International Business Part One

Background For International Business

Chapter One

Globalization and International Business

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Chapter Objectives

• To define globalization and international business and show how they affect each other

• To understand why companies engage in international business and why international business growth has accelerated

• To discuss the major criticisms of globalization• To become familiar with different ways in which

a company can accomplish its global objectives• To apply social science disciplines to

understanding the differences between international and domestic business

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Definition of Globalization

The broadening set of interdependent relationships among people from different parts of a world that happens to be divided into nations

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Definition of International Business

All commercial transactions—including sales, investments, and transportation—that take place between two or more countries

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Factors in Increased Globalization

• Increase 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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The Criticisms of Globalization

• Threats to national sovereignty

• Growth and environmental stress

• Growing income inequality

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Reasons That Firms Engage in International Business

• Expanding sales

• Acquiring resources

• Minimizing risk

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Modes of Operation in International Business

• Merchandise exports and imports

• Service exports and imports

• Tourism and Transportation

• Service Performance

• Asset Use

• Investments

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Types of International Organizations

• Collaborative arrangements

• Strategic Alliance

• Multinational Enterprise (MNE)

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Views on future of international business and globalization

• Further globalization is inevitable.

• International business will grow primarily along regional rather than global lines.

• Forces working against further globalization and international business will slow down both trends.