Week 1:INTRODUCTION TO

INTERNATIONAL BUSINESS
• WHAT IS A BUSINESS?
• WHAT IS INTERNATIONAL MANAGEMENT?
• WHAT IS BUSINESS INTERNATIONAL
• DEFINITION OF KEY TERMS
• GLOBALISATION FORCES
• FOUR BROAD RISK OF INTERNATIONAL BUSINESS
• THREE FORMS OF INTERNATIONAL BUSINESS
• DYNAMICS OF INTERNATIONAL ORGANISATIONS
• VIDEO:MEASURING GLOBALISATION BY PROFESSOR Mauro F. Guillén

LECTURER: SAMDI .E MUSA

  It is an organization or economic system where goods and services
are exchanged for one another or for money.
 Every business requires some form of investment and enough
WHAT IS A customers to whom its output can be sold on a consistent basis in
BUSINESS? order to make a profit.
 Businesses can be privately owned, not for profit or state-owned.
---Business Dictionary.com----
  IT IS THE PROCESS OF APPLYING MANAGEMENT CONCEPTS
AND TECHNIQUES IN A MULTINATIONAL ENVIRONMENT.
WHAT IS -----------Richard M.H and Fred L. (2000)-----------------------------
INTERNATIONAL
MANAGEMENT  A BUSINESS, International or domestic, requires the application
of effective management process in order to achieve its set goals
and objectives.
  International business is defined as all business activities,
including the creation and transfer of resources, goods, services,
know-how, skills, and information, which transcend national
boundaries.
 The resources may be raw materials, energy, technological
know-how and patents, capital, and organizational skills.
WHAT IS  Goods include manufactured parts, sub-assemblies, and
assemblies.
INTERNATIONAL  Services may include accounting, financial, legal, consulting,
BUSINESS import and export, health care, and transportation.
 Know-how may include product and process technological
innovations, copyrights, trademarks, and brands.
 Skills may include organizational and managerial skills.
 Information includes databases as well as information
networks.
Source: http://www.sagepub.com/menipaz/Chapter%201.pdf
  International Business is business whose activities involves
crossing national boarders. This definition includes not only
WHAT IS International trade and foreign manufacturing, but also the
growing service industry in such areas as transportation, tourism,
INTERNATIONAL banking, advertising, construction, retailing, wholesaling and mass
communication.
BUSINESSCONTD.
------------Don B. and Wendell M. (1999)-------------------------
  MULTIDOMESTIC COMPANY: It is an organization with Multi country
affiliates each of which formulates its own business strategies based
on perceived market differences.
 GLOBAL COMPANY: An organization that attempts to standardized
and integrate operations worldwide in all functional areas.
 INTERNATIONAL COMPANY: Either a global or a multi domestic
company.
DEFINITIONS OF  ENVIRONMENT as used here is the sum of all forces surrounding and
influencing the life and development of the firm. The forces
KEY TERMS themselves can be classified as external or external. Furthermore
management has no direct control over them, though it can exert
influences such as lobbing for a change in a law and heavily promoting
a new product that requires a change in a cultural attitude.
 INTERNATIONAL ENVIRONMENT: Involves interactions between
the domestic and foreign environmental forces or between set of
foreign environmental forces.
------------Don B. and Wendell M. (1999)-------------
  ECONOMIC AND SOCIOECONOMIC FORCES
 PHYSICAL AND ENVIRONMENTAL FORCES
 SOCIOCULTURAL FORCES
 POLITICAL FORCES
GLOBALISATION  LEGAL FORCES
FORCES.  LABOUR FORCES
(Forces influencing
International Business)  COMPETITIVE AND DISTRIBUTIVE FORCES
 FINANCIAL FORCES
 • Weak partner
• Operational problems
Commercial • Timing of entry
risk • Competitive intensity
• Poor execution of
strategy

FOUR RISKS OF Risks in

• Currency
exposure
Currency
INTERNATIONAL Cross-cultural Risks International
business
(financial risk)
• Asset valuation
• Foreign taxation
• Inflationary and

BUSINESS • Cultural differences

• Negotiation patterns
Transfer pricing

• Decision-making
Styles
• Ethical practices
• Government intervention, protectionism,
and
barriers to trade and investment
Country Risks • Bureaucracy, red tape, administrative
delays,
and corruption
• Lack of legal safeguards for intellectual
property rights
• Legislation unfavorable to foreign firms
• Economics failures and mismanagement
Source: http://www.sagepub.com/menipaz/Chapter%201.pdf • Social and political unrest and instability
  DOMESTIC MARKET EXTENSION BY EXPORTING: Firms
following this strategy locate all production function and as many
as the marketing function as possible in the home country. Export
managers must be knowledgeable about any differences between
domestic and foreign environmental forces that could have impact
THREE FORMS on the marketing mix.
 MULTI-DOMESTIC COMPANY Similar to a Holding company –
OF strong financial control from head quarters but whose subsidiary
have considerable autonomy in formulating their own business
INTERNATIONAL strategies based on perceived market differences Headquarter
managers maintain veto power.
BUSINESS  GLOBAL CORPORATION: Management of global corporation
(BASED ON THREE KINDS OF BUSINESS
STRATEGIES) look at the world economy as the single market. There is a strong
central authority with global managers of functional areas such as
marketing and production etc. who attempt to standardize their
operations world wide and there is no international division.
Managerial functions such as strategic planning and budgeting are
performed globally.
  The United Nations
 Multilateral development Banks
 The world Bank
THE DYNAMICS  International monetary Funds (IMF)
OF  World Trade Organization (WTO), previously the General
Agreement on Tariffs and Trade (GATT)
INTERNATIONAL
 Organization of Petroleum exporting Countries (OPEC)
ORGANISATIONS  The European Union
 Other Regional groupings of Nations
 Organization for Economic Corporation and Development (OECD)
 VIDEO

Measuring
Globalization by
Professor
Mauro F. Guillén
Professor at the Wharton School.

•Director of the Lauder Institute at the

University of Pennsylvania.

•I am originally from Spain.

•I have a passion: analyzing global trends.

•I’ve written 10 books and myriad articles on

various aspects of globalization
  Donald, B. Wendell H. McCulloch, Micheal Geringer, Paul L. Frantz,
RECOMMENDED Michael S. Minor (2005) International Business: The challenge of
READINGS global completion 10th edition, Irwin McGraw-Hill
 Mauro Guill ‚ Global Turning Points, Cambridge en and Emilio
Week 1 Ontiveros (2012) University Press