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