The Emergin g Global

 

Barriers to trade are coming dow Allowing free flow of goods, services & capital The volume of cross country trad is increasing Making the economies more interdependent More countries are joining the ranks of developed world

List of developed countries

 Andorra•   FaroeIslands•   Ireland•   Monaco•    Spain•   Australia•   Finland•   Israel•   Netherlands •   Sweden•   Austria•   France•   Italy•    New Zealand•   Switzerland•   Belgium•   Germany •  Japan•   Norway•   Turkey•   Bermuda  Greece•    Liechtenstein•   Portugal•   United Kingdom•    Canada•   HolySee•   Luxembourg•  SanMarino•    UnitedStates•   Denmark•  Iceland•   Malta•    South Africa

High income       Upper-middle income       Lower-middle income       Low income 

Strengthening of Global Economy

  

Adoption of liberal economic policies State-owned business privatized Deregulation adopted Markets opened to more competition Commitment increased to removing barriers to cross-border trade and investment

Powerful Market-oriented economies
     

Czech republic Poland Brazil India China South Africa

INDICATION
Favorable world for the practice of International business

Other side of the coin…..

Countries may pull back from the current liberal economic ideology if their experiences do not match their expectations LESSON TO LEARN FROM THE ASIAN CRISIS OF 1997-98

Asian financial Crisis

Trigger for the Asian crisis – 2nd July 1997 Started with the Thai govt. announcement Reached to Philippines and Malaysian Govt. Soon other economies become involved – Taiwan, Hong Kong, Singapore

 

Oct 1997 – crisis roll all over the world 1998 – Russia and Brazil Also threatened the economies of developed world including US Risks associated with global financial contagion are also greater

Modes of IB
 

Merchandise Exports & Imports Service Exports & Imports  Tourism & Transportation  Performance of services banking, insurance)  Use of assets (trademarks, patents, copyrights, licensing agreements)  Franchising Investments  Direct Investment  Portfolio Investment

Entry Modes
  

Which Markets to enter When to enter What scale

 How

??

Entry Modes
     

Exporting Licensing Franchising Joint-ventures Wholly-owned subsidiary Turnkey Projects

Exporting

Advantages

Ability to realize location and experience curve economies

Disadvantages
  

High Transport costs Trade barriers Problems with local marketing agents

Licensing

Advantages

Low development costs and risks

Disadvantages
 

Lack of control over technology Inability to realize location and experience curve economies Inability to engage in global strategic coordination

Franchising

Advantages

Low development costs and risks

Disadvantages
 

Lack of control over quality Inability to engage in global strategic coordination

Joint ventures

Advantages
  

Access to local partner’s knowledge Sharing development costs and risks Politically acceptable Lack of control over technology Inability to engage in global strategic coordination Inability to realize location and experience economies

Disadvantages
 

Wholly owned subsidiaries

Advantages
 

Protection of technology Ability to engage in global strategic coordination Ability to realize location and experience economies High costs and risks

Disadvantages

Sign up to vote on this title
UsefulNot useful