, South Africa 1990
South Africa United Kingdom, Netherlands 1910
United States United Kingdom, France, Spain, R 1776
ussia
Vietnam France 1955

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INTERNATIONAL BUSINESS, 4e CHAPTER

Review concepts
 How does domestic business differ from
international business?
 Why is international business important?

© 2011 South-Western | Cengage Learning SLIDE 9

INTERNATIONAL BUSINESS, 4e CHAPTER

LESSON 1-2
1
International Business Basics

 The Fundamentals of International Trade

 Imports: products bought from businesse
s in other countries
 Exports: are products sold in other countri
es
 Trade barriers: restrictions that reduce fre
e trade among countries (tariff—a tax on i
mports)
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INTERNATIONAL BUSINESS, 4e CHAPTER

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INTERNATIONAL BUSINESS, 4e CHAPTER

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The International Business Enviro
nment
 These are the examples of factors that
make up or affect the international busi
ness operating environment
 Geographic conditions
 Cultural and social factors
 Political and legal factors
 Economic conditions

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The International Business Enviro
nment
GEOGRAPHIC CONDITIONS CULTURAL & SOCIAL FACTORS
● Climate ● Language
● Terrain and seaways ● Education
● Natural resources ● Religion
● Agriculture products ● Values and customs
● Social relationships

POLITICAL & LEGAL FACTORS ECONOMIC CONDITIONS

● Type of government ● Type of economic system
● Political stability ● Education level
● Government policies toward busi ● Type of industries
ness ● Technology

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INTERNATIONAL BUSINESS, 4e CHAPTER

1
The Global Business World
 Certain basic skills and knowledge are nee
ded to do business globally
 History
 Geography
 Foreign language
 Cultural awareness
 Study skills

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INTERNATIONAL BUSINESS, 4e CHAPTER

The Global Business World

 How consumers, workers and citizens e
ffect from IB?
 Consumer choice increases
 Career opportunity increases
 Awareness of the world

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