international business, 5 th edition chapter 1 an overview of international business

1-2 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

1-3 The Business of the Olympics

1-4 The Business of the Olympics Intense reflection of international business Government of games by IOC Competition for hosting Revenue sources for the Olympics –Broadcast rights –Corporate sponsorships

1-5 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

1-6 How Does International Business Differ from Domestic? Currency conversion Legal systems Culture Availability of resources

1-7 Why Study International Business? Large organizations Foreign-owned subsidiaries Small businesses Competitors Business techniques and tools Cultural literacy

1-8 International Business Activities Exporting and Importing International Investments Licensing, Franchising, and Management Contracts

1-9 Exporting and Importing 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

1-10 Figure 1.1 Exports as a % of GDP

1-11 Visible and Invisible Trade Trade in Goods –Merchandise exports and imports –Visible trade Trade in Services –Service exports and imports –Invisible trade

1-12 Exporting at Boeing

1-13 International Investments Capital supplied by residents of one country to residents of another Two categories: –Foreign direct investments –Portfolio investments

1-14 Other Forms of International Business Activity Management contracts Franchising Licensing

1-15 Variations of Organizations Multinational Corporation Multinational Enterprise Multinational Organization

1-16 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

1-17 Table 1.1 The Largest MNCs ExxonMobil Wal-Mart Royal Dutch Shell BP General Motors Chevron DaimlerChrysler Toyota Motor Ford Motor ConocoPhillips

1-18 Motives for Globalization To leverage core competencies To acquire resources and supplies To seek new markets To better compete with rivals

1-19 Environmental Change and Globalization Changes in Political Environments Technological Changes

1-20 Figure 1.2 World Exports as a % of World GDP

1-21 Figure 1.3 Foreign Direct Investment Relative to World GDP

1-22 Globalization and Emerging Markets Argentina Brazil China India Indonesia Mexico Poland South Africa South Korea Turkey

1-23 Framework of Book The World’s Marketplaces International Environment Managing International Business Managing International Business Operations