Download International Business: Strategy, Management, and the New Realities

1.Introduction to
International Business
International Business
Strategy Management & the New Realities
by
Cavusgil, Knight and Riesenberger
FM : Anis Gunawan,MM
[email protected]
International Business: Strategy, Management, and the New Realities
International Business: Strategy, Management, and the New Realities
5. Functional Area excellence
4. Entering and operating in
International Markets.
3.Strategy and opportunity
assessment
2. The environment of International Business
1. Foundation concepts of
International business
International Business: Strategy, Management, and the New Realities
International Business –
A Firm Level Activity
Performance of trade and
investment activities by firms
across national borders.
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The Nature of International
Business
1. All value-adding activities including sourcing,
manufacturing, and marketing, can be
performed in international locations
2. The subject of cross-border trade can be
products, services, capital, technology, know
how, and labor
3. Firms internationalize through exporting,
foreign direct investment, licensing,
franchising, and collaborative ventures
International Business: Strategy, Management, and the New Realities
Nafta
International Trade
Exchange of products and services
across national borders; typically
through exporting and importing.
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International Business: Strategy, Management, and the New Realities
Exporting
Sale of products or services to
customers located abroad, from
a base in the home country
or a third country.
Export
International Business: Strategy, Management, and the New Realities
Importing or Global Sourcing
Procurement of products or services
from suppliers located abroad for
consumption in the home country
or a third country.
International Business: Strategy, Management, and the New Realities
Comparing the Growth Rates of
World GDP and World Exports
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Dramatic Growth of FDI
Since the 1980s
September 11, 2001 interrupted FDI inflows with the
worldwide panic that ensued following the terrorist attacks
in the United States.
Developed economies = Australia, Canada, Japan, the
United States, and most countries in Western Europe.
Developing economies = Parts of Africa, Asia, and Latin
America. Of particular significance is the growth of FDI into
developing economies despite widespread poverty and less
investment capital than advanced economies.
The improved lives of billions are directly linked to world
trade and investment.
International Business: Strategy, Management, and the New Realities
Foreign Direct Investment (FDI) Inflows into World Regions
(in Billions of U.S. Dollars per Year)
Leading Countries in International
Services Trade
Service Industry Sectors That Are
Rapidly Internationalizing
The Four Risks of International Business
Geographic Location of Multinational
Enterprises, 2006
Globalization of Markets
and the Internationalization
of the Firm
International Business: Strategy, Management, and the New Realities
Globalization of Markets:
A Macro Concept
• Two mega trends have altered the international business
landscape: the globalization of markets or economies
and technological advances.
• Market globalization is a broad term referring to the
interconnectedness of national economies and the
growing interdependence of buyers, producers, suppliers,
and governments in different countries.
• Globalization allows firms to view the world as one large
marketplace for goods, services, capital, labor, and
knowledge.
International Business: Strategy, Management, and the New Realities
Phases of Globalization
1st Phase: 1830, peaking around 1880
Aided by railroads, ocean transport; resulting in the rise of manufacturing
and trading companies
2nd Phase: 1900, peaking late 1920s
Fueled by electricity and steel; early MNEs
3rd Phase: 1948, peaking around 1970
GATT, end of WW II, Marshall Plan; gradual reduction of barriers to trade
4th Phase: 1980, peaking around 1997
Fueled by Internet and other technologies: rapid liberalization in Emerging
Markets…
Phases of Globalization Since the 1800s
The Death of Distance
International Business: Strategy, Management, and the New Realities
Airbus 380
The Drivers and Consequences of
Market Globalization
Information Technology
• The cost of computer processing fell by 30 percent per year during the past
two decades, and continues to fall.
• The remarkable performance of the U.S. economy in the 1990s was due in
large part to aggressive integration of IT into firms’ value-chain activities,
which accounted for 45 percent of total business investments at the time.
• IT alters industry structure, changes the rules of competition, and creates
new ways to outperform rivals, thus forming the basis for competitive
advantage.
• Data, information, and experience can be readily shared via collaboration
software within a multinational company.
• Smaller firms can leverage IT to design and produce customized products
that can be targeted to narrow, cross-national niches.
• The impact of IT on our daily lives has been profound- cell phones, Google,
Yahoo, etc.
International Business: Strategy, Management, and the New Realities
Declining Cost of Global Communication
and Growing Number of Internet Users
Examples of How Firms Value Chain Activities
Can Be Internationalized
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