• To define globalization and international business and show how they affect each other. • To understand why companies engage in international business and why international business growth has accelerated. • To discuss the major criticisms of globalization • To become familiar with different ways in which a company can accomplish its global objectives



INC.DEFINITION OF GLOBALIZATION The broadening set of interdependent relationships among people from different parts of a world that happens to be divided into nations COPYRIGHT © 2009 PEARSON EDUCATION. PUBLISHING AS PRENTICE HALL 2-3 .

investments. and transportation—that take place between two or more countries.DEFINITION OF INTERNATIONAL BUSINESS All commercial transactions—including sales. Parties may include:  Private individuals  Individual companies  Groups of companies  Governmental agencies COPYRIGHT © 2009 PEARSON EDUCATION. Business transactions between parties from more than one country. PUBLISHING AS PRENTICE HALL 2-4 . INC.

REASONS THAT FIRMS ENGAGE IN INTERNATIONAL BUSINESS • Expanding sales: • Companies like: • • • • • • Volkswagen Ericsson IBM Sony Michelin Nestle • • Acquiring resources Minimizing risk COPYRIGHT © 2009 PEARSON EDUCATION. PUBLISHING AS PRENTICE HALL 2-5 . INC.

HOW DOES INTERNATIONAL BUSINESS DIFFER FROM DOMESTIC? • Currency conversion • Legal systems • Culture • Availability of resources 1-6 .

INTERNATIONAL BUSINESS ACTIVITIES • Exporting and Importing • International Investments • Licensing. and Management Contracts 1-7 . Franchising.

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 1-8 .

VISIBLE AND INVISIBLE TRADE Trade in Goods  Merchandise exports and imports  Visible trade Trade in Services  Service exports and imports  Invisible trade 1-9 .

PUBLISHING AS PRENTICE HALL 2-10 . INC.MODES OF OPERATION IN INTERNATIONAL BUSINESS • Merchandise exports and imports • Service exports and imports • Tourism and Transportation • Service Performance: Turnkey Operations Management Contracts • Asset Use • Investments COPYRIGHT © 2009 PEARSON EDUCATION.

INTERNATIONAL INVESTMENTS Capital supplied by residents of one country to residents of another Two categories:  Foreign direct investments  Joint Venture  Mixed Venture  Portfolio investments 1-11 .



OTHER FORMS OF INTERNATIONAL BUSINESS ACTIVITY Management contracts Licensing Franchising 1-14 .

TYPES OF INTERNATIONAL ORGANIZATIONS AND VARIATIONS OF ORGANIZATIONS Multinational Corporation (MNC) Multinational Enterprise (MNE) Multidomestic Company Transnational Company (TNC) 1-15 .

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 1-16 .

TABLE 1.1 THE LARGEST MNCS ExxonMobil Wal-Mart Royal Dutch Shell BP General Motors Chevron DaimlerChrysler Toyota Motor Ford Motor ConocoPhillips 1-17 .

MOTIVES FOR GLOBALIZATION • • • • To leverage core competencies To acquire resources and supplies To seek new markets To better compete with rivals 1-18 .

GLOBALIZATION AND EMERGING MARKETS Argentina Brazil China India Indonesia Mexico Poland South Africa South Korea Turkey 1-19 .

• Forces working against further globalization and international business will slow down both trends. PUBLISHING AS PRENTICE HALL 2-20 . • International business will grow primarily along regional rather than global lines. COPYRIGHT © 2009 PEARSON EDUCATION.VIEWS ON FUTURE OF INTERNATIONAL BUSINESS AND GLOBALIZATION • Further globalization is inevitable. INC.

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