International business 5th griffin chapter 01

an overview of
international
business

international business, 5th edition

chapter 1


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

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The Business of the Olympics

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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

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

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Why Study International

Business?
• Large organizations
• Foreign-owned subsidiaries
• Small businesses
• Competitors
• Business techniques and tools
• Cultural literacy
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International
Business Activities
• Exporting and Importing
• International Investments
• Licensing, Franchising, and
Management Contracts

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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

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Figure 1.1 Exports as a % of GDP

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Visible and Invisible Trade
• Trade in Goods
– Merchandise exports and imports
– Visible trade

• Trade in Services
– Service exports and imports
– Invisible trade
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Exporting at Boeing

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

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Other Forms of
International Business Activity

Management
contracts
Licensing

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Franchising


Variations of Organizations

Multinational Corporation
Multinational Enterprise
Multinational Organization

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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
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Table 1.1 The Largest MNCs

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• ExxonMobil

• Chevron

• Wal-Mart

• DaimlerChrysler

• Royal Dutch Shell

• Toyota Motor

• BP

• Ford Motor

• General Motors

• ConocoPhillips

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

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Environmental Change and
Globalization

Changes in
Political
Environments

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Technological
Changes


Figure 1.2 World Exports
as a % of World GDP

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Figure 1.3 Foreign Direct
Investment Relative to World GDP

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Globalization and
Emerging Markets

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• Argentina

• Mexico

• Brazil

• Poland

• China

• South Africa

• India

• South Korea

• Indonesia

• Turkey

Framework of Book
• The World’s Marketplaces
• International Environment
• Managing International Business
• Managing International Business
Operations

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