International

Management
Lecturer: Mr Sama Jawneh
Sjawneh@utg.edu.gm
Introduction
 Management of business operations for an
organization that conducts business in more
than one country
 Requires knowledge and skills above and
beyond normal business expertise
 Familiarity with the business regulations of
the nations in which the organization operates
 Understanding of local customs and laws
 Capability to conduct transactions that may
involve multiple currencies
INTERNATIONALIZATION PROCESS
 Firms increase awareness of the influence of
international activities on their future

 Establish & conduct transactions with foreign

firms
 Multi domestic strategy
 Multinational strategy
WHY INTERNATIONALIZATION
PROCESS/ GOALS
 Desire for continuous growth
 Domestic market saturation/Severe competition in

home country.
 Exploit new technological advantage
 Performance improvement
 To enhance higher rates of profits/To increase

market shares.
 Expanding production capacity.
 Limited home market.
 Political stability vs Instability.
 Human resources.
 Nearness to raw materials.
 Liberalization and Globalization.
PROBLEMS OF INTERNATIONAL
BUSINESS
 Political factor
 Huge foreign indebtedness
 Exchange rate instability
 Entry requirements
 Tariffs, quotas and trade barriers
 Competition
 Bureaucratic practices of Government
 Technological pirating (hackers)
TWO DIMENSIONS OF
INTERNATIONALIZATION
 INWARD PERSPECTIVE (internal)
 importing/ sourcing
 Acting as licensee from foreign company
 Establishing joint ventures
 Managing wholly owned subsidiary
TWO DIMENSIONS OF
INTERNATIONALIZATION (cont,
 OUTWARD PERSPECTIVES (external)
 Exporting
 Acting as a licensor to foreign company
 Joint venture outside home country
 Establishing or acquiring wholly owned

business outside
MANAGERS APPROACHES TO
INTERNATIONAL BUSINESS
 Ethnocentric (home country orientation)

 Polycentric (host-country orientation)

 Regiocentric (regional orientation)

 Geocentric (world wide orientation)

Ethnocentric (home country
orientation
 Domestic companies view foreign markets as
extension of domestic markets.

 Use home country personnel in key positions

around the world and rewarding them better
than locals.
Polycentric (host-country
orientation)
 Companies established foreign subsidiaries
and empowers its executives

 Local nationals occupy virtually all the key

positions in their respective local subsidiaries
and appoint and develop their own people
Regiocentric (regional orientation)

 Subsidiaries consider regional environment

for policy / strategy formulation.

 Recruit, develop, appraise and assign

managers on a regional basis
Geocentric (world wide orientation)

 Companies view the entire world as a single

unit.

 World orientation

 Personnel are employed from different part of

the world.
THE GLOBAL BUSINESS ENVIRONMENT
 Managers focus
 Market size & growth rates
 Population
 Trade volumes
 Natural recourse base
 Labor costs
 Financial position
 Opportunities & threats
THE WORLD OF INTERNTIONAL
TRADE
 Trade between countries & geographical regions
 Expanded more that the worlds output despite world wars
 Creates value for both producers & consumers
 Increase demand for exportable products ( increase price &
volume)
 Increase supply for importable products ( decrease price &
increase product choices)
 Efficient worldwide resource allocation
 Economies of scale advantage
 Increase exposure for firms & countries
 Increase competition with local firms


INTERNATIONAL TRADE
ENVIRONMENT
 Expansion of world export 10.2% average per
annum (1970-1980)
 USA largest trading nation (12.3% export &

18.9% import) 2000

 US trade deficit result to protectionism
 US Govt. enact “hit list” through negotiation

or trade sanction
 Nontariff restraints
 Emergence of WTO after GATT negotiation
FRAMEWORK FOR INTERNATIONAL
TRADE ANALYSIS
 PEST impact on firms comparative &
competitive advantage
 Countries market size import & export (Mkt

identification)
 Tariff & nontariff barriers to trade
 Trade intermediaries between producers &

buyers
 Absolute & Competitive Advantage
NEW TRADE THEORIES
 Inter-industry Trade (trade of products that
belong to different industries)

 Intra-industry Trade (trade of products that

belong to the same industry)
CLUSTERS OF INTERCONNECTED
COMPANIES
 Combination of number of firms & industries with
the aim to achieve & sustain competitive
advantage in the world trade
 REASONS
 capacity or resources constraints
 Build sustainable competitive advantage`
 Economics of scale advantage
 Increase access to wider markets
 Increase competition & cooperation (3
dimensions; productivity, innovation & formation
of new businesses)
BENEFITS OF TRADE
 Value creation for all participants
 Encourages foreign investment
 Source of foreign exchange
 Wider varieties of consumer choices
 Increase competition
 Boost infrastructural development