IB chapter 1.ppt
- 1. 1-1 Copyright © Pearson Education Globalization and International Business
- 2. 1-2 Chapter 1 Globalization and International Business Copyright © Pearson Education
- 3. 1-3 Chapter Objectives • To define globalization and international business and show how they affect each other • To understand why companies engage in international business and why international business growth has accelerated • To become familiar with different ways in which a company can accomplish its global objectives • To apply social science disciplines to understanding the differences between international and domestic business Copyright © Pearson Education
- 4. 1-4 Globalization • The ongoing process that deepens and broadens the relationships and interdependence among countries. • National economies are merging into an interdependent, integrated global economic system • The shift toward a more integrated and interdependent world economy. Copyright © Pearson Education
- 5. 5 Globalization • Globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace be accessed by individuals in many countries, from diverse economic backgrounds. Copyright © Pearson Education
- 6. 6 Globalization • Globalization of production refers to sourcing goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land, and capital). • By using global sourcing, companies hope to lower their overall cost structure or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively. Copyright © Pearson Education
- 7. 7 Globalization • Because of globalization, for the first time in history, the availability of international products and services can be accessed by individuals in many countries, from diverse economic backgrounds. Copyright © Pearson Education
- 8. 1-8 International Business International business consists of all commercial transactions—including sales, investments, and transportation—that take place between two or more countries Increasingly foreign countries are a source of both production and sales for domestic companies Copyright © Pearson Education
- 9. 1-9 1-9 Studying International Business is Important • Most companies are either international or compete with international companies • Modes of operations may differ from those used domestically • The best way of conducting business may differ by country • An understanding helps you make better career decisions • An understanding helps you decide what government policies to support Copyright © Pearson Education
- 10. 1-10 International Business: Operations and Influences Copyright © Pearson Education
- 11. 1-11 Factors Contributing to Rapid Growth of International Business 1. Increase in and expansion of technology 2. Liberalization of cross-border trade and resource movements 3. Development of services that support international business 4. Growing consumer pressures 5. Increased global competition 6. Changing political situations 7. Expanded cross-national cooperation Copyright © Pearson Education
- 12. 1-12 1 Companies Engage in International Business • To Expand Sales: pursuing international sales increases the potential market and potential profits • To Acquire Resources: may give companies lower costs, new and better products, additional operating knowledge • To Diversify or Reduce Risks: international operations may reduce operating risk by smoothing sales and profits, preventing competitors from gaining advantage Copyright © Pearson Education
- 13. 1-13 Modes of Operation in International Business • Merchandise exports and imports • Service exports and imports Tourism and Transportation Service Performance Asset Use • Investments Foreign Direct Investment (FDI) Portfolio Investment Copyright © Pearson Education
- 14. 1-14 Multinational Enterprises Multinational Enterprises (MNEs) take a global approach to markets and production. Sometimes they are referred to as multinational corporations or companies (MNCs) or transnational companies (TNCs). Copyright © Pearson Education
- 15. 1-15 Difference Between International and Domestic Operations When operating abroad companies may have to adjust their usual methods of carrying out business. Foreign conditions often dictate a more suitable method, and the operating modes used for international business differ from those used on a domestic level. Copyright © Pearson Education
- 16. 1-16 Physical and Social Factors Affecting International Business Operations To operate within a company’s external environment, its managers must have knowledge of business operations and a working knowledge of social sciences, and how they affect all functional business fields. Copyright © Pearson Education
- 17. 1-17 1-15 Physical and Social Factors Affecting International Business Operations Copyright © Pearson Education
- 18. 1-18 Competitive Factors Affecting International Business • A company’s competitive strategy influences how and where it can best operate. • A company’s competitive situation may differ in terms of its relative strength and which competitors it faces. Copyright © Pearson Education
- 19. 1-19 Competitive Factors Affecting International Business Copyright © Pearson Education
- 20. 1-20 Future of International Business and Globalization • Further globalization is inevitable. • International business will grow primarily along regional rather than global lines. • Forces working against further globalization and international business will slow down both trends. Copyright © Pearson Education
- 21. 1-21 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © Pearson Education