international business, 5th edition

Topic 1
an overview of
international
business
 Learning Objectives

• Discuss the meaning of international business

• Explain the importance of understanding
international business
• Identify and describe the basic forms of
international business activities
• Discuss the causes of globalization
• Comprehend the growing role of emerging
markets in the global economy

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 The Business of the Olympics

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 The Business of the Olympics

• Intense reflection of international business

• Government of games by IOC
• Competition for hosting
• Revenue sources for the Olympics
– Broadcast rights
– Corporate sponsorships

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 What Is International
Business?

• Business transactions between parties

from more than one country
• Parties may include
– Private individuals
– Individual companies
– Groups of companies
– Governmental agencies

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 How Does International Business
Differ from Domestic?

• Currency conversion
• Legal systems
• Culture
• Availability of resources

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 Why Study International
Business?

• Large organizations
• Foreign-owned subsidiaries
• Small businesses
• Competitors
• Business techniques and tools
• Cultural literacy

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 International
Business Activities

• Exporting and Importing

• International Investments
• Licensing, Franchising, and
Management Contracts

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 Exporting and Importing

• Exporting: selling of products made

in one’s own country for use or
resale in other countries
• Importing: buying of products made
in other countries for use or resale
in one’s own country

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 Figure 1.1 Exports as a % of GDP

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 Visible and Invisible Trade

• Trade in Goods
– Merchandise exports and imports
– Visible trade

• Trade in Services
– Service exports and imports
– Invisible trade

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 Exporting at Boeing

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 International Investments

• Capital supplied by residents of one

country to residents of another
• Two categories:
– Foreign direct investments
– Portfolio investments

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 Other Forms of
International Business Activity

Management
contracts

Licensing Franchising

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 Variations of Organizations

Multinational Corporation

Multinational Enterprise

Multinational Organization

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 Multinational Corporations
(MNCs)

• Engage in foreign direct investment

• Own and control foreign assets
• Buy resources in multiple countries
• Create goods and services in multiple
countries
• Sell goods and services in multiple
countries

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 Table 1.1 The Largest MNCs

• ExxonMobil • Chevron
• Wal-Mart • DaimlerChrysler
• Royal Dutch Shell • Toyota Motor
• BP • Ford Motor
• General Motors • ConocoPhillips

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 Motives for Globalization

• To leverage core competencies

• To acquire resources and supplies
• To seek new markets
• To better compete with rivals

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 Environmental Change and
Globalization

Changes in
Technological
Political
Changes
Environments

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 Figure 1.2 World Exports
as a % of World GDP

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 Figure 1.3 Foreign Direct
Investment Relative to World GDP

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 Globalization and
Emerging Markets

• Argentina • Mexico
• Brazil • Poland
• China • South Africa
• India • South Korea
• Indonesia • Turkey

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 Framework of Book

• The World’s Marketplaces

• International Environment
• Managing International Business
• Managing International Business
Operations

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