BUSI 1301 - Mod 1.pdf

Module 1 – The Challenging Context of International Business BUSI 1301 PROF. CARVALHO  International Business Challenges 1. Economic risks (exchange rate, inflation, taxes, trade deals) 2. Political risks (democracy, dictatorship, pseudo-dictatorship) 3. Different law and regulations 4. Int...

Module 1 – The Challenging Context of International Business BUSI 1301 PROF. CARVALHO  International Business Challenges 1. Economic risks (exchange rate, inflation, taxes, trade deals) 2. Political risks (democracy, dictatorship, pseudo-dictatorship) 3. Different law and regulations 4. International accounting practices 5. Cultural differences 6. International company structure 7. Payment methods 8. Global cost and pricing strategy 9. Supply chain complexity including shipping methods 10. Global environmental issues International Business Challenges What Is International Business?  International Business Challenges 1. Economic risks (exchange rate, inflation, taxes, trade deals) 2. Political risks (democracy, dictatorship, pseudo-dictatorship) 3. Different law and regulations 4. International accounting practices 5. Cultural differences 6. International company structure 7. Payment methods 8. Global cost and pricing strategy 9. Supply chain complexity including shipping methods 10. Global environmental issues Environmental Forces All businesses subject to external and internal forces Domestic businesses mostly deal with the domestic environment International businesses must consider domestic, foreign, and global environments Forces operate within each of these environments (Hyper)Globalization Industrial Revolution began to erode protectionist policies and beliefs By WWI, a number of American companies went abroad 1980s-today: (hyper)globalization Increasing Foreign Direct Investment (FDI) Investment in a business enterprise by a foreign entity resulting in some controlling ownership (not the same thing as foreign investment in stock markets) FDI and foreign investment in stock markets are NOT the same thing FDI is all about an investor gaining influence and an interest in the enterprise Why Globalize? The latest GDP reports show that of the U.S. fell by 2.3% in 2020, while China’s grew by 2.3% amid the coronavirus pandemic. The divergence means China will likely overtake the U.S. as the world’s largest economy a few years earlier than anticipated, economists said. Now in 2028! However, they pointed out the two countries have different economic structures, and China’s per capita GDP is still far below that of the U.S. Five Drivers of Globalization Click Here Politics Technology Markets Costs Competition Click Here Globalization: Good or Evil?