The process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture.
Interdependence of economic and cultural activities
Advances in transportation and telecommunications infrastructure, especially the Internet, are major factors
Enables people to get more variety, better quality, lower prices.
Growth in globalization of international business
Technology evolving and expanding, esp in transport and communications
Government lifting of trade restrictions
Growth in service industry of tools to facilitate international business
Consumer interest in international goods
Competition becoming global via the internet
Improvement in political ties in major economic powers
Cross national cooperation
Benefits that firms obtain by locating near each other
Venture launched to exploit global niche from begining
Independent authority over a geographic area. A nations freedom from external control.
A commercial enterprise that operates substantial facilities, in 2+ countries, does not consider any country national home.
Govs are reducing trade restrictions because
Citizen demand for more products and lower prices
Comp increases internal efficencies in domestic markets
Hope other countries reciprocate
International Business Definition
All commercial transactions that take place between two or more regions, countries and nations beyond their political boundaries.
Private and governmental, sales, investments, logistics, and transportation
Private for profit
Govt profit and political
Transaction of economic resources include capital, skills, people etc
Social disintergration, democracy breakdown, spread of diseases, increasing poverty, alienation
More rapid and extensive deterioration
The competative advantage
Products compete by cost or differentiation (brandimage or unique characteristics). Mass market or niche. Situation differs between countries.
Resources and exp
Size and resources compared to comp
Competition in each market
Success depends on if comp is local or also international
Costs of globalisation
Threat to national sovereignty
National priorities are sometimes compromised by international trade. Eg labour laws, minimum wage etc. External countries dont face same laws. Small countries rely on larger for markets and supplies. Poor countries inadequate capacity to deal with globalisation. Large companies dictate terms (eg tax free) and exploit legal loop holes, fovour home country
Growth and environmental stress
Brings economic growth, eats up non renewable resources.
Growing income inequality & personal stress
Inequality growing within and between countries
Reasons companies engage in int business
Diversify their revenue stream
Types of international organisations
Collaborative arrangments - Companies work together
Joint ventures, licensing agreements, management contracts, minority ownership,
Any company with foreign direct investments
How is International business different
Geography and demography. Affect where goods and services can be produced
Politics influences ease of business, law also, as well as culture and economy
# and strength of suppliers, customers and rival firms
Modes of operation in int business
Merch export and import
Most common IB transactions
Service export and import
Tourism and transportation, service performance (banking, rental, engineering, mgmt services) earnings via fees
Licensing agreements (contracts to use trademarks, patents, copyrights),