1. intro to ib

8/8/2019 1. Intro to IB

1/18

ChapterO

ne

Copyright, John Wiley and Sons, Inc.

PartOne:

Concepts

and

TheoriesinIB.thr

ee

Learning Themes for This Sectionreading this chapter, you should be able to:

1. Understand the major theories of why trade

occurs.2. Comprehend the differences between

traditional and contemporary trade theory.

3. Explain why FOREIGN DIRECT

INVESTMENT is important to InternationalBusiness.

Part One:Concepts and Theories in IB.


8/8/2019 1. Intro to IB

2/18

ChapterO

ne


PartOne:

Concepts

and

TheoriesinIB.thr

ee

Learning Themes for This Section (cont)reading this chapter, you should be able to:

4. Know the general trends in FOREIGN

DIRECT INVESTMENT stock and flowworldwide.

5. Identify the major organizational forms in

international business.



8/8/2019 1. Intro to IB

3/18

ChapterO

ne


ChapterO

ne

thr

ee

Learning Concepts Chapter 1 :

1. Understand globalization and why it is

important.2. Comprehend why and how globalization can

be perceived as a benefit and as a threat.

3. Explain the differences between important

international business terms.

InternationalBusiness in an Ageof Globalization


8/8/2019 1. Intro to IB

4/18

ChapterO

ne


ChapterO

ne

thr

ee

Learning Concepts Chapter 1 (cont):

4. State the differences between international

business and domestic business practices.

5. Appreciate why firms expand internationally.



8/8/2019 1. Intro to IB

5/18

ChapterO

ne


An Age of Globalization

Globalization is everywhere. For consumers, it

means more choice, lower prices, and blurrednational identities. For business, it means lower

costs, better supply, and more markets.

8/8/2019 1. Intro to IB

6/18

ChapterO

ne


Globalization Who benefits?

Developing countries benefit from globalization

with increased employment, tax revenues, and

international relations.

Developed countries benefit from globalization

with increased production, imports, exports, and

corporate growth.

8/8/2019 1. Intro to IB

7/18

ChapterO

ne


Globalization and CorporateMonopoly

There is an argument that governments will surrender

their sovereignty to global corporations. This is nottrue globalization does, however, open

governments to the reality of trade and pluralistic

influence.

8/8/2019 1. Intro to IB

8/18

ChapterO

ne


Globalization and theEnvironment

Does globalization hurt the natural environment?

Probably not. Resources show that globalizationactually helps the natural environment through the

national development it fosters.

8/8/2019 1. Intro to IB

9/18

ChapterO

ne


Globalization can cause job transitions in

home and host countries.

Globalization causes wages to go up indeveloping countries and can put downward

wage pressure among unskilled workers at

home.

Globalization also causes capital to enter andexit economies easier and more frequently,

which causes economic uncertainty.

Globalization The Social Impact

8/8/2019 1. Intro to IB

10/18

ChapterO

ne


Globalization and InternationalBusiness

Some suggest that globalization causes cultural

homogenization. This isnt true. Globalizationcauses people to be more aware of their national

culture and background, not less.

The challenge, is to lever resources to maintain

productivity in light of increasing nationalism and

cultural awareness.

8/8/2019 1. Intro to IB

11/18

ChapterO

ne


What is International Business?

International business (IB) refers to business activities

that involve the transfer of resources, goods,services, knowledge, skills, or information across

national boundaries.

IB uses raw materials, capital and people toaccomplish these goals.

8/8/2019 1. Intro to IB

12/18

ChapterO

ne


IB Some Key Terms

International Transactions are economic

transactions that cross borders.

International Trade occurs whencompanies imports or export across

borders.

International Investment occurs when a

company invests its resources acrossnational boundaries.

International Firms are those engaged in

international business.

A Multinational Enterprise (MNE) invests

globally and actively controls those

investments.

8/8/2019 1. Intro to IB

13/18

ChapterO

ne


International U.S. DomesticBusiness

IB is an outgrowth of domestic practice. Most

international firms started as domestic ones.

Toyota, Honda, Mitsubishi, Renault, Jaguar; all

started as domestic business. As these firms grew,

they became MNEs.

8/8/2019 1. Intro to IB

14/18

ChapterO

ne


Why Do Firms Go Global?

Market Motives can gain, protect, or hold a

market position.

Economic Motives occur when firms seek

higher returns on investments or lower costs.

Strategic Motives help a firm capitalize on

distinctive resources or develop capabilities thatare rare, imitable, valuable, and not

substitutable.

8/8/2019 1. Intro to IB

15/18

ChapterO

ne


Examples of Global Motives

Market Motives -

where a firm

seeks to gain,

protect, or hold

market position.

Amway gains

market position in

China.

Honda protects

market share bybuilding cars in

the USA.

8/8/2019 1. Intro to IB

16/18

ChapterO

ne



EconomicMotives - where

a firm seeks toincrease ROI ordecrease costs.

Scania moves

production toMexico to lowercosts.

Michelin improves

by building tires inCanada.

8/8/2019 1. Intro to IB

17/18

ChapterO

ne



Strategic

Motives - where

firms seek to

leverage

distinctive

competencies.

Exxon drills for oil

in Asia and the

Middle East.

Procter andGamble sell food

in China.

8/8/2019 1. Intro to IB

18/18

ChapterO

ne


Globalization In summary

Globalization is complex and expensive. It

forces business firms to adopt strategies and

operations to different cultures and climates.

When business can do this, and this is what this

class is all about, it can achieve a very good

return on investment and useful global

operations.

1. intro to ib

Documents