International Business

Chapter One

Globalization and International Business

Defination Peter Drucker says International business and International Marketing are the art and science of creating customers abroad.

Globalization
Globalization: the ongoing social, economic, and political process that deepens and broadens the relationships and interdependencies amongst nationstheir people, their firms, their organizations, and their governments

International business facilitates globalization process Four Dimension of Globalization Index are: Economic, Technological, Personal Contact, and Political

International Business
International business: all commercial transactions between parties in two or more countries Private firms are profit-oriented. Government organizations may or may not be profit-oriented. The international business environment is more complex and diverse than the domestic business environment.
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Factors in International Business Operations

Figure shows the organization of materials in the text.

The Forces Driving Globalization

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4. 5. 6. 7.

Increased in and expansion of technology Liberalization of cross-border trade and resource movements Development of services that support international business Growing consumer pressures Increased global competition Changing political situations Expanded cross-national cooperation
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Criticisms of Globalization

Threats to national sovereignty Economic growth and environmental stress Growing income inequality and personal stress

Why International Business Differs from Domestic Business

Political and legal practices Cultural factors Economic forces Geographic influences Competitive factors

International Business As A Discipline for Managers

Integrative discipline borrowing from Domestic and International Law, Political Science, Anthropology, Sociology, Psychology, Economics, Geography and Business Managers must have an International Mindset to succeed in global markets
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Global Governance

Politics/Peace- United Nations Trade- World Trade Organization (WTO) Money/Finance- International Monetary Fund (IMF) Development- World Bank Overall- G8 Nations (USA, Canada, UK, France, Germany, Italy, Japan, and Russia) Other international organizations and bodies

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Types of Businesses

Goods, commodities and services are traded outside the countries. Selling or buying services rendered by banks , insurance, telecommunication and transportation companies. Buying and selling of currencies , FDI and investment in shares /bonds etc Outsourcing and insourcing

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Similarities b/w domestic and International Business

Both are based on specialization Geographical resource allocations Immobility leads to specialization and specialization leads to business Profit motive Both have differences in cost and price
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Dissimilarities

Different currencies Differences in mobility of factors Differences in national policies Exchange control policies (WTO) Rate of Inflation Socio culture values Transport costs are more imp in IB Rate of exchange keeps on differing. Impact of BOP on national income and people welfare will differ.

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Chapter 1: Discussion Questions

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Define globalization and explain the forces driving globalization. Define International Business. How does it differ from domestic business? What is global governance? Explain the role that each institution plays in Global Governance.

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