International Business Session 1

An Overview of
International Business
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
The Business of the Olympics
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
How Does International Business
Differ from Domestic?

• Currency conversion
• Legal systems
• Culture
• Availability of resources
Why Study International Business?

• Large organizations • Competitors

• Foreign-owned • Business techniques and
subsidiaries tools
• Small businesses • Cultural literacy
International
Business Activities

• Exporting and Importing

• International Investments
• Licensing, Franchising, and Management
Contracts
Exporting and Importing

• Exporting: selling of • Importing: buying of

products made in one’s products made in other
own country for use or countries for use or
resale in other countries resale in one’s own
country
Visible and Invisible Trade

• Trade in Goods • Trade in Services

– Merchandise exports and – Service exports and
imports imports
– Visible trade – Invisible trade
International Investments

• Capital supplied by residents of one country to

residents of another
• Two categories:
– Foreign direct investments
– Portfolio investments
Other Forms of
International Business Activity

Management
Licensing Franchising
contracts
Variations of Organizations

Multinational Corporation

Multinational Enterprise
Multinational Organization
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
The Era of Globalization

Globalization: the inexorable integration of markets,

nation-states, and technologies…in a way that is
enabling individuals, corporations and nation-states to
reach around the world farther, faster, deeper, and
cheaper than ever before
Contemporary Causes of Globalization

Strategic Imperatives
• To leverage core
competencies
• To acquire resources and
supplies
• To seek new markets
• To better compete with
rivals
Environmental Change and Globalization

Changes in
Technological
Political
Changes
Environments
Globalization and
Emerging Markets
Thank You