International Business PDF

International Business: Opportunities and Challenges in a Flattening World, 1e By Mason Carpenter and Sanjyot P. Dunung © Mason Carpenter 2011, published by Flat World Knowledge 1-1  This work is licensed under the...

International Business: Opportunities and Challenges in a Flattening World, 1e By Mason Carpenter and Sanjyot P. Dunung © Mason Carpenter 2011, published by Flat World Knowledge 1-1  This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA © Mason Carpenter 2011, published by Flat World Knowledge 1-2  Chapter 1 Introduction © Mason Carpenter 2011, published by Flat World Knowledge 1-3  Learning Objectives 1-4 ⚫ Know the definition of international business ⚫ Comprehend how strategic management is related to international business ⚫ Understand how entrepreneurship is related to international business ⚫ Know who has an interest in international business ⚫ Understand what a stakeholder is and why stakeholder analysis might be important in the study of international business © Mason Carpenter 2011, published by Flat World  Learning Objectives 1-5 ⚫ Recognize that an organization’s stakeholders include more than its suppliers and customers ⚫ Know the possible forms that international businesses can take ⚫ Understand the differences between exporting, importing, and foreign direct investment ⚫ See how governments and nongovernmental organizations can be international businesses ⚫ Understand the flattening world perspective in the globalization debate © Mason Carpenter 2011, published by Flat World  Learning Objectives 1-6 ⚫ Understand the multidomestic perspective in the globalization debate ⚫ Know the dimensions of the CAGE analytical framework ⚫ Learn about the field of ethics ⚫ Gain a general understanding of business ethics ⚫ See why business ethics might be more challenging in international settings © Mason Carpenter 2011, published by Flat World  The Definition of International Business 1-7 ⚫ Globalization: The shift toward a more interdependent and integrated global economy ⚪ In terms of markets: ⯍ Trade barriers are falling and buyer preferences are changing ⚪ In terms of production: ⯍ Where a company can source goods and services easily from other countries © Mason Carpenter 2011, published by Flat World  The Definition of International Business 1-8 ⚫ International business: All cross-border exchanges of goods, services, or resources between two or more nations ⚪ These exchanges can go beyond the exchange of money for physical goods to include international transfers of other resources, such as people, intellectual property, and contractual assets or liabilities ⚫ The entities involved in international business: ⚪ Large multinational firms with thousands of employees doing business in many countries around the world ⚪ A small one-person company acting as an importer or exporter © Mason Carpenter 2011, published by Flat World  Strategic Management and Entrepreneurship 1-9 ⚫ Strategic management: The body of knowledge that answers questions about the development and implementation of good strategies; mainly concerned with the determinants of firm performance ⚫ Strategy: The central, integrated, and externally oriented concept of how an organization will achieve its performance objectives © Mason Carpenter 2011, published by Flat World  Strategic Management and Entrepreneurship 1-10 ⚫ Basic tool of strategy – SWOT assessment ⚪ SWOT (strengths, weaknesses, opportunities, threats): A strategic management tool that helps an organization: ⯍ Take stock of its internal characteristics—strengths and weaknesses ⯍ Assess its external environmental conditions—opportunities and threats— that favor or threaten the organization’s strategy © Mason Carpenter 2011, published by Flat World  Strategic Management and Entrepreneurship 1-11 ⚫ Entrepreneurship: The recognition of opportunities (needs, wants, problems, and challenges) and the use or creation of resources to implement innovative ideas for new, thoughtfully planned ventures ⚫ Entrepreneur: A person who engages in entrepreneurship ⚫ Intrapreneurship: A form of entrepreneurship that takes place in a business that is already in existence ⚫ Intrapreneur: A person within an established business who takes direct responsibility for turning an idea into a profitable finished product through assertive risk taking and innovation © Mason Carpenter 2011, published by Flat World  Who is Interested in International Business? 1-12 ⚫ Individuals or organizations will have an interest in international business if it affects them in some way—positively or negatively ⚫ Stakeholder: An individual or organization whose interests may be affected as the result of what another individual or organization does ⚫ Stakeholder analysis: A technique used to identify and assess the importance of key people, groups of people, or institutions that may significantly influence the success of an activity, project, or business © Mason Carpenter 2011, published by Flat World  The Forms of International Business 1-13 ⚫ Business: A person or organization engaged in commerce with the aim of achieving a profit ⚪ Importer: A person or organization that sells products and services that are sourced from other countries ⚪ Exporter: A person or organization that sells products and services in foreign countries that are sourced from the home country ⚪ Foreign direct investment: The investment of foreign assets into domestic structures, equipment, and organizations ⚪ Location advantages: Advantages due to choice of foreign markets and can include better access to raw materials, less costly labor, key suppliers, key customers, energy, and natural resources © Mason Carpenter 2011, published by Flat World  Table 1.1 - Sample Three-Part Mission Statement 1-14 © Mason Carpenter 2011, published by Flat World  The Forms of International Business 1-15 ⚫ Government: The body of people that sets and administers public policy and exercises executive, political, and sovereign power through customs, institutions, and laws within a state, country, or other political unit ⚫ Nongovernmental organizations (NGOs): Any nonprofit, voluntary citizens’ group that is organized on a local, national, or international level © Mason Carpenter 2011, published by Flat World  The Globalization Debate 1-16 ⚫ It is a stark difference of opinion on how the internationalization of businesses is affecting countries’ cultural, consumer, and national identities—and whether these changes are desirable ⚫ The shift toward a more interdependent and integrated global economy is fueled largely by ⚪ Declining trade and investment barriers ⚪ New technologies, such as the Internet ⚫ The globalization debate surrounds whether and how fast markets are actually merging together © Mason Carpenter 2011, published by Flat World  We Live in a Flat World 1-17 ⚫ Flat-world view: A metaphor for viewing the world as a level playing field in terms of commerce, where all competitors have an equal opportunity ⚫ Multidomestic view: A metaphor for viewing the world’s markets as being more different than similar, such that the playing field differs in respective markets © Mason Carpenter 2011, published by Flat World  We Live in a Flat World 1-18 ⚫ According to Thomas Friedman: ⚪ Globalization 1.0 - Columbus’s discovery of the New World and ran from 1492 to about 1800 ⚪ Globalization 2.0 - From about 1800 to 2000, was disrupted by the Great Depression and both World Wars and was largely shaped by the emerging power of huge, multinational corporations ⚪ Globalization 3.0 - Major software advances have allowed an unprecedented number of people worldwide to work together with unlimited potential © Mason Carpenter 2011, published by Flat World  How the World Got Flat 1-19 ⚫ Friedman identifies ten major events that helped reshape the modern world and make it flat: ⚪ 11/9/89: When the walls came down and the windows went up ⚪ 8/9/95: When Netscape went public ⚪ Work-flow software: Let’s do lunch; Have your application talk to my application ⚪ Open-sourcing: Self-organizing, collaborative communities ⚪ Outsourcing: Y2K © Mason Carpenter 2011, published by Flat World  How the World Got Flat 1-20 ⚪ Offshoring: Running with gazelles, eating with lions ⚪ Supply-chaining: Eating sushi in Arkansas ⚪ Insourcing: What the guys in funny brown shorts are really doing ⚪ In-forming: Google, Yahoo!, MSN Web Search ⚪ The Steroids: Digital, mobile, personal, and virtual © Mason Carpenter 2011, published by Flat World  How the World Got Flat 1-21 ⚫ The ten factors had powerful roles in making the world smaller, but each worked in isolation until the convergence of three more powerful forces ⚪ New software and increased public familiarity with the Internet ⚪ The incorporation of that knowledge into business and personal communication ⚪ The market influx of billions of people from Asia and the former Soviet Union who want to become more prosperous—fast © Mason Carpenter 2011, published by Flat World  We Live in a Multidomestic World, Not a Flat One! 1-22 ⚫ International business professor Pankaj Ghemawat characterizes the world as as “semiglobalized” and “multidomestic” ⚫ CAGE framework: The analytical framework used to understand country and regional differences along the distance dimensions of culture, administration, geography, and economics © Mason Carpenter 2011, published by Flat World  Ethics and International Business 1-23 ⚫ Ethics: A branch of philosophy that seeks virtue and morality, addressing questions about “right” and “wrong” behavior for people in a variety of settings; the standards of behavior that tell how human beings ought to act ⚫ Business ethics: The branch of business that examines various kinds of activities and asks, “Is this business conduct ethically right or wrong?” © Mason Carpenter 2011, published by Flat World  What Ethics is Not 1-24 ⚫ Two of the biggest challenges to identifying ethical standards ⚪ What the standards should be based on? ⚪ How we apply those standards in specific situations? © Mason Carpenter 2011, published by Flat World