the nature of international business part 1 s5
Post on 14-Apr-2018
216 Views
Preview:
TRANSCRIPT
-
7/29/2019 The Nature of International Business Part 1 S5
1/33
-
7/29/2019 The Nature of International Business Part 1 S5
2/33
Section One
The Nature of International Business
by Ball, McCulloch, Frantz,Geringer, and Minor
-
7/29/2019 The Nature of International Business Part 1 S5
3/33
1
The Rapid Change of
International Business
McGraw-Hill/Irwin Copyright 2006 The McGraw-Hill Companies, Inc. All rights reserved.
This chapter covers:
Internationalization of
markets
Various names given to
firms in multiple countries
Effect of the internet on
international business
Drivers leading firms to
globalization of productDifferences between
domestic and international
businesses
Three environments of
international business
International Business
by Ball, McCulloch, Frantz,
Geringer, and Minor
-
7/29/2019 The Nature of International Business Part 1 S5
4/33
Chapter Objectives
Appreciate the dramatic internationalization of markets.
Understand the various names given to firms that havesubstantial operations in more than one country.
Appreciate the profound effect of the Internet on many
international business firms. Understand the five kinds of drivers that are leading
international firms to the globalization of their operations.
Comprehend why international business differs from
domestic business. Describe the three environments--domestic, foreign, and
international--in which an international company operates
1-2
-
7/29/2019 The Nature of International Business Part 1 S5
5/33
International Business Experience
Seventy-nine percent of CEOs believe all businessmajors should have an introductory internationalbusiness course
Seventy percent will consider expertise in foreignlanguage and international exposure in hiringdecisions
The majority of CEOs consider courses related to
international business relevant to their company Managers wanting to advance will need to have
foreign experience1-3
-
7/29/2019 The Nature of International Business Part 1 S5
6/33
International Business Terminology
The United Nations uses transnational instead of multinational to
describe a firm doing business in more than onecountry.
Business people define a transnational as a company formed by a
merger of two firms of approximately the same sizethat are from two different countries
Unilever (Dutch-English) Dunlop-Pirelli (English-Italian)
1-4
-
7/29/2019 The Nature of International Business Part 1 S5
7/33
Definitions
International Business is a business whose activities are carried out across
national borders.
includes international trade and foreignmanufacturing
also includes a growing service industry in areas suchas
transportation, tourism, advertising, construction,retailing, wholesaling, and mass communication.
1-5
-
7/29/2019 The Nature of International Business Part 1 S5
8/33
Definitions
Foreign Business domestic operations within a foreign country
A Multidomestic Company has multicountry affiliates, each of which formulates
its own business strategy based on perceived marketdifferences.
A Global Company attempts to standardize and integrate operations
worldwide in all functional areas. International Company
describes both global and multidomestic companies1-6
-
7/29/2019 The Nature of International Business Part 1 S5
9/33
Global Company- By Whose Definition?
Have a worldwide presence in its market
Allen-Edmonds produces all shoes in Port Washington,Wisconsin ships to over 33 nations
Standardize operations worldwide in one or more functional
areas P&G has operations in more than 70 countries and sells
essentially the same products in over 140 countries
Integrate operations worldwide
Multicultural multinationals respond to local markets,produce products worldwide, exploit knowledge andtechnology on a global basis
1-7
-
7/29/2019 The Nature of International Business Part 1 S5
10/33
History of International Business
Phoenician and Greek merchants sent abroad beforetime of Christ
1600s British East India Company establishedbranches in Asia
1700s American colonial traders begin operations
FDI prior to Civil War by Colt Fire Arms and Ford
1800s Singer Sewing Machine first foreignproduction
1914 at least 37 American companies producingoverseas
1-8
-
7/29/2019 The Nature of International Business Part 1 S5
11/33
Globalization
Economic Globalization is the international integration of goods, technology,
labor, and capital.
refers to the implementation of global strategies
which link and coordinate a firms internationalactivities on a worldwide basis.
definition continues to broaden to include political, social, environmental, historical, geographical,
and cultural implications
1-9
-
7/29/2019 The Nature of International Business Part 1 S5
12/33
Globalization Forces
There are five major kindsof drivers that are leadinginternational firms to theglobalization of theiroperations.
Political Technological
Market
Cost
Competitive
1-10
-
7/29/2019 The Nature of International Business Part 1 S5
13/33
Globalization Forces
Political
There is a trend toward the unification and
socialization of the global community.
Preferential trading agreements NAFTA
European Union
1-11
-
7/29/2019 The Nature of International Business Part 1 S5
14/33
Globalization Forces
Technological Advancements in computers and communication
technology are permitting an increased flow of ideasand information across borders. The Internet and network computing enables small
companies to compete globally.
Business to business commerce is experiencingsignificant savings by using the Internet for businessexchanges. Web is used to find suppliers Web is used to process purchase orders
1-12
-
7/29/2019 The Nature of International Business Part 1 S5
15/33
Globalization Forces
Market As companies globalize,
they also become globalcustomers.
Companies followcustomers abroad
Saturation of the homemarket
Customer tastes and
lifestyles areconverging
1-13
-
7/29/2019 The Nature of International Business Part 1 S5
16/33
Globalization Forces
Cost
Economies of scale to reduce unit cost are always a
management goal.
Globalizing product lines can reduce development,
production, and inventory costs can help achieve
economies of scale.
Companies can also locate production in countrieswhere production costs are lower.
1-14
-
7/29/2019 The Nature of International Business Part 1 S5
17/33
Globalization Forces
Competitive
Competition continues to increase in intensity.
Newly industrialized and developing countries
Companies are defending their home markets fromcompetitors by entering the competitors homemarkets to distract them.
1-15
-
7/29/2019 The Nature of International Business Part 1 S5
18/33
Explosive Growth
Foreign Direct Investment
One commonly used measure of growth
Refers to direct investment into equipment,structures, and organizations in a foreigncountry sufficient to obtain managementcontrol
World stock of FDI rose from $519 billion in 1980 to$6.6 trillion in 2001.
1-16
-
7/29/2019 The Nature of International Business Part 1 S5
19/33
Explosive Growth
ExportingRefers to the transportation of any domestic
good or service to a destination outside the
home country or regionThe level of world merchandise exports more
than tripled from 1980 to 2002.
The level of service exports worldwide more
than quadrupled in the same period.
1-17
-
7/29/2019 The Nature of International Business Part 1 S5
20/33
Number of International Companies
In 2002, the United Nations estimated there were
over 63,800 companies with a total of over 866,000
foreign affiliates accounting for two-thirds of world
trade.
Foreign affiliates sales were $17.7 trillion in 2002.
Growth due in part to liberalization of governmentpolicies toward foreign investment
1-18
-
7/29/2019 The Nature of International Business Part 1 S5
21/33
2002 Top International Firms
Ranking Nation or Firm1. United States
2. Japan
3. Germany
4. United Kingdom5. France
6. China
7. Italy
8. Canada9. Mexico
10. Spain1-19
Total Sales for 2002 ($billion)$10,207.0
4,323.9
1,876.3
1,510.81,362.1
1,234.2
1,100.7
702.0597.0
296.5
-
7/29/2019 The Nature of International Business Part 1 S5
22/33
The Globalization Debate
Supporting
Free trade advances
economic development
Reduces poverty,
improves education,
health and life
expectancy
Expanded trade creates
more and better jobs Must manage the costs
and transition of workers
1-20
Globalization Concerns produces uneven results
across nations and people
Increases gap between
rich and poor has negative effects on
labor and labor standards
Jobs migrate todeveloping nations
contributes to decline inenvironment and healthconditions
-
7/29/2019 The Nature of International Business Part 1 S5
23/33
Forces in the Environment
Environment The sum of all forces
surrounding andinfluencing the life anddevelopment of the firm.
Forces can be classified as External forces
Management canexert influence butcannot control
Internal forces Management must
administer and adapt
1-21
-
7/29/2019 The Nature of International Business Part 1 S5
24/33
External Environmental Forces
Competitive Kind, number, location
Distributive
For goods and services
Economic GNP, labor cost
Socioeconomic
Characteristics ofpopulation
Financial Interest rates, inflation,
taxes1-22
Legal Laws governing business
Physical
Topography, climate
Political Form of government
Sociocultural
Attitudes, beliefs
Labor
Skills, attitudes
Technological
Equipment, skills
-
7/29/2019 The Nature of International Business Part 1 S5
25/33
Internal Environmental Forces
Factors of production
Capital, raw material,and people
Activities of theorganization
Personnel, finance,production, and
marketing
1-23
-
7/29/2019 The Nature of International Business Part 1 S5
26/33
Domestic Environment
Composed of all the uncontrollable forces
originating in the home country that surrounds and
influences the life and development of the firm
Managers most familiar
May affect foreign operations
1-24
-
7/29/2019 The Nature of International Business Part 1 S5
27/33
Foreign Environment
Operates differently than the domestic environmentfor the following reasons
Different force values
Changes difficult to assess
Particularly political and legal forces
Forces interrelated
1-25
-
7/29/2019 The Nature of International Business Part 1 S5
28/33
International Environment
The International Environment is the interaction between the domestic environmental
forces and the foreign environmental forces.
the interaction between the foreign environmentalforces of two countries when an affiliate in onecountry does business with customers in another.
Decision making is more complex
1-26
-
7/29/2019 The Nature of International Business Part 1 S5
29/33
International Business Model
International businesstransactions take place acrossnational borders and may
involve three environments. Domestic
Foreign
International
Figure 1.2 here
1-27
-
7/29/2019 The Nature of International Business Part 1 S5
30/33
United States Commercial Service
The U.S. Commercial Service offers four ways togrow your international sales:
world-class market research
trade events that promote your product or service toqualified buyers
introductions to qualified buyers and distributors
counselingthrough every step of the export process
www.export.gov/comm_svc/
http://www.buyusainfo.net/adsearch.cfm?search_type=int&loadnav=nohttp://www.export.gov/comm_svc/tradeevents.htmlhttp://www.export.gov/comm_svc/cs_products_services.htmlhttp://www.export.gov/comm_svc/consulting_advocacy.htmlhttp://www.export.gov/comm_svc/consulting_advocacy.htmlhttp://www.export.gov/comm_svc/cs_products_services.htmlhttp://www.export.gov/comm_svc/tradeevents.htmlhttp://www.buyusainfo.net/adsearch.cfm?search_type=int&loadnav=no -
7/29/2019 The Nature of International Business Part 1 S5
31/33
The Language of Trade (Examples)
AD VALOREM EQUIVALENT The duty collected under aspecific tariff or a compoundtariff expressed as a percentageof the value of the importeditem. Since a specific tariff is
calculated on the basis of units(of volume or weight), ratherthan value, and since prices canchange over time, the advalorem equivalent could differwhen calculated for differenttime periods.
www.usinfo.state.gov/products/pubs
AGREEMENT ON RULES OFORIGIN A WTO agreementaddressing the rules thatdetermine the country of originof an imported product. Rulesof origin play an important role
in international trade due to thefact that the application ofduties and other restrictions onentry often depends on thedeemed source of the imports.The agreement provides forharmonization in the practicesof WTO members indetermining the country oforigin of products.
-
7/29/2019 The Nature of International Business Part 1 S5
32/33
Top Five Global Companies*
Europe BP
Royal Dutch/ShellGroup
Daimler Chrysler
Total
Allianz
*According to Fortune 500
Asia Toyota Motor
Nippon Telegraphand Telephone
Hitachi
Honda Motor
Sony
-
7/29/2019 The Nature of International Business Part 1 S5
33/33
Ecommerce Trademark and Patent Services
Trademarks Trademark eBusiness
Search
File
Assign Ownership Search Assignments
Status
File TTAB Documents
Search & View TTABProceedings
www.ecommerce.gov
Patents Patent Electronic
Business Center
Electronic Filing(EFS)
Status Information(PAIR)
Assign Ownership
Search Assignments
Patent Searches Sequence Searches
(biotech)
Software
http://www.uspto.gov/main/trademarks.htmhttp://www.uspto.gov/main/trademarks.htmhttp://www.uspto.gov/main/trademarks.htmhttp://tess2.uspto.gov/bin/gate.exe?f=login&p_lang=english&p_d=trmkhttp://www.uspto.gov/teas/index.htmlhttp://etas.uspto.gov/http://assignments.uspto.gov/assignments/http://tarr.uspto.gov/http://estta.uspto.gov/http://ttabvue.uspto.gov/ttabvue/http://www.uspto.gov/ebc/index.htmlhttp://www.uspto.gov/ebc/index.htmlhttp://www.uspto.gov/ebc/index.htmlhttp://www.uspto.gov/ebc/efs/index.htmlhttp://portal.uspto.gov/external/portal/pairhttp://epas.uspto.gov/http://assignments.uspto.gov/assignments/q?db=pathttp://www.uspto.gov/patft/index.htmlhttp://seqdata.uspto.gov/http://seqdata.uspto.gov/http://www.uspto.gov/patft/index.htmlhttp://assignments.uspto.gov/assignments/q?db=pathttp://epas.uspto.gov/http://portal.uspto.gov/external/portal/pairhttp://www.uspto.gov/ebc/efs/index.htmlhttp://www.uspto.gov/ebc/index.htmlhttp://www.uspto.gov/ebc/index.htmlhttp://www.uspto.gov/ebc/index.htmlhttp://ttabvue.uspto.gov/ttabvue/http://estta.uspto.gov/http://tarr.uspto.gov/http://assignments.uspto.gov/assignments/http://etas.uspto.gov/http://www.uspto.gov/teas/index.htmlhttp://tess2.uspto.gov/bin/gate.exe?f=login&p_lang=english&p_d=trmkhttp://www.uspto.gov/main/trademarks.htmhttp://www.uspto.gov/main/trademarks.htmhttp://www.uspto.gov/main/trademarks.htm
top related