Czinkota Ronkainen Moffett


Chapter 1
The International Business Imperative


position in world trade and the impact international business has on the United States. To understand the U. To recognize the growth of global linkages today. To learn the definition of international business. 3 .Learning Objectives To understand the history and impact of international business. To appreciate the opportunities and challenges offered by international business.S.

insurance.Need for International Business More and more firms around the world are going global. and music companies 4 . film. banks. including: Manufacturing firms Service companies (i.e. consulting firms) Art.

and technology provides challenging employment opportunities reallocates resources. and shifts activities to a global level 5 . and capital across the world offers consumers new choices permits the acquisition of a wider variety of products facilitates the mobility of labor. capital.Need for International Business International business: causes the flow of ideas. services. makes preferential choices.

companies. 6 . and organizations.What is International Business? International business consists of transactions that are devised and carried out across national borders to satisfy the objectives of individuals.

Types of International Business Export-import trade Foreign direct investment Licensing Franchising Management contracts 7 .

and how can these threats be counteracted? 8 . good. or service fit into the international market? Should trade or investment be used to enter a foreign market? Should supplies be obtained domestically or abroad? What product adjustments are necessary to be responsive to local conditions? What are the threats from global competitors.International Business Questions How will an idea.

or Roman Peace ensured that merchants were able to travel safely and rapidly. central market locations. Rome developed a systematic law. all of which enabled international business to flourish in the Roman Empire. The growth of the Roman Empire occurred mainly through the linkages of business 9 .International Business and the Roman Empire Pax Romana. Common coinage simplified business transactions. and an effective communication system.

10 . former Roman allies cooperated with invaders.) The decline of the Roman Empire can be attributed in part to: infighting and increasing decadence the Pax Romana being no longer enforced the decline of use and acceptance of the common coinage declining levels of communication As a result.International Business and the Roman Empire (cont.

and services across national borders an encouragement of international communication and transportation Pax Americana. an American sponsored and enforced peace 11 . goods.United States: A Global Leader The United States has developed a world leadership position due to: its use of market-based transactions in the Western world a broad flow of ideas.

S. The result was a worldwide depression and the collapse of the world financial system. 12 . The act was passed in the hope that it would restore domestic employment. the U.The Smoot-Hawley Act The the 1930’s.S. passed the SmootHawley Act. which raised import duties to reduce the volume of goods coming into the U.

13 .5 trillion. the volume of international trade has expanded from $200 billion to over $7.Expansion of International Trade In the past 30 years. The sales of foreign affiliates of multinational corporations are now twice as high as global exports.

financial markets. and living standards. and individuals with trade. a reduction in coffee production in Brazil would affect individuals and economies worldwide. 14 . technology.Global Links Today International business has created a network of global links that bind countries. For example. institutions.

Regionalization is taking place. but is again on the rise. The participation of countries in world trade is shifting. 15 . resulting in trading blocs.Recent Changes in International Business Total world trade declined dramatically after 2000. The rate of globalization is accelerating.

16 . there has been a shift of manufacturing to countries with emerging economies. There has been an increase in the area of services trade in recent years.e. rubber or mining) had decreased.The Composition of Trade Between the 1960’s and the 1990’s the importance of manufactured goods increased while the role of primary commodities (i. More recently.

The Current U.472 Imports per Capita $4.525 428 199 3.622 125 5.767 3.S.500 4. International Trade Position Exports and Imports of Goods and Services per Capita for Selected Countries Country Australia Brazil China Japan Kenya United Kingdom United States Exports per Capita $4.962 17 .296 379 222 4.165 91 4.

participation in international business can help firms achieve economies of scale that cannot be achieved in domestic markets. 18 . On the microeconomic level. international business outflows are important on the macroeconomic level in terms of balancing the trade account.The Impact of International Business on the United States U.S.

Average Plant Salary and Wages (per worker. dollars per hour) 0 0 0 0 $ per hour 0 0 0 0 0 0 0 0 All Plants Small Plants Non-Exporters Exporters 19 Large Plants .

20 . the availability of international products and services can be accessed by individuals in many countries. from diverse economic backgrounds. for the first time in history.Globalization Because of globalization.

21 . and emerging market concerns. financial systems. addressing culture. politics. and law. Part Four discusses markets. policies.The Structure of this Book Part One introduces the importance of international business and its global linkages. Part Three provides coverage of the theory of international trade and investment and presents balance of payments issues. economic integration. Part Two presents the environment of international business.

) Part Five presents the strategy considerations surrounding international business. Part Six targets the operational issues surrounding international business. using an implementationoriented perspective. Part Seven concludes the book with a focus on the future of the field and the reader’s career.The Structure of this Book (cont. 22 .

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