International Business Management

ASSESSMENT
 Mid Term Exam (2 Assessments) 30%
 Course Project (2 Assessments) 20% Continuous
 Section Assignment 5% Assessment
 Self Structured Learning 5%
 Final exam 40%
 Course Guidelines
 No switching between lectures in relevance to time as long as the course is introduced on-
campus.
 Using face masks is necessary for attending lectures
 No marks are graded for the attendance (lectures and sections) but withdrawals and warnings
will be taking place when appropriate
 Sections will hold assignments that count for at least 5 marks
 Some extra material will be discussed in the section
 Case studies will be discussed and assigned in the sections.
 The course material, any new announcements, assignments and assessments will be posted to
the Moodle so check it regularly
 The course’s Whatsapp Group will be posted to the Moodle
 Mid-term and final assessments will be multiple choice questions.
 Videos discussed in the lectures and posted to the Moodle are considered course material and
are subject to be questioned in the mid-term and final assessments
 Any explanation discussed in class even if not written in the material are subject to be
questioned in the mid-term and final assessments so take notes of any further explanation
discusses.
Course Outline
 Lecture 1: The Environment of International Business
 Lecture 2: The Environment of International Business (Cont.)
 Lecture 3: National Differences in Political Economy
 Lecture 4: National Differences in Political Economy …
(Cont.)
 Lecture 5: Differences in Culture
 Lecture 6: Mid-Term Assessment 1
 Lecture 7: Mid-Term Assessment 2
Course Outline
 Lecture 8: Differences in Culture (Cont.)
 Lecture 9: Self Structured Learning
 Lecture 10: The Political Economy of International Trade and Entry
Strategy
 Lecture 11: Pre-Final Assessment 1(Word)
 Lecture 12: Pre-Final Assessment 2 (PPT)
 Lecture 13: Foreign Direct Investment (FDI)
 Lecture 14: International Organization and The Strategy of
International Business
 Lecture 15: Revision
The Environment of International
Business
Lecture 1
Lecture Outline
 Introduction to Globalization (Markets and Production)
 Evolution and Spread of Globalization
 The Changing Demographics of the Global Economy
Workshop
 What is Globalization?
 Watch the Video “What Is Globalization? Understand Our
Interconnected World”
Globalization of Markets and
Production
The Globalization of Markets
 This term refers to the merging of historically distinct and
separate national markets into one huge global
marketplace. Falling barriers to cross-border trade have
made it easier to sell internationally.
 It has been argued for some time that the tastes and
preferences of consumers in different nations are
beginning to converge on some global norm, thereby
helping to create a global market.
The Globalization of Markets
 Consumer products such as Citigroup credit cards, Coca-Cola
soft drinks, Sony PlayStation video games, McDonald’s
hamburgers, Starbucks coffee, and IKEA furniture are
frequently held up as prototypical examples of this trend.
 Firms such as those just cited are more than just benefactors
of this trend; they are also facilitators of it. By offering the
same basic product worldwide, they help to create a global
market.
Workshop

 Give examples of other brands known worldwide

The Globalization of Production

 This term refers to sourcing goods and services from locations

around the globe to take advantage of national differences in
the cost and quality of factors of production (such as labor,
energy, land, and capital).
 By using global sourcing, companies hope to lower their
overall cost structure or improve the quality or functionality of
their product offering, thereby allowing them to compete more
effectively.
Workshop
 Watch the Video “Melton Freeman and the Pencil”

 Give examples of other things that can be produced in

several places
Boeing 777
Example of Globalization
of Production

 Consider the Boeing’s 777, a commercial jet airliner. Eight Japanese

suppliers make parts for the fuselage ‫لطائرة‬NN‫ ا‬N‫جسم‬, doors, and wings; a supplier

in Singapore makes the doors for the nose landing gear; three suppliers in

Italy manufacture wing flaps; and so on. In total, foreign companies build

about 30 percent of the 777, by value.

 For its most recent jet airliner, the 787, Boeing has pushed this trend even

further, with some 65 percent of the total value of the aircraft scheduled to be

outsourced to foreign companies, 35 percent of which will go to three major

Japanese companies.
The Globalization of Production
 Early outsourcing efforts were primarily confined to
manufacturing activities increasingly, however, companies
are taking advantage of modern communications
technology, particularly the Internet, to outsource service
activities to low-cost producers in other nations.
The Globalization of Production

 In the health care sector for example, the Internet has

allowed some U.S hospitals to outsource some radiology
work to India, where images from MRI scans and the like
are read at night while U.S. physicians sleep and the
results are ready for them in the morning.
The Globalization of Production
 Many software companies, including IBM, now use
Indian engineers to perform maintenance functions on
software designed in the United States. The time
difference allows Indian engineers to run debugging tests
on software written in the United States when U.S.
engineers sleep, transmitting the corrected code back to
the United States over secure Internet connections so it is
ready for U.S. engineers to work on the following day.
Dispersing value-creation activities in this way can
compress the time and lower the costs required to develop
new software programs.
The Globalization of Production

 Other companies, from computer makers to banks, are

outsourcing customer service functions, such as customer
call centers, to developing nations where labor is cheaper
Evolution and Spread of Globalization
 Until the Great Depression of the 1930s, most countries had
some degree of protectionism
 After WWII, the U.S. and other nations realized the value of
freer trade
 established the General Agreement on Tariffs and Trade (GATT) - a
multilateral agreement to liberalize trade
Evolution and Spread of Globalization

 In the 1980s and early 1990s protectionist trends emerged

 First, Japan became a major factor in the global trading system.
The country’s economic strength, and huge trade surplus
prompted many countries to implement trade barriers.
 Second, the world’s largest economy, the U.S. was struggling
with persistent trade deficits which resulted in significant
problems in some industries like textiles and automobiles.
Workshop

• How did globalization help in increasing world

trade?
Importance of Globalization to Firms
 Lower Barriers to Trade and Investment
 Technological Change
Lower Barriers to Trade and Investment
 Lower barriers to trade and investment mean firms
can:
 view the world, rather than a single country, as their market
 base production in the optimal location for that activity
Declining Trade And Investment Barriers
1913 1950 1990 2016 2019
France 21% 18% 5.9% 1.9% 2%
Germany 20 26 5.9 1.9% 2%
Italy 18 25 5.9 1.9% 2%
30 - 5.3 2.35
Japan 1.6%
%
Holland 5 11 5.9 1.9% 2%
Sweden 20 9 4.4 1.9% 2%
Great Britain - 23 5.9 1.9% 2%
United 44 14 4.8 2.79
2.2%
States %
Average Tariff Rates on Manufactured Products as Percent of Value
Technological Change
 Technological change means:
 lower transportation costs - firms can disperse production to
economical, geographically separate locations
 lower information processing and communication costs - firms can
create and manage globally dispersed production systems
 low cost global communications networks - help create an
electronic global marketplace
 global communication networks and global media - create a
worldwide culture, and a global market for consumer products
The Changing Demographics
Of The Global Economy
Workshop
 What are Demographics?

• How can demographics affect globalization?

– Example: In Japan only around 8.4 children
were born for every 1,000 Japanese people over
last five years
The Changing Demographics
Of The Global Economy

 There has been a drastic change in the demographics

of the world economy in the last 30 years
 Four trends are important:
1. the Changing World Output and World Trade Picture

2. the Changing Foreign Direct Investment Picture

3. the Changing Nature of the Multinational Enterprise

4. the Changing World Order

The Changing World Output and -1
World Trade
 In 1960, the United States accounted for over 40% of world
economic activity
 By 2008, the United States accounted for just over 20% of
world economic activity
 A similar trend occurred in other developed countries
 The share of world output accounted for by developing nations
was rising and was expected to account for more than 4.4% of
world economic activity by 2020 (Before COVID-19)
 The Changing World Output and World
Trade
Share of world output
Country
Jan. Dec. Jan
1963 2015 2018
2020 2020 2021
United 40.3% 15.9% 2.9% 2% 3.4%- 5.1%
States
Germany 9.7 3.4 1.5% 1.2% 5.4%- 3.5%
France 6.3 2.4 1.7% 1.3% 9%- 5.5%
Italy 3.4 2.0 0.8% 0.9% 9.2%- 3%
Euro Area N/A 12.2 1.9% 1.7% 7.2%- 4.2%
Japan 5.5 4.4 0.3% 1.8% 5.1%- 3.1%
China N/A 16.6 6.6% 5.9% 2.3% 8.1%
Lecture Outline
 Introduction to Globalization (Markets and Production)
 Evolution and Spread of Globalization
 The Changing Demographics of the Global Economy