1. 1-1 International Business Environments and Operations, 13/e Part One Background For International Business Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

2. 1-2 Chapter 1 Globalization and International Business Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

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 discuss globalization’s future and the major criticisms of globalization 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

4. 1-4 Introduction Globalization is the ongoing process that deepens and broadens the relationships and interdependence among countries. International Business is a mechanism to bring about globalization. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

5. 1-5 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

6. 1-6 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

7. 1-7 International Business: Operations and Influences Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

8. 1-8 Measuring Globalization A.T. Kearney/Foreign Policy Globalization Index  Economic  Technological  Personal Contact  Political Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

9. 1-9 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

10. 1-10 What’s Wrong with Globalization Threats to national sovereignty Economic growth and environmental stress Growing income inequality and personal stress Offshoring – the transferring of production abroad – is controversial in terms of who benefits when costs are reduced and whether the process exchanges good jobs for bad ones. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

11. 1-111 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

12. 1-12 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

13. 1-13 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

14. 1-14 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

15. 1-15 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

16. 1-161-15 Physical and Social Factors Affecting International Business Operations Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

17. 1-17 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

18. 1-18 Competitive Factors Affecting International Business Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

19. 1-19 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall

20. 1-20 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 © 2011 Pearson Education, Inc. publishing as Prentice Hall