Introduction to International Business PDF

Slide 1.1 Part 1 The World of International Business Chapter 1 An Introduction to International Business Collinson, Narula and Rugma...

Slide 1.1 Part 1 The World of International Business Chapter 1 An Introduction to International Business Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.2 ‫اﻟﺗواﺻل‬ ‫ﻣ ﺣﻣ د ﺧﺎﻟ د ﺣﻣ د ي‬ [email protected] ‫ﻣﻊ ﻣراﻋﺎة ﻛﺗﺎﺑﺔ اﺳم اﻟﻣﻘرر ورﻗم اﻟﺷﻌﺑﺔ وﻋﻧوان اﻟواﺟب‬ Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved ‫‪Slide 1.3‬‬ ‫اﻻ ﺧ ﺗ ﺑ ﺎ ر ات و اﻟ ﺗ ﻘ ﯾ ﯾ م‬ ‫‪3‬‬ ‫اﻟدرﺟﺔ‬ ‫اﻷﺳﺑوع‬ ‫اﻟﻧﺷﺎط‬ ‫‪%10‬‬ ‫ﺟﻣﯾﻊ اﻷﺳﺎﺑﯾﻊ‬ ‫اﻟﺣﺿور واﻟﻣﺷﺎرﻛﺔ واﻟﻣﻧﺎﻗﺷﺔ‬ ‫‪%10‬‬ ‫‪3‬‬ ‫ﺣﺿور دورة ﺗدرﯾﺑﯾﺔ ‪ +‬ﺗﺳﻠﯾم‬ ‫اﻟﺷﮭﺎدة‬ ‫‪%20‬‬ ‫‪4&8‬‬ ‫اﻟﺗﻛﺎﻟﯾف‬ ‫‪%20‬‬ ‫‪6‬‬ ‫اﺧﺗﺑﺎر ﻧﺻﻔﻲ‬ ‫‪%40‬‬ ‫ﻧﮭﺎﯾﺔ اﻟﻔﺻل‬ ‫اﻻﺧﺗﺑﺎر اﻟﻧﮭﺎﺋﻲ‬ ‫‪%100‬‬ ‫اﻟﻣﺟﻣوع‬ ‫ﺗﻧﺑﯾﮫ ﻣﮭم‬ ‫* ﻻ ﺗوﺟد اﻋﻣﺎل ﻓﺻﻠﯾﺔ اﺿﺎﻓﯾﺔ ﻟﺗﺣﺳﯾن اﻟدرﺟﺎت!!‬ ‫* اﻟواﺟﺑﺎت واﻋﻣﺎل اﻟﺗﻛﺎﻟﯾف اﻟﻣﺳﻠﻣﺔ ﺧﺎرج ﻣوﻋدھﺎ ﺳﯾﻛون ﺗﻘﯾﯾﻣﮭﺎ ﺻﻔر!‬ ‫‪Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved‬‬ Slide 1.4 Course Content List of Topics 1 Introduction to International Business 2 The International Environment 3 International Trade Theories 4 Foreign Direct Investment 5 International Business Strategies and Organization 6 International opportunities and Modes of Entry 7 International Marketing 8 International Operations 9 International Financial Systems Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.5 An Introduction to International Business Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.6 Lecture outline Introduction What is international business? Globalization Technology and innovation Socio-political developments What are institutions? Multinational enterprises Foreign direct investment International business in the modern era Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.7 What is international business? International business: The study of transactions taking place across national borders for the purpose of satisfying the needs of individuals and organizations. Two of the most common types of international business activity are export/import and foreign direct investment (FDI). In recent years both have been on the rise. Watch and Discuss: What Is International Business? https://www.youtube.com/watch?v=oeMhzbuwzm o Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.8 Globalization Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.9 Globalization Economic Globalization: The growing interdependence of locations and economic actors across countries and regions. Consequences of Globalization: Figure 1.1 The consequences of globalization Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.10 Globalization (Continued) Interdependence: Internationalization vs Globalization. Mapping Globalization can be a difficult task. Driving Forces: Figure 1.2 The dynamics of globalization Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.11 Technology and innovation Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.12 Technology and innovation Technology implies the application of scientific knowledge for practical aims which involves applying scientific concepts that help us understand our environment. Invention is an idea, sketch, or model of any new or improved device, product, process, or system. Innovation occurs when the new product, device, or process is involved in a commercial transaction. Multiple inventions may be involved in achieving an innovation. More powerful and affordable technology has promoted fast, easy worldwide communication and improved production capabilities enabling organizations to operate more effectively in the international marketplace. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.13 Improved technology More powerful and affordable technology has promoted fast, easy worldwide communication and improved production capabilities enabling organizations to operate more effectively in the international marketplace. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.14 Socio-political developments Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.15 Socio-political developments Economic interdependence is partly driven by political events, and most importantly by political stability. Stability of policies, and the creation and maintenance of the appropriate environment, plays a significant role in promoting the appropriate environment for firms to prosper. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.16 What are institutions? Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.17 What are institutions? Institutions: “Sets of common habits, routines, established practices, rules, or laws that regulate the interaction between individuals and groups.” Formal: Rules that can be of the form of legal codes and laws. Can exist within a firm such as responsibilities, job descriptions, codes of conduct, and accounting and financial regulations. (E.g. GATT, WTO) Informal: Are not always laid out in the form of written instruction, but come out of usage and tradition and are often unwritten and tacit. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.18 What are institutions? (Continued) GATT: Established in 1947 to liberalize trade and to negotiate trade concessions among member countries. Today, the WTO is enforcing the provisions of the GATT. WTO: Established on January 1, 1995. An international organization that deals with the rules of trade among member countries. Enforces the provisions of the General Agreement on Tariffs and Trade (GATT). Acts as a dispute-settlement mechanism. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.19 Multinational enterprises Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.20 Multinational enterprises Multinational enterprises (MNE): “A firm that engages in value-added international business activities, that has affiliates in more than one country, and whose operations and activities in different locations are actively coordinated by one or more headquarters organizations.” Watch & Discuss: What is a Multinational Company? https://www.youtube.com/watch?v=Hv-C1ZK3J_8 Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.21 Misconceptions about MNEs Common misconceptions about MNEs: – MNEs have far-flung operations or earn most of their revenues overseas. – MNEs are globally monolithic and excessively powerful in political terms. – MNEs produce homogeneous products for the world market and through their efficient techniques are able to dominate local markets everywhere. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.22 Misconceptions about MNEs (Continued) In fact, – MNEs earn most of their revenues in their home regions. – The largest 500 MNEs are not spread around the world but are clustered around the triad. – These MNEs engage not in global competition but in triad/regional competition; this rivalry effectively eliminates enduring political advantage. – MNEs adapt their products for the local market. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.23 MNE activity Most MNE activity can be classified into two major categories: (1) Trade (exports and imports): Approximately more than 50 percent of all trade is made by the world’s largest 500 MNEs. (2) Foreign direct investment (FDI): Approximately 80 percent of all FDI is made by the world’s largest 500 MNEs. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.24 Foreign direct investment Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.25 Foreign direct investment Foreign direct investment (FDI) is equity funds invested in other nations. Inward FDI flows are money coming into a country during the reporting year, from foreign-owned MNEs to their subsidiaries in country A. In this case, country A is known as the host country. Outward FDI flows are money going out, from firms that are registered in country A (known as the home country) to their subsidiaries in other countries. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.26 International business in the modern era Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.27 International business in the modern era The international business environment has changed rapidly in recent years as a result of: – an overall slowdown of triad economies; – increased trade liberalization through trade agreements; – improvements in technology; – the emergence of SMEs. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.28 International business in the modern era (Continued) Much of the growth in new MNEs from emerging markets reflects the growth of China. However, the number of Chinese firms entering the Global Fortune 500 tripled between 2010 and 2014 years, the evidence suggests that few of them are truly internationalized. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.29 Small and medium-sized enterprises (SMEs) The definition of SMEs varies according to the nation. SMEs are firms with fewer than 250 employees in Europe, but fewer than 500 in the United States. MNEs often purchase from SMEs. This is because their specialized workforces, innovation and technology allow SMEs to provide goods and services more efficiently than if the MNE were to source these internally. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.30 The triad Most global transactions take place within and between three key regions: the United States, the European Union, and Japan; these are referred to as the “triad.” Watch & Discuss: Most Powerful Corporations in the World? https://www.youtube.com/watch?v=JV1NB70gLQI Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.31 The triad: the United States (US) The United States has the largest economy in the world with a GDP of over $17.96 trillion (2015 estimate). The United States is part of the North American Free Trade Agreement (NAFTA) with Canada and Mexico. The United States economy is significantly larger than that of its two trading partners and is therefore a triad member on its own. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.32 The triad: the European Union (EU) The EU (or EU27) is composed of the countries in the EU15 (Austria, Belgium, Denmark, Finland, Germany, Greece, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the UK) and 12 new, mainly Central European, countries that joined in 2004 and 2007. The collective GDP of the EU is greater than that of the United States and Japan. The EU27 is the world’s largest importer and exporter. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved Slide 1.33 The triad: Japan Japan is the second largest economy in Asia. Japan is the 4th largest importer and 4th largest exporter in the world. Slowdown of triad economies In the late 1990s and early 2000s, the United States, the EU, and Japan all experienced a reduction in economic activity, which, in turn, decreased international business activity. Collinson, Narula and Rugman, International Business, 7th edition, © 2017, 2013, 2009 Pearson education, Inc. All Rights Reserved