2. GLOBALIZATION AND INTERNATIONAL BUSINESS “The world isn’t just for travelers” What is the nature of international business? What are multinational corporations and how do they work?

3. GLOBALIZATION AND INTERNATIONAL BUSINESS The Nature of International Business Globalization creates international business opportunities. International business is done by global sourcing, import/export, licensing, and franchising. International business is done by joint ventures and wholly owned subsidiaries. International business is complicated by different legal and political systems.

4. Multinationals and LDC’s- perhaps??

5. THE NATURE OF INTERNATIONAL BUSINESS Globalization International Business –Conducting commercial transactions across national boundaries Five Reasons to Pursue International Business 1. Expanded profit potential 2. More customers 3. More capital 4. Lower cost suppliers 5. Lower costs of labor

6. GLOBALIZATION International Business Exporting –Local products are sold abroad Importing –The process of acquiring products abroad and selling them in domestic markets. Licensing –one firm pays a fee for rights to make or sell another company’s products. Franchising –a firm pays a fee for rights to use another company’s name and operating methods.

7. GLOBALIZATION International Business Joint Venture –A firm operates in a foreign country through co-ownership with local parties. Strategic Alliance –each partner hopes to achieve through cooperation things they couldn’t do alone. Foreign Subsidiary –a local operation completely owned by a foreign firm.

8. GLOBALIZATION AND INTERNATIONAL BUSINESS Multinational Corporations Multinational corporations do substantial business in several countries. Multinational corporations can be controversial at home and abroad. Multinational corporations face a variety of ethical challenges. Planning and Controlling are complicated in multinational corporations. Organizing is complicated in multinational corporations. Leading is complicated in multinational corporations.

9. GLOBALIZATION AND INTERNATIONAL BUSINESS Multinational Corporations Multinational Corporation (MNC) –A business with extensive foreign operations in more than one county. Transnational Corporation –A MNC that operates worldwide on a borderless basis. “Fortune’s” Top 10 Multinational Corporations 1. Wal-Mart Stores 6. DaimlerChrysler 2. BP 7. Toyota Motor 3. Exxon Mobil 8. General Electric 4. Royal Dutch Shell Group 9. Total 5. General Motors 10. Chevron

10. Los Angeles Palo Alto Acceleration Quiz Q: Of the 100 top economies in the world, how many are multinational corporations and how many are nation states?

11. Acceleration Quiz Q: Of the 100 top economies in the world, how many are multinational corporations and how many are nation states? 51 MNC’s and 49 Nations.

12. RankCompanyCountryField 1Wal-Mart Stores United States Retail 2Royal Dutch Shell Netherlands †Netherlands Petroleum 3Exxon Mobil United States Petroleum 4BP United Kingdom Petroleum 5Sinopec China Petroleum 6 China National Petroleum China Petroleum 7State Grid China Power 8Toyota Motor Japan Automobiles 9 Japan Post Holdings Japan Diversified 10Chevron United States Petroleum 2 July 2011

13. © 2005 Accelerating.org Acceleration Quiz Q: Disney and Sony (respectively) produce and launch one new product every _________?

14. Acceleration Quiz Q: Disney and Sony (respectively) produce and launch one new product every _________? Once every three minutes for Disney. Once every twenty minutes for Sony.

15. MULTINATIONAL ORGANIZATIONS MNC Issues

16. Acceleration Quiz Q: How much of Hewlett Packard’s revenue comes from products launched in the last year?

17. Acceleration Quiz Q: How much of Hewlett Packard’s revenue comes from products launched in the last year? 70%

18. McDonalds Toyota

19. MULTINATIONAL ORGANIZATIONS MNC Issues Protectionism A call for tariffs and special treatment to protect domestic firms from foreign competition. Corruption Illegal practices to further one’s business interests. Transparency International gives these countries its poorest corruption scores: Indonesia Nigeria Tajikistan Bangladesh Haiti Paraguay Myanmar

20. MULTINATIONAL ORGANIZATIONS MNC Issues Sweatshops Employ workers at very low wages, for long hours, and in poor working conditions. Child labor The full-time employment of children for work otherwise done by adults. Sustainable Development Development that meets the needs of the present without hurting future generations.

21. MULTINATIONAL ORGANIZATIONS MNC Issues Currency Risk The possible loss of profits because of fluctuating exchange rates. Understanding Currency Risk in International Business U.S. exporter makes a sale in France for Euro 100,000. Scenario 1: Weak dollar.95 Euros = 1 $US Take home revenue = $105,263 Scenario 2: Strong dollar 1.25 Euros = 1 $US Take home revenue = $80,000

22. MULTINATIONAL ORGANIZATIONS MNC Organizations

24. Expatriate An employee who lives and works in a foreign country. Global Manager A person who is culturally aware and informed on international affairs. Personal Attributes for Expatriate Success High degree of self-awareness Cultural sensitivity Desire to live and work abroad Family flexibility and support Technical job competence Are you willing to admit that the world isn’t just for traveling anymore, and to embrace it as a career opportunity? Is it possible that you might stand out to a potential employer as someone with the skills to excel as a global manager?

25. Management Tips Criteria for choosing a partner for successful joint ventures Familiar with your firm’s major business Employs a strong local workforce Values its customers Has potential for future expansion Has strong local market for its own products Has good profit potential Has sound financial standing

26. Acceleration Quiz Q: How many of the lowest net-worth Americans would it take to approximate Bill Gate’s net worth?

27. © 2005 Accelerating.org Acceleration Quiz Q: How many of the lowest net-worth Americans would it take to approximate Bill Gate’s net worth? Roughly 110 million Americans in 1997, when his net worth was $40 billion. At $30 billion presently (2005), Mr. Gates ranks roughly as the 60 th largest country (of 280) and the 55 th largest business. When MSFT went public in 1986, Bill was worth $230 million. NYU economist Edward Wolff, Top Heavy, 2002

28. © 2005 Accelerating.org Something Curious Is Going On Unexplained. (Don’t look for this in your physics or information theory texts…)