An Overview of International Business Griffin & Pustay 1-1 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall International Business, 6th Edition chapter Chapter Objectives • Discuss the meaning of international business • Explain the importance of understanding international business • Identify and describe the basic forms of international business activities • Discuss the causes of globalization • Comprehend the growing role of emerging markets in the global economy 1-2 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall The Business of the Olympics 1-3 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall The Business of the Olympics (continued) • Intense reflection of international business • Government of games by IOC • Competition for hosting • Revenue sources for the Olympics – Broadcast rights – Corporate sponsorships 1-4 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall What Is International Business? • Business transactions between parties from more than one country • Parties may include: – Private individuals – Individual companies – Groups of companies – Governmental agencies 1-5 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall How Does International Business Differ from Domestic? 1-6 • Currency conversion • Legal systems • Culture • Availability of resources Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Why Study International Business? 1-7 • Large organizations • Foreign-owned subsidiaries • Small businesses • Competitors • Business techniques and tools • Cultural literacy Copyright 2010 Pearson Education, Inc publishing as Prentice Hall International Business Activities 1-8 • Exporting and Importing • International Investments • Licensing, Franchising, and Management Contracts Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Exporting and Importing 1-9 • Exporting: selling of products made in one’s own country for use or resale in other countries • Importing: buying of products made in other countries for use or resale in one’s own country Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Visible and Invisible Trade • Trade in Goods – Merchandise exports and imports – Visible trade • Trade in Services – Service exports and imports – Invisible trade 1-10 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall International Investments • Capital supplied by residents of one country to residents of another • Two categories: – Foreign direct investments – Portfolio investments 1-11 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 1.1 Exports as a % of GDP 1-12 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Other Forms of International Business Activity Management contracts Licensing 1-13 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Franchising Variations of Organizations Multinational Corporation Multinational Enterprise Multinational Organization 1-14 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Multinational Corporations (MNCs) • Engage in foreign direct investment • Own and control foreign assets • Buy resources in multiple countries • Create goods and services in multiple countries • Sell goods and services in multiple countries 1-15 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Table 1.1 The World’s Largest MNCs • Wal-Mart • Chevron • Exxon Mobil • ING Group • Royal Dutch Shell • Total • BP • General Motors • ConocoPhillips • Toyota Motor 1-16 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall The Era of Globalization the inexorable integration of markets, nation-states, and technologies…in a way that is enabling individuals, corporations and nation-states to reach around the world farther, faster, deeper, and cheaper than ever before Globalization: 1-17 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 1.2 World Exports as a % of World GDP 1-18 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 1.3 Foreign Direct Investment Relative to World GDP 1-19 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Contemporary Causes of Globalization Strategic Imperatives 1-20 • To leverage core competencies • To acquire resources and supplies • To seek new markets • To better compete with rivals Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Environmental Change and Globalization Changes in Political Environments 1-21 Technological Changes Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Globalization and Emerging Markets BRIC • Brazil / Argentina • Russia • India • China 1-22 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Globalization and Emerging Markets (continued) Big Ten Argentina Brazil South Korea Indonesia Poland Turkey China Mexico India South Africa 1-23 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Framework of Book 1-24 • The World’s Marketplaces • International Environment • Managing International Business • Managing International Business Operations Copyright 2010 Pearson Education, Inc publishing as Prentice Hall 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 © 2010 Pearson Education, Inc publishing as Prentice Hall .. .Chapter Objectives • Discuss the meaning of international business • Explain the importance of understanding international business • Identify and describe the basic forms of international. .. Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Framework of Book 1-24 • The World’s Marketplaces • International Environment • Managing International Business • Managing International. .. Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 1.1 Exports as a % of GDP 1-12 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Other Forms of International