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    International Business: by Daniels and Radebaugh

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    Keval Patel
    This chapter provides an overview of international business. It defines international business as commercial transactions between countries. Companies engage in international business to expand sales, acquire resources from other countries, and diversify their sources of sales and supplies. The chapter describes different modes for companies to operate internationally such as exporting, importing, foreign direct investment, and strategic alliances. It also discusses factors like politics, culture, and geography that comprise the external environment and influence international business operations and strategy. The chapter outlines how companies' international involvement has typically evolved from limited exporting to extensive foreign production and operations in many countries. It concludes by describing countervailing forces like global standards versus nationally responsive practices that complicate international business decision making.

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    International Business: by Daniels and Radebaugh

    Uploaded by

    Keval Patel
    51 views15 pages
    This chapter provides an overview of international business. It defines international business as commercial transactions between countries. Companies engage in international business to expand sales, acquire resources from other countries, and diversify their sources of sales and supplies. The chapter describes different modes for companies to operate internationally such as exporting, importing, foreign direct investment, and strategic alliances. It also discusses factors like politics, culture, and geography that comprise the external environment and influence international business operations and strategy. The chapter outlines how companies' international involvement has typically evolved from limited exporting to extensive foreign production and operations in many countries. It concludes by describing countervailing forces like global standards versus nationally responsive practices that complicate international business decision making.

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    This chapter provides an overview of international business. It defines international business as commercial transactions between countries. Companies engage in international business to expand sales, acquire resources from other countries, and diversify their sources of sales and supplies. The chapter describes different modes for companies to operate internationally such as exporting, importing, foreign direct investment, and strategic alliances. It also discusses factors like politics, culture, and geography that comprise the external environment and influence international business operations and strategy. The chapter outlines how companies' international involvement has typically evolved from limited exporting to extensive foreign production and operations in many countries. It concludes by describing countervailing forces like global standards versus nationally responsive practices that complicate international business decision making.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    51 views15 pages

    International Business: by Daniels and Radebaugh

    Uploaded by

    Keval Patel
    This chapter provides an overview of international business. It defines international business as commercial transactions between countries. Companies engage in international business to expand sales, acquire resources from other countries, and diversify their sources of sales and supplies. The chapter describes different modes for companies to operate internationally such as exporting, importing, foreign direct investment, and strategic alliances. It also discusses factors like politics, culture, and geography that comprise the external environment and influence international business operations and strategy. The chapter outlines how companies' international involvement has typically evolved from limited exporting to extensive foreign production and operations in many countries. It concludes by describing countervailing forces like global standards versus nationally responsive practices that complicate international business decision making.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 15

    International Business

    by
    Daniels and Radebaugh

    Chapter 1

    International Business:
    An Overview
    1-1

    Objectives
    To define internal business (IB) and describe how it differs from
    domestic business
    To explain why companies engage in IB and why its growth has
    accelerated
    To introduce different modes a company can use to accomplish its
    global objectives
    To illustrate the role social science disciplines play in understanding the
    environment of IB
    To provide an overview of the primary patterns for companies
    international expansion
    To describe the major countervailing forces that affect IB

    1-2

    Introduction to International Business (IB)


    IBall commercial transactions between two or more countries
    Involves modes of business that differ from those at the domestic
    level
    Foreign conditions diversity companys external environment

    Why Companies Engage in IB


    Expand salesgreater purchasing power in the world as a whole
    Acquire resourcesproducts, services, components
    also, foreign capital, technologies, information
    Diversify sources of sales and suppliestakes advantage of business
    cycle differences among countries
    Minimize competitive riskprevent competitor from gaining advantages

    1-3

    International Business: Operations and Influences


    OPERATIONS
    EXTERNAL INFLUENCES
    PHYSICAL AND
    SOCIETAL FACTORS
    Political policies and
    legal practices
    Cultural factors
    Economic forces
    Geographical influences

    COMPETITIVE
    ENVIRONMENT
    Major advantage in price,
    marketing, innovation, or
    other factors
    Number and comparative
    capabilities of competitors
    Competitive differences
    by country

    OBJECTIVES
    Sales expansion
    Resource acquisition
    Diversification
    Competitive risk
    minimization
    STRATEGY

    MEANS
    Modes
    Importing and exporting
    Tourism and transportation
    Licensing and franchising
    Turnkey operations
    Management contracts
    Direct and portfolio
    investment

    Functions
    Marketing
    Production
    Accounting
    Finance
    Human
    resources

    Overlaying
    Alternatives
    Choice of
    countries
    Organization
    and control
    mechanisms

    1-4

    Reasons for Growth of IB


    Expansion of technologytransportation and communication are quicker
    and less costly
    Liberalization of cross-border movements
    Government barriers reduced because:
    desire for better access to greater variety of goods and
    services
    domestic producers forced to be more competitive
    lowered trade barriers to their own exports
    Development of supporting services by business and governments to:
    Ease the flow of goods and services sold abroad
    Reduce risks of IB
    Increase in global competitionfirms have become more global to
    maintain competitiveness

    1-5

    Means of Carrying Out International Operations


    OPERATIONS

    EXTERNAL INFLUENCES

    OBJECTIVES
    PHYSICAL AND
    SOCIETAL FACTORS

    STRATEGY

    MEANS

    COMPETITIVE
    ENVIRONMENT

    Modes
    Importing and exporting
    Tourism and transportation
    Licensing and franchising
    Turnkey operations
    Management contracts
    Direct and portfolio
    investment

    Functions
    Marketing
    Production
    Accounting
    Finance
    Human
    resources

    Overlaying
    Alternatives
    Choice of
    countries
    Organization
    and control
    mechanisms

    1-6

    Modes of IB
    Merchandise exports and importsmost common international
    economic transaction, especially for smaller companies
    Major source of international revenue and expenditures for most
    companies
    Service exports and importsnonproduct international earnings
    Tourism and transportation
    Performance of services for a fee
    turnkey operations
    management contracts
    Use of assets by otherslicensing agreements
    royalties
    Franchisingfranchisor:
    allows franchisee to use trademark
    provides components, technology, services

    1-7

    Modes of IB (cont.)
    Investmentsownership of foreign property in exchange for financial
    return
    Foreign direct investmentinvestor gains a controlling interest in
    foreign company
    joint venture
    mixed venture
    Portfolio investmentnoncontrolling interest

    International Companiesterminology
    Strategic alliancecollaborative arrangement of critical importance to
    the competitive viability of one or more partners
    Multinational enterprise (MNE)company with global approach to
    foreign markets and production
    Globally integrated companyintegrates operations located in different
    countries
    Multidomestic companyforeign-country operations act fairly
    independently
    1-8

    Physical and Societal Influences on International Business


    EXTERNAL INFLUENCES
    OPERATIONS
    PHYSICAL AND
    SOCIETAL FACTORS
    Political policies and
    legal practices
    Cultural factors
    Economic forces
    Geographical influences

    OBJECTIVES

    STRATEGY
    COMPETITIVE
    ENVIRONMENT
    MEANS

    1-9

    External Influences on IB
    Physical and societal factorsmust understand
    Politics that affect whether and how IB occurs
    Domestic and international law determines what managers can do
    in IB
    Economics
    Geographydetermine location and availability of worlds
    resources
    Competitive environment
    Varies by industry, company, and country
    strategies differ across companies
    e.g., importance of controlling labor costs
    e.g., influence of local and international competitors
    size of market differs across countries

    1-10

    Competitive Environment and International Business


    EXTERNAL INFLUENCES

    PHYSICAL AND
    SOCIETAL FACTORS

    COMPETITIVE
    ENVIRONMENT
    Major advantage in price,
    marketing, innovation, or
    other factors
    Number and comparative
    capabilities of competitors
    Competitive differences
    by country

    OPERATIONS

    OBJECTIVES

    STRATEGY

    MEANS

    1-11

    Evolution of Strategy in International Process


    Risk minimizationforeign operations viewed as risky
    international commitments evolve gradually
    Patterns of expansion
    Passive to active pursuit of IB opportunities
    initially wait for foreign opportunity
    External to internal handling of IB
    rely on intermediaries at first
    Limited to extensive modes of operations
    begin with importing or exporting operation
    Few to many foreign locations
    Similar to dissimilar business environments
    Leapfrogging of expansionnew companies begin with international
    focus
    Possible because of founders experience and technological
    advances that help define foreign markets
    1-12

    The Usual Pattern of Internationalism


    Impetus for
    international A
    business

    HIGH

    Active search
    for opportunities

    MEDIUM

    Passive
    response to
    proposals
    Moderately
    similar
    E
    Degree of
    similarity
    between
    foreign and
    domestic
    countries

    Internal versus
    external handling of
    foreign operations
    B

    Very
    dissimilar

    LOW
    Domestic
    Business

    Quite
    similar

    One
    Several
    Many
    D

    Company handles
    its own foreign
    operations

    Other firms
    handle external
    contracts

    Limited
    foreign
    functions,
    usually
    export/
    import

    Limited foreign
    production and
    multiple functions

    Mode of

    operations
    Extensive C
    production
    abroad with
    FDI and all
    functions

    Number of foreign countries in


    which a firm does business
    1-13

    Countervailing Forcescomplicate decision making


    Global standardsexport suited to many countries
    results in economies of scale
    based on global strategy
    Nationally responsive practicesadjust product or service to unique
    local conditions
    multidomestic approach advisable
    Country versus company competitiveness
    Companies compete by seeking maximum efficiency on a global
    scale
    Countries compete with each other to attain economic, political,
    and social goals
    no consensus on measures of goal attainment
    Relationship unclear between country and company performance
    high-value activitiesproduce high profits or performed by
    well-paid employees

    1-14

    Countervailing Forces (cont.)


    Sovereigntyfreedom from external control
    Countries will cede in order to:
    gain reciprocal advantages
    bilateral or multilateral commercial treaties or
    agreements
    attack problems that cannot be solved by a single country
    problem is too big or widespread
    problem results from conditions that spill over from
    another country
    deal with areas of concern that lie outside the territory of all
    countries (noncoastal areas of the ocean, outer space,
    Antarctica)
    technologically advanced countries believe that
    companies should reap benefits from exploitation
    other countries want to share the spoils

    1-15

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