International Business: An Overview

• International Business involves the production or distribution of goods/services across country borders.
• Globalization is the shift toward a more interdependent and integrated global economy.
• International business includes cross-border exchange of goods, services & resources between nations.
• These exchanges go beyond money for physical goods to include international resource transfers like:
  • People
  • Intellectual property, patents, copyrights, brand trademarks & data

Involvement in International Business

• Large multinational firms with thousands of employees operate in many countries.
• Small one-person companies act as importers or exporters.
• Strategic management answers questions about the development and implementation of good strategies.
• Strategic management is mainly concerned with determinants of firm performance.
• Strategy is how an organization will achieve its performance objectives.
• SWOT Analysis (Strengths, Weakness, Opportunity, Threats) is a basic tool for strategy
• Strength & Weaknesses are internal characteristics to formulate an action plan.
• Opportunities and threats are external factors that help assess environmental conditions.
• Entrepreneurship is recognizing opportunities (needs, wants, problems, challenges) and resource creation
• Entrepreneurship will help you think about opportunities available when you connect new ideas.
• An entrepreneur is a person who engages in entrepreneurship.

Interested in International Business

• International business refers to a broad set of entities and activities.
• Stakeholders are individuals/organizations whose interests are affected by another's actions.
• Stakeholder analysis identifies and assesses the importance of key people, groups, and institutions.
• Individuals or organizations will have an interest in international business if their affected somehow.
• Government has concerns about taxes and important economic interest.
• The government is also responsible for protecting the environment.
• Labour is a stakeholder.
• International Business spans business, government, and non-governmental organizations (NGOs).
• Business involves a person/organization engaged in commerce with the aim of achieving a profit
• Business profit is typically gauged in financial or economic terms.
• A firm's international part can vary from importing to exporting & significant operations.
• An Importer sells products/services sourced from other countries.
• An Exporter sells products/services in foreign countries sourced from their home country.
• Foreign Direct Investment involves a firm investing assets directly into a foreign country's buildings.
• Foreign offices are carbon copies of the parent firm.
• Location advantages has a choice of foreign location that generates unique advantages like:
  • Include better access to raw materials, less costly labor, key suppliers, key customers, energy, & natural resources.
• A trade-off between global efficiency and local responsiveness determines firm performance.

International Forms of Government

• Government is how the body of people set and administers public policy and exercises:
  • Executive
  • Political
  • Sovereign power
• Governmental power occurs through customs, institutions, and laws within a state.
• National governments maintain embassies and consulates in foreign countries.
• National governments participate in international treaties related to:
  • Trade, environment, and child labor
• North American Free Trade Agreement (NAFTA) was signed between the US, Canada, and Mexico that created a trade bloc.
• The Kyoto Protocol is an agreement aimed at combating global warming.
• European Community (EC) agreements span trade, the environment, labor, and business issues.
• The Atlanta Agreement is an agreement to eliminate child labor in soccer ball production in Pakistan.
• United Nations (UN) or World Trade Organization (WTO) are practically separate governments.

Nongovernmental Organizations

• National Nongovernmental Organizations (NGOs) are any nonprofit, voluntary citizens' groups
• International NGOs whose operations cross borders date back to at least 1839 & fostered globalization.
• Rotary International was founded in 1905.

The Globalization Debate

• Globalization debate is on how the internationalization of businesses is affecting national identities.
• How fast markets are actively moving and whether and how fast markets are actually merging together.
• Globalization shifts toward a more interdependent and integrated global economy largely by:
  • Declining trade and investment barriers
  • New technologies
• Thomas Friedman wrote the 2005 best seller, The World is Flat.
• Globalization has a number of stages.
• Globalization 1.0 started with Columbus's discovery of the New World (1492-1800).
• It was driven by nationalism, religion and characterized by industrial power countries.
• Globalization 2.0 ran from about 1800 to 2000.
• It was disrupted by the Great Depression, World Wars, and emerging power of corporations.
• It grew with the European mercantile stock companies expanded for new markets and cheaper goods.
• Globalization 3.0 began around 2000 with modern communications & interconnectivity of electronics.
• Mumbai taximan where the friendly local accountants do your taxes via servers to a team in Mumbai, India.
• Companies can outsource service/business that can be broken down to key components and computerized.
• Home sourcing allows people to work at home and anywhere.
• Christopher Columbus actually set sail for India in 1492, he never found India, but he called the people he met "Indians".
• "The World is Flat" a metaphor for the playing field.

We Live in a Multidomestic World

• Pankaj Ghemawat says the world is "semiglobalized' and "multidomestic".
• CAGE Analysis/Framework studies "barriers to cross-border economic activity”.
• Cultural differences between two countries reduce their economic exchange.
• Culture refers to a people's norms, beliefs, and practices.
• Cultural distances are differences based on language, norms, or national identity.
• Genetically modified foods (GMOs) are common in North America and disdained in Europe.
• Bilateral trade flows shows administratively similar countries trade more with each other.
• Administrative factors include the same sorts of laws, regulations, institutions, & policies.
• Administrative distance has historical governmental ties.
• Members in the same trading block is a key similarity
• Most obvious difference between countries is distance and that trade goes down.
• Geographic differences include time zones, access to ports, shared borders, topography, and climate.
• Economic distance is the differences in demographic and socioeconomic conditions.
• An economic difference between the countries is size as compared by GDP and another is per capita income.
• CAGE dimensions share the common notion of distance.
• CAGE Analysis examines an organization's industry and products in culture.
• CAGE also examines administration that involves whether other countries coddle certain industries.
• CAGE examines factors involved in geography and economics.