“The best teachers are those who show you where to look, but

don't tell you what to see.”  Alexandra K Trenfor

The International Business Environment

2022-S02-PGE-M1-MGT-0632-E-L-BOD

L1 Introduction
Readings
Morrison (2017) Ch1+2
Hamilton and Webster (2012) Ch1

Dr Dimitrios Tsagdis dimitrios.tsagdis@kedgebs.com

 Dispelling common misconceptions

1. Investment (by many equal investors) not custom

2. ‘I’m doing: purchasing/law/marketing...’ (1 IBE)

3. Past data are not out-dated

Dr Dimitrios Tsagdis IBE: Introduction Slide 2

 Lecture Outline

A. Introduction to IBE:
1. The ‘organisations’ populating the IBE
2. Dealing with the IBE
3. The territories involved

B. Introduction to the course:

4. Purpose/learning outcomes
5. Syllabus, Delivery, and Assessment
6. Reading and Resources List

Dr Dimitrios Tsagdis IBE: Introduction Slide 3

 n

Dr Dimitrios Tsagdis IBE: Introduction Slide 4

 n

What sort of ‘organisations’ are

encountered in the IBE? (1 of 3)
Corporations, vary according to
motive: for/non-profit, charities, social enterprises…
geographical scope: domestic vs. international, multinational, transnational…
ownership structure: family, ltd, plcn, state-owned,
size: SME, LSE (HQs,
(Sovereign wealth funds, SOE)
subsidiaries…)
Institutions, vary according to
formality: formal, informal L6 DSC IBE
ownership: private, public, semi-public (NGOs)
geographical scope: national, trading bloc, supranational…
Markets, vary according to
what is being marketed: products, commodities, services, financial, labour…
level of regulation/competition: competitive, oligopolies…

Economies L3, vary according to Trading

resource allocation mechanism: market vs. planned/controlled blocks?
level of development: developed, less developed, transition…
size and growth…
Dr Dimitrios Tsagdis IBE: Introduction Slide 5
 n

What sort of ‘organisations’ are

encountered in the IBE? (2 of 3)

Dr Dimitrios Tsagdis IBE: Introduction Slide 6

 n

What sort of ‘organisations’ are

encountered in the IBE? (3a of 3)
Several overlaps !!!
Institution
Institution
Firm
Firm
Institution Firm Firm Firm
Firm
Firm Firm Firm
Firm Institution
Legend
Firm Firm
Institution Institution
Market Firm Firm
Economy

Dr Dimitrios Tsagdis +IBE:

cause we can override biology
Introduction Slide 7
 n

What sort of ‘organisations’ are

encountered in the IBE? (3b of 3)
Several overlaps !!!
Institution
Institution
Firm
Firm
VISIT:
Institution Firm Firm Firm
Firm
https://www.youtube.com/watch?v=Aaxw4zbULMs
Firm Firm Firm Institution Firm
Legend
Firm Firm
Institution Institution
Market Firm Firm
Economy

Dr Dimitrios Tsagdis IBE: Introduction Slide 8

 Metronomes & dynamics
 Each (of the five) metronomes at the beginning has a
different dynamic; as a shorthand we can say it is a dynamic
(system).
 Each of the initial five dynamics comprise various elements
like the pendulum, its housing, base.
 Also each (of the initial five) dynamics has different phases
or stages; e.g. the up or down swing of the pendulum.
 When the metronomes are placed with the cardboard over
the two empty soda cans the dynamics become connected,
linked, and eventually synchronise.
 This new dynamic system has different components; i.e. in
addition to the previous the two empty soda cans.
 The new dynamic has common phases (i.e. pendulum swings)
Dr Dimitrios Tsagdis IBE: Introduction Slide 9
 SPACE?
NB see respective LEARN entry

ent
o nm
n vir
lE
terna
In

The Globe
Nation states - how many ? what counts as a state? who is doing the counting?
GWP (PPP) …….……..…?
Population.…….…........…?
Surface………,,,,,,,,,,,,,,,…?
Dr Dimitrios Tsagdis IBE: Introduction Slide 10
 n

ent
o nm
n vir
lE
terna
In

it?
The Globe it h
Nation states: 193 UN members (+?) vs. 217 WB listed territories l w
a
GWP (PPP) : USD 85 trillion (2020) de
to
Population : 7.9 billion ow
Surface: 146 m Km2 H
Dr Dimitrios Tsagdis IBE: Introduction Slide 11
 How do we deal with IBE?
strongly recommended (20 min podcast+transcipt):
https://www.pnas.org/post/podcast/science-misinformation

Dr Dimitrios Tsagdis IBE: Introduction Slide 12

 n
How do we deal with the IBE in
this course? (1/2)
IBE (reality) appears in layers and connections
with a different way of talking, understanding,… stories about it

The stories we say about these have to be compatible

An individual may be unable to tell a story about all aspects of all

layers/connections or even being totally ignorant of some of them.

According to this module’s ILOs (see part B/Guide) you should understand

enough to articulate a coherent, valid, interesting... (and ideally true) story

about the relevant layers and connections thereof.

Dr Dimitrios Tsagdis IBE: Introduction Slide 13
 How do we deal with the IBE? (2/2)

fallacies:
a) we understand everything (illusion of knowledge/hubris),
b) in a few years we’ll understand everything (postponement),
c) we don’t understanding anything (resignation/random),
d) following dogma/power (e.g. prophets/experts),
e) ‘blind men’ and the elephant (wrong inference)

...so the right thing to do is to say:

here is a ‘dividing line’, we understand some things and we do not
understand others (and this is what they are).
NB Given that you come from different ‘paths’ your dividing lines differ.
if a layer/connection in question is stopping you from articulating a story
with the aforementioned characteristics,
then go above/below, left/right... until you develop the sought story
Dr Dimitrios Tsagdis IBE: Introduction Slide 14
 k1)
ac
(H
Dealing with the IBE:
A. Territorial scales

World Different levels of

(globe) Territorial
resolution/granularity
Events cohabit
Western Europe (NUTS)
the same (trading block/triad)
spatiotemporal
locality; i.e. UK
any event takes place at
all levels at the same time. (nation state)
Cultural
It is an observer that
renders certain ‘events’ observable at London
higher or lower levels of resolution. (city/region)
Limitations? Source: Brooks et al (2004:13)
Dr Dimitrios Tsagdis IBE: Introduction Slide 15
 n
)
B. Recognising & grouping territories
ac k2 (e.g. for pedagogical, business, legislative purposes)
(H
Where is
Cyprus &
Greenland?
(according
to the UN)
visit:
https://
unstats.un.o
rg/unsd/
methodolog
y/m49/
US Department of State organization chart (2020)
https://www.state.gov/department-of-state-organization-chart/

IEA (2021) Key World Energy Statistics.

https://www.iea.org/reports/key-world-energy-statistics-2021/supply

Dr Dimitrios Tsagdis IBE: Introduction Slide 16

 )
a ck
3 Conceptual apparatus/history of thought
(H
(e.g. Projection geometry)

3) Sorting the IBE

elements into 12
distinct IB
1) Globe approximation environments

2) Elements of the IBE

5) Mapping their interconnections

4) Unfolding the complexity of the 12 IB environments

Dr Dimitrios Tsagdis IBE: Introduction Slide 17

 Dealing with the IBE: Conceptual scales
Structuring their investigation in this course
Learning about each
environment can be
done in a number of
ways…

Organisation

5 Forces?
PEST-LE?
(cover only 4-6 IBEs)
Dr Dimitrios Tsagdis IBE: Introduction Slide 18
source: Shenkar and Luo (2004:267); Daniels et al. (2004:Ch13) Grouping IBE indicators (1/2)

Macro-context
Regulatory factors: Industrial Policies, FDI policies, Availability of special
zones
Socio-political factors: Political instability, Cultural barriers, Local business
practices, Government efficiency & corruption, Attitudes towards foreign
business, Community characteristics, Sustainable development (e.g. pollution
control, recycling requirements) What about:
meso-contexts?
or context
Micro-context differentiation?
Cost/Tax factors: Transportation, Labour, Land, Construction, Raw
materials, Local financing, Tax rates, Incentives, Profit repatriation
Demand factors: Market size & growth, Presence of customers, Local
competition
Strategic factors: Infrastructure, Manufacturing concentration, Industrial
linkages, Labour productivity, In/outbound logistics

Dr Dimitrios Tsagdis IBE: Introduction Slide 19

Source: Koslad andVillanger(2004), Benassy-Quere et al. (2005); Mina (2009)
…another way of grouping IBE indicators
e.g. in terms of:
Economic [market] Institutional [non-market]
• Population n • Country risk
• GDP • Corruption
• Growth • Democratic accountability
• Infrastructure • Stability
• Deposits, loans, venture capital • Institutional quality
• Openness (Trade) • Cultural proximity
• FDI stocks (sectors) • Law existence & enforcement
• Exchange Rates (e.g. contractual, property
• Wages rights, labour, bankruptcy)
• Inflation • Bi/multi-lateral (investment) treaties
• Taxation • Income disparities
• Competition (production, • Company formation, patent
distribution) registration, bond/share issue
• Incentives • Availability of information
• Education
Where are the sustainability indicators?
• Support for R&D & innovation
Population an economic indicator?
• Government contract denunciation
Dr Dimitrios Tsagdis IBE: Introduction Slide 20
 …and what about the theory?

 What is theory?
 Different kinds of theory (of/for)
 Only partial theories currently available
 Some relevant theories:
Regional Economic Integration
International Trade and Investment theory
State and Market Theories
Theories of Economic Transition
New Institutional Economics
Theories of Innovation
Developmental Economics
Dr Dimitrios Tsagdis IBE: Introduction Slide 21
 n

Theories vs. unit of analysis

Theories
Porter (1990)
The competitive
advantage of
nations
[diamond model]

Porter (1980)
Competitive
strategy
[5 forces,
Structure
Performance
Conduct
derivative]
Unit of analysis
… Firm … Cluster … Industry … Nation … Trading block … World
…Business
Unit

Dr Dimitrios Tsagdis IBE: Introduction Slide 22

 Concepts vs Reality; e.g. Dacia
Duster

From these to this

sources:
https://www.hotcars.com/concept-vs-reality-15-concept-cars-way-more-sick-
than-the-versions-we-got/
, Dr Dimitrios Tsagdis IBE: Introduction Slide 23
 Intended Learning Outcomes

In short…
…to be able to identify, describe, model,
argue… what are the key connections
between the relevant IBEs in any given
‘problem situation’ you may come across in
your subsequent studies and careers

…a superior way of thinking and researching

Dr Dimitrios Tsagdis IBE: Introduction Slide 24
 Course Syllabus

The course is a vehicle for the exploration of :

a) 12 international business environments.

b) The theoretical aspects relating to these environments,

e.g. Regional Economic Integration and Trade Agreements,
International Trade and Investment Theory,
Institutions and their role in growth/development,
Innovation, Foreign Direct Investment.

c) Empirical manifestations of (a) and (b) in the territories.

Dr Dimitrios Tsagdis IBE: Introduction Slide 25

 IBE Reading & Resource List

No single book for IBE at present or in the future

Most frequently used textbooks for this course:

Morrison, J. (2017) The Global Business Environment, 4 th ed. Palgrave

Paik, Y. et al. (2017) Global Business: Connecting theory to Reality. Routledge

For a list of websites per each environment and additional resources (esp.
cases) visit LEARN

Journals: Journal of International Business Studies, Strategic Management

Journal, Harvard Business Review, International Business Review, Journal of
World Business, Thunderbird International Business Review, Journal of World
Economic Research, World Development, Review of World Economics…

Dr Dimitrios Tsagdis IBE: Introduction Slide 26

 Module Delivery

see course presentation & syllabus

Dr Dimitrios Tsagdis IBE: Introduction Slide 27
 Assessment: Overview

Formative element: Individual coursework (40%)

L2-7 coursework submissions by all individuals

Summative element: Individual Exam (60%)

Individual Assignment tbc by 12:00
[this a week after our last session]

On the topic: tbc. What is the future of the IBE?

Dr Dimitrios Tsagdis IBE: Introduction Slide 28

What do you see?

Dr Dimitrios Tsagdis IBE: Introduction Slide 29

What do you see?

Dr Dimitrios Tsagdis IBE: Introduction Slide 30

What do you see?

Dr Dimitrios Tsagdis IBE: Introduction Slide 31

What do you see?

Dr Dimitrios Tsagdis IBE: Introduction Slide 32

What do you see?

io n :
c a u t
d o f o r y ’
w o r rr i t
ly a e t e
i na l o t t h
n d f i s n
a m a p
‘t he

Dr Dimitrios Tsagdis IBE: Introduction Slide 33

 For the session(s)…
Always arrive prepared

 Read the Course Handbook

 Sort out computer, LEARN, and library logins
 Read in advance the lecture ppt
 Visit the listed www
 Undertake any coursework tasks
 Check the respective library resources – Search the lib
catalogue for books and periodicals
 Borrow, buy, or copy the relevant textbooks

Dr Dimitrios Tsagdis IBE: Introduction Slide 34

 References (and Reading)
Ball, D.; McCulloch, W.; Franz, P.L.; Geringer, J.M.; Minor, M.S. (2004). International Business; The
Challenge of Global Competition, 9th ed. McGraw-Hill, Boston: MA
Benassy-Quere, A.; Coupet, M.; Mayer, T. (2005) Institutional Determinants of Foreign Direct
Investment. Centre D’Etudes Prospectives Et D’Information Internationales (CEPII), Paris
Buckley, P.J. and Lessard, D.R. (2005) Regaining the Edge for International Business Research. Journal
of International Business Studies, 36(6), 595-599
Daniels, J.D.; Radebaugh, L.H.; Sullivan, D.P. (2004) International Business: Environments and
Operations, 10th ed. Prentice Hall, London
Koslad, I.; Villanger, E. (2004) Determinants of foreign direct investment in services, WP 2004:2. Chr.
Michelsen Institute Development Studies and Human Rights, Bergen (Norway)
www.cmi.no/public/public.htm
Mina, W. (2009) External commitment mechanisms, institutions, and FDI in GCC countries. Journal of
International Financial Markets, Institutions & Money, 19, pp. 371-386
Shenkar, O.; Luo, Y. (2004) International Business. Wiley, Chichester
Wild, J.J.; Wild, L.K.; Han, J.C.Y. (2003). International Business, 2nd ed. Prentice Hall, Upper Saddle
River: NJ

Dr Dimitrios Tsagdis IBE: Introduction Slide 35

www.resources
BUBLE LINK catalogue of internet resources for most countries http://www.bubl.ac.uk/link/world/index.html [4/11/10]
Canadian International Development Agency http://w3.acdi-cida.gc.ca/home [4/11/10]
Central Intelligence Agency (CIA) the world factbook www.cia.gov/library/publications/the-world-factbook/ [4/11/10]
Economist country briefings www.economist.com/countries [4/11/10]
Guardian world news http://www.guardian.co.uk/world [31/10/10]
Index Mundi www.indexmundi.com [31/10/10]
Internationalist business information for several countries http://www.internationalist.com/business/ [31/10/10]
International Herald Tribune (the global edition of the New York Times) http://global.nytimes.com/ [31/10/10]
International affairs resources virtual library http://www2.etown.edu/vl/intlbus.html [4/11/10]
Maps and geographic information: www.geographic.org , http://geography.about.com/ , www.lib.utexas.edu/maps/index.html ,
www.worldatlas.com/aatlas/world.htm [22/11/10]
Nationmaster world statistics www.nationmaster.com [4/11/10]
Organisation for Economic Cooperation and Development (OECD) www.oecd.org
Philadelphia University Everything International http://faculty.philau.edu/russowl/russow.html [4/11/10]
Public holidays and religious calendars around the world www.qppstudio.net [4/11/10]
SUNY IB Online Resource Centre www.esc.edu/library/ibol/default.html [4/11/10]
Sussex University Institute of Development Studies country development information www.eldis.org [4/11/10]
Third World Network an independent non-profit international network of organisations and individuals involved in issues relating to development, Third
World and North-South affairs www.twnside.org.sg [4/11/10]
Trading Economics Data but not all free www.tradingeconomics.com [6/12/15]
UK Economic and Social Data Service (ESDS) provides free economic and social data (both quantitative and qualitative) as well as support for using them
http://www.esds.ac.uk/ [1/11/10]
United Nations www.un.org [31/10/10]
UN Conference on Trade and Development (UNCTAD) www.unctad.org/Templates/Startpage.asp?intItemID=2068&lang=1 [4/11/10]
US Department of State A-Z list of countries and other Areas http://www.state.gov/misc/list/index.htm [31/10/10]
US Library of Congress Country Studies containing the history of several countries http://memory.loc.gov/frd/cs/list.html [4/11/10]
World Bank www.worldbank.org [31/10/10]
World Trade Organisation (WTO) www.wto.org [31/10/10]

Dr Dimitrios Tsagdis IBE: Introduction Slide 36

 Appendices

Ap. 1a - Alternative map projections

Ap. 1b - Alternative map projections: the
true size of Africa
Ap. 2 - The territories (alternative ‘cuts’)
Ap. 3 - …some of the key-indicators per
IBE
Ap. 4 - Dealing with the IBE (3):
synthesising (1+2)
to paint the ‘big-picture’
Dr Dimitrios Tsagdis IBE: Introduction Slide 37
 Appendix 1a:
Alternative map projections
Mercator projection (1569) Hobo–Dyer projection (2002)

Note the relative size difference of Africa; e.g. in comparison to Europe and N America
Source: List of map projections in Wikipedia https://en.wikipedia.org/wiki/List_of_map_projections <13/05/19>

Dr Dimitrios Tsagdis IBE: Introduction Slide 38

 Appendix 1b:
Alternative map
projections

Mercator projection (1569)

source:
https://www.statista.c
om/chart/27090/true-
size-of-africa/
<23/03/22>

Dr Dimitrios Tsagdis IBE: Introduction Slide 39

 Ap. 2:
The
territories
(alternative
‘cuts’)

NB see also
XL file
accompanying
this lecture
where this and
other such
tables are
provided
Dr Dimitrios Tsagdis IBE: Introduction Slide 40
 Ap. 3 …some of the key-indicators per
IBE
Political Environment: CRA indices; Bank of America World Information Services; BERI S.A.; Control Risks Information
Services; Economist Intelligence Unit; Euromoney; Institutional Investor; Standard and Poor's Rating; Political Risk
Services ICRG; Political Risk Services: Coplin-O'Leary Rating System; Moody's Investor Services…
Legal Environment: Corruption Perceptions Index, Bribe Payers Index, Global Barometer by Transparency International;
Freedom in the world annual survey of political rights and civil liberties by Freedom House; Number of international
disputes; Lawyers per 100,000 population, Courts’ case backlog…
Economic Environment: GDP/GNP PPP (per capita), industrial structure (Agriculture – Manufacturing – Services %
GDP/labour/productivity), trade/FDI, grey economy, unemployment, inflation, interest/exchange rates, balance of
payments/trade, income inequality, standards of living…
Competitive-Cooperative (Coopetative) Environment: Competitiveness index, concentration indices, firm birth/death
rate, productivity growth (total/factor/sector), trade/FDI (growth), GDP/GNP PPP (growth), number of bi-/multi-
lateral agreements/memberships in supranational organisations (e.g. WTO, UN, OECD), number of M&A (relevant
industries)…
Financial Environment: Interest/exchange rates, size/volume of financial market transactions, SX efficiency, liquidity of
capital/foreign currency, balance of payments (goods, services, trade, current account), SX indices (e.g. NASDAQ,
FTSE), independence of Central bank, size of bad bank loans, IMF/WB/EB programmes, tax regime (breaks/incentives),
firm share of equity/exposure, availability of venture/risk capital…
Demographic, Social, and Cultural Environment: Birth/death rates, life expectancy, age distribution, migration,
un/employment (men/women/children), poverty (urban/rural), standards of living, income inequality, human rights,
crime/corruption, education, firm birth rate, Hofstede’s 5 dimensions…
Labour Environment: Sectoral employment, labour productivity (growth), labour education/skills, un/employment (men,
women, children), trade union membership, labour mobility, turnover, im/migration (domestic/ international), value
added per worker…
Technological Environment: National System(s) of Innovation (education, science, industrial structure, interaction),
Inputs: R&D expenditure/labour (as a share of GDP/total employment), Outputs: number of patents (per million
inhabitants/sector); Other: IPR violations; patent costs, number of telephone/www/TVs.
Ecological Environment: Climate, desertification, water table, ecological footprint, audits, CO2 emissions, Dow Jones
sustainability Index, renewable sources of energy, extraction as a share of GDP, biodiversity (number of extinct
species), recycling, landfills.

Dr Dimitrios Tsagdis IBE: Introduction Slide 41

 Ap. 4 - Dealing with the IBE (3):
synthesising (1+2)
to paint the ‘big-picture’
Globe
Triad

Labour
i al

al
Nation

ic
an

l it
Region
e

n
v

Po
i
al

i
at

F
pe
r
Le g
oo
C
Ecological
Competitive Organisation
De
Eco mo
gr
Te
no
mic ap
ch
hi
c
nol

So
Cultural
o g

cia
i c al

l
…and what about the
theory?
Dr Dimitrios Tsagdis IBE: Introduction Slide 42
 weekly group Coursework – see XL on
LEARN under course presentation

Dr Dimitrios Tsagdis IBE: Introduction Slide 43