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an overview of
international
business
international business, 5th edition
chapter 1
Chapter 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
1-2
The Business of the Olympics
1-3
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
1-4
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
1-5
How Does International Business
Differ from Domestic?
• Currency conversion
• Legal systems
• Culture
• Availability of resources
1-6
Why Study International
Business?
• Large organizations
• Foreign-owned subsidiaries
• Small businesses
• Competitors
• Business techniques and tools
• Cultural literacy
1-7
International
Business Activities
• Exporting and Importing
• International Investments
• Licensing, Franchising, and
Management Contracts
1-8
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
1-9
Figure 1.1 Exports as a % of GDP
1-10
Visible and Invisible Trade
• Trade in Goods
– Merchandise exports and imports
– Visible trade
• Trade in Services
– Service exports and imports
– Invisible trade
1-11
Exporting at Boeing
1-12
International Investments
• Capital supplied by residents of one
country to residents of another
• Two categories:
– Foreign direct investments
– Portfolio investments
1-13
Other Forms of
International Business Activity
Management
contracts
Licensing
1-14
Franchising
Variations of Organizations
Multinational Corporation
Multinational Enterprise
Multinational Organization
1-15
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
1-16
Table 1.1 The Largest MNCs
1-17
• ExxonMobil
• Chevron
• Wal-Mart
• DaimlerChrysler
• Royal Dutch Shell
• Toyota Motor
• BP
• Ford Motor
• General Motors
• ConocoPhillips
Motives for Globalization
• To leverage core competencies
• To acquire resources and supplies
• To seek new markets
• To better compete with rivals
1-18
Environmental Change and
Globalization
Changes in
Political
Environments
1-19
Technological
Changes
Figure 1.2 World Exports
as a % of World GDP
1-20
Figure 1.3 Foreign Direct
Investment Relative to World GDP
1-21
Globalization and
Emerging Markets
1-22
• Argentina
• Mexico
• Brazil
• Poland
• China
• South Africa
• India
• South Korea
• Indonesia
• Turkey
Framework of Book
• The World’s Marketplaces
• International Environment
• Managing International Business
• Managing International Business
Operations
1-23