CH. 4 INTERNATIONAL ENVIRONMENT OF BUSINESS

Most information from Business Principles and Management and Thomas Friedman article

AFTER THIS CHAPTER, YOU SHOULD BE ABLE TO:

Describe the nature, growth, and importance of international trade and investment (Globalization).

Explain the reasons for the growth of international business.

Understand the factors related to being sent abroad on assignment

Identify cultural diversity in business

AFTER THIS CHAPTER, YOU SHOULD BE ABLE TO CONTINUED:

Identify communication and cultural barriers in communication

Identify business etiquette, ethics, and customs in foreign countries

Collaborate, Plan and organize a trip to a foreign country with a partner

Create a presentation with your research results.

BRIEF HISTORY OF THE EARLY 21ST CENTURY

What will the scholars say was the most crucial development?

A. 9/11 B. Iraq war C. The convergence of technology that allowed

India, China and many other countries to become part of the global supply chain for services and manufacturing, creating an explosion of wealth in the middle classes of the world’s two biggest nations

BTW: if you are one in a million in China, there are 1,300 people just like you; in India, 1,100.

Source: It's a Flat World, After All by Thomas Friedman

A BRIEF HISTORY OF GLOBALIZATION

Globalization 1.0 1492-1800 Horsepower, wind

power, steam power Sea Routes used to

connect the world together.

Globalization 2.0 1800-2000 Multi-national

companies People throughout the

world were investing in businesses abroad.

Foreign money used to finance big projects in U.S.

GLOBALIZATION 3.0

2000 - present Individuals to collaborate and compete globally Not horsepower, not hardware, but software Where do I fit into the global competition and

opportunities of the day? Competing with the company/person down the

street or in this school ---> competing with the company/person around the globe. Your future boss just graduated within the past couple of years.

THE SCOPE OF INTERNATIONAL BUSINESS Business activities that occur between

two or more countries. Every country has its own laws and

rules, its own currency, and its own traditions of doing business.

End of World War II in 1945 brought international business dominant aspect of economic life for most countries.

EXTENT OF INTERNATIONAL TRADE

Look everywhere and you will see names of foreign companies established in the US? Which ones do you know?

In order for the U.S. to compete today, it is important our workforce become a successful international communicator.

Made in America?

REASONS FOR GROWTH IN INTERNATIONAL BUSINESS

Guess? Businesses may be able to earn more

PROFIT from selling abroad May be able to charge higher prices

abroad than at home, where competition could be more intense

Cost of making goods is lower in a foreign country than at home – Cost Effective

Maquiladoras – Youtube Video

CURRENCY VALUES

International business involves dealing with money, or currency, of foreign countries.

Currencies have different names: Dollar, peso, yen… They all differ in value as well.

This is the key difference between doing business domestically and internationally

Exchange rate is the value of one country’s currency expressed in the currency of another.

CULTURAL DIFFERENCES

Culture refers to the customs, beliefs, values, and patterns of behavior of the people of a country or group. (Ex. Business women in China wear only neutral clothing. In Belize, men do not wear business suits).

It includes language, religion, attitudes toward work, authority, and family, practices regarding courtship, etiquette, gestures, joking, and manners and traditions. (Exs. “Thumbs-up” sign means okay, while in Australia it is a rude gesture)

Time to get to work and learn a new culture!!

If you think this is just a project… think about this

In 2001, India graduated almost a million more students from college than the United States did.

China graduates twice as many students with bachelor's degrees as the U.S., and they have six times as many graduates majoring in engineering.

When I was growing up, my parents used to say to me, ''Tom, finish your dinner -- people in China are starving.'' But after sailing to the edges of the flat world for a year, I am now telling my own daughters, ''Girls, finish your homework -- people in China and India are starving for your jobs.'‘ (Quote from, April 3, 2005, It's a Flat World, After All By THOMAS L. FRIEDMAN)