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INTERNATIONALINTERNATIONALBUSINESS; AN OVERVIEWBUSINESS; AN OVERVIEW

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Case: Euro DisneyCase: Euro Disney

1992 debut1992 debut Cultural ChernobylCultural Chernobyl

WhyFrance?:WhyFrance?:

government concessions,central locationgovernment concessions,central location

Popularityof frenchcharactersPopularityof frenchcharacters

largenumber of adaptationslargenumber of adaptations

Eurosproblems:Eurosproblems:The leisurehabitsof Europeans; competitionThe leisurehabitsof Europeans; competition

Thecost of visiting the park; U.SThecost of visiting the park; U.S--FrenchFrench

agricultural tradeanimosityagricultural tradeanimosity

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II -- IntroductionIntroduction

InternationalInternational BusinessBusiness isis allall businessbusiness transactionstransactionsthatthat involveinvolve twotwo orormoremore countriescountries..

InternationalInternational Busi nessBusiness comprisescomprises aa lar gelarge andandgrowinggrowing portionportionofof thethe worldsworlds totaltotal businessbusiness..

InternationalInternational BusinessBusiness usuallyusually takestakes placeplace withinwithinaamoremore diversediverse externalexternal environmentenvironment..

WhyWhy CompaniesCompanies EngageEngage ininI

nternationalI

nternational BusinessBusiness

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AA)) ToTo ExpandExpand SalesSales:: companiescompanies salessales areare dependentdependentonon twotwo factorsfactors:: thethe consumersconsumers interestinterest inin theirtheir

productproduct oror servicesservices andand thethe consumersconsumers abilityability andandwillingnesswillingness toto buybuy themthem..

B)B) AcquireAcquire ResourcesResources:: products,products, services,services, technology,technology,andand informationinformation

C)C) DiversifyDiversify SourcesSources ofof SalesSales andand SuppliesSupplies

D)D) MinimizeMinimize CompetitiveCompetitive RiskRisk:: companiescompanies movemove

internationallyinternationally forfor defensivedefensive reasonsreasons.. ProfitsProfits fromfromoneone marketmarket cancan bebe usedused toto expandexpand operationsoperations ininotherother marketsmarkets..

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ReasonsReasons forfor RecentRecent InternationalInternational BusinessBusiness GrowthGrowth

ExpansionExpansion ofof TechnologyTechnology::

transportation,transportation, telecommunicationstelecommunications;;TransportationTransportation andand telecommunicationstelecommunications costscosts arearemoremore conduciveconducive forfor internationalinternational operationsoperations..

LiberalizationLiberalization ofof CrossCross--BorderBorder MovementsMovements::

goods,goods, services,services, labour,labour, CapitalCapital

DevelopmentDevelopment ofof SupportingSupporting InstitutionalInstitutional ArrangementsArrangements::developmentdevelopment byby businessbusiness andand governmentsgovernments ofofinstitutionsinstitutions thatthat enableenable usus toto effectivelyeffectively applyapply thatthattechnologytechnology..

IncreaseIncrease inin GlobalGlobal CompetitionCompetition::

newnew productsproducts becomebecome globalglobal;; GlobalizationGlobalization ofofproductionproduction

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Modesof InternationalBusinessModesof InternationalBusiness

AA -- MerchandiseMerchandise ExportsExports andand ImportsImports:: visiblesvisibles andand

invisiblesinvisibles

BB -- PerformancePerformance ofof ServicesServices:: feesfees;; turnkeyturnkeyoperationsoperations;; managementmanagementContractsContracts

CC -- UseUse ofofAssetsAssets:: licensinglicensing agreementsagreements;; royaltiesroyalties;;

franchisingfranchising

DD -- InvestmentsInvestments::

11)) For eignForeign DirectDirect InvestmentInvestment:: givesgives thethe investorinvestor aacontrollingcontrolling InterestInterest inin aa foreignforeign companycompany.. ItIt givesgives

accessaccess toto::-- foreignmarketsforeignmarkets

-- foreignresourcesforeignresources

-- higher profitsthanexportinghigher profitsthanexporting

-- partialownershippartialownership

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22)) PortfolioPortfolio InvestmentInvestment:: stockstock inin aa companycompany ororloansloans toto aa companycompany oror countrycountry inin thethe formform ofofbonds,bonds, bills,bills, oror notesnotes thatthat thethe investorinvestor purchasespurchases..

EE -- Other Operational DefinitionsOther Operational Definitions

-- Strategic AlliancesStrategic Alliances

FF MNCs, MNEs, TNCs, Global Company,MNCs, MNEs, TNCs, Global Company,Multidomestic CompanyMultidomestic Company

External Influences on International BusinessExternal Influences on International Business

UnderstandingUnderstanding aa CompanysCompanys PhysicalPhysical andand SocietalSocietalEnvironmentEnvironment ManagersManagers needneed aa workingworking knowledgeknowledge ofofbusinessbusiness operations,operations, aa workingworking KnowledgeKnowledge ofof politicalpoliticalsciences,sciences, law,law, anthropoly,anthropoly, sociology,sociology, economics,economics, andandgeographygeography..

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EvolutionofStrategyintheEvolutionofStrategyintheInternationalizationProcessInternationalizationProcess

A)A) P atternsPatterns ofof ExpansionExpansion:: passivepassive;; externalexternal toto internalinternalhandlinghandling ofof thethe businessbusiness;; limitedlimited toto extensiveextensive modesmodesofofoperationsoperations

B) Deepeningmode ofCommitmentB) Deepeningmode ofCommitment

C) GeographicDiversification(similar culturalC) GeographicDiversification(similar culturalbackground)background)

D) Leapfrogging ofExpansion: companiesarestartingD) Leapfrogging ofExpansion: companiesarestartingwith a globalfocus.with a globalfocus.