The International Business Chapter 1 The International Business What is it?

What is International Business? International business consists of transactions that are devised and carried out across national borders to satisfy the objectives of individuals, companies, and organizations.

Need for International Business More and more firms around the world are going global, including: Manufacturing firms Service companies (i.e. banks, insurance, consulting firms) Art, film, and music companies

Need for International Business causes the flow of ideas, services, and capital across the world offers consumers/owners new choices permits the acquisition of a wider variety of products facilitates the mobility of labor, capital, and technology provides challenging employment opportunities reallocates resources, makes preferential choices, and shifts activities to a global level

Types of International Business Export-import trade Foreign direct investment Licensing Franchising Management contracts

Licensing A business arrangement in which one company gives another company permission to manufacture its product for a specified payment . Licensing lets you instantly tap the existing production, distribution and marketing systems that other companies may have spent decades building. In return, you get a percentage of the revenue from products or services sold under your license. For example, about 90 percent of the $160 million a year in sales at Calvin Klein Inc. comes from licensing the designer's name to makers of underwear, jeans and perfume. It only manufactures and designs women's apparel lines.

The Smoot-Hawley Act The the 1930’s, the U.S. passed the Smoot-Hawley Act, which raised import duties to reduce the volume of goods coming into the U.S. The act was passed in the hope that it would restore domestic employment. The result was a worldwide depression and the collapse of the world financial system.

Expansion of International Trade In the past 30 years, the volume of international trade has expanded from $200 billion to over $7.5 trillion.

Global Links Today International business has created a network of global links that bind countries, institutions, and individuals with trade, financial markets For example, a reduction in coffee production in Brazil would affect individuals and economies worldwide.

Recent Changes in International Business Total world trade declined dramatically after 2000, but is again on the rise. The rate of globalization is accelerating. Regionalization is taking place, resulting in trading blocs. The participation of countries in world trade is shifting.

emerging market make the world sit up and take notice.

The Composition of Trade More recently, there has been a shift of manufacturing to countries with emerging economies. There has been an increase in the area of services trade in recent years.

Globalization Because of globalization, for the first time in history, the availability of international products and services can be accessed by individuals in many countries, from diverse economic backgrounds.