1. International Business Environments & Operations
15e, Global Edition
Daniels ● Radebaugh ● Sullivan
International Business Environments and Operations 15e, Global Edition by Daniels, Radebaugh, and Sullivan

2. Overview of International Business and Globalization
Chapter 1
Overview of
International Business and
Globalization
Chapter 1: Overview of International Business and Globalization

3. International Business
International Business consists of all commercial transactions—including sales, investments, and transportation—that take place between two or more countries.
Why should we study international business?
It comprises a large and growing portion of the world’s total
business. Today, almost all companies – large or small – are
affected by global events and competition.

4. Factors of International Business

5. Why companies engage in international business?
To expand their sales
To acquire resources : Capital
Technology
Information
To diversify their sources
of sales and supplies
To minimize competitive risk

6. Reasons for Recent International Business Growth
Rapid increase in and expansion of
technology
Liberalization of Cross-border
Movements
Development of Supporting Institutional
Arrangements
Increase in Global Competition

7. Factors Influencing International Business
The cultural environments
The political and legal environments
The economic environment
The geographical advantages

8. Modes of International Business
Export – import trade
Direct Foreign Investment
- Wholly owned subsidiaries
- Joint venture
- Mixed venture
- Portfolio Investment
Licensing / Franchising
Strategic Alliance
Turnkey Operations
Management contracts

9. Types of International Organizations
Multinational
Transnational
Global

10. Multinational / Multidomestic
An organization with multi-country affiliates,
each of which formulates its own business
strategy based on perceived market differences. EX. Coca-Cola
Global
An organization attempts to standardize
and integrate operations worldwide in all functional areas. Ex. Nestlé

11. International Company
Either a global or multidomestic company
Transnational
It comprises parent enterprises and their foreign affiliates: a parent enterprise is defined as one that controls assets of another entity or entities in a country or countries other than its home country, usually by owning a capital stake

12. Example of Transnational Companies
A company formed by a merger of two firms of approximately the same size that are from two different countries.
+ Unilever (Dutch & English – Food)
+ Shell (Dutch & English – Oil)
+ Pharmacia & Upjohn (Swedish &
American – Pharmaceuticals)
+ Dunlop-Pirelli (English & Italian – Tires)
+ VFW-Fokker (Germany & Netherlands –
Aircraft)

13. Characteristics of Global & Multinationals
Trying to achieve economies of scale through global integration of its functional areas while at the same time
Being highly responsive to different local environments (Multicultural Multinational)
OR Combination of both 1 & 2

14. International business facilitates the globalization process.
Globalization Defined
Globalization: the ongoing social, economic, and political process that deepens and broadens the relationships and inter-dependencies amongst nations—their people, their firms, their organizations, and their governments
Globalization is the widening set of interdependent relationships among people from different parts of a world divided into nations
The term sometimes refers to the elimination of barriers to international movement of goods, services, capital, technology, and people that influence the integration of world economies
International business facilitates the globalization process.

15. The Forces Behind Globalization
Increased expansion and technological improvements in transportation and communications networks
Liberalization of cross-border trade and resource movements
Development of services that support international business activities
Growing consumer demand for foreign products
Increased global competition
Changing political and economic situations
Expanded cross-national treaties and agreements

16. Globalization

17. Act Locally
Think Globally
Globalization

18. Major Globalization Forces
Political
Technological
Market
Cost
Competitive

19. The International Environment
1. Worldwide Bodies : World Bank
2. Regional Economic Groupings of Nations :
North American Free Trade Agreement
3. Organizations Bound by Industry Agreements :
Organization of Petroleum Exporting Countries