International Business: Strategy, Management, and the New Realities 1.Introduction to International Business Strategy Management & the New Realities by Cavusgil, Knight and Riesenberger FM : Anis Gunawan,MM

International Business: Strategy, Management, and the New Realities

1.Foundation concepts of International business 2. The environment of International Business 3.Strategy and opportunity assessment 4. Entering and operating in International Markets. 5. Functional Area excellence

International Business – A Firm Level Activity Performance of trade and investment activities by firms across national borders. Chin a

International Business: Strategy, Management, and the New Realities The Nature of International Business 1.All value-adding activities including sourcing, manufacturing, and marketing, can be performed in international locations 2.The subject of cross-border trade can be products, services, capital, technology, know how, and labor 3.Firms internationalize through exporting, foreign direct investment, licensing, franchising, and collaborative ventures Nafta

International Business: Strategy, Management, and the New Realities International Trade Exchange of products and services across national borders; typically through exporting and importing. I&Evideos\Indo export.flvvideos\Indo export.flv

International Business: Strategy, Management, and the New Realities Exporting Sale of products or services to customers located abroad, from a base in the home country or a third country. Export

International Business: Strategy, Management, and the New Realities Importing or Global Sourcing Procurement of products or services from suppliers located abroad for consumption in the home country or a third country.

Comparing the Growth Rates of World GDP and World Exports

International Business: Strategy, Management, and the New Realities Dramatic Growth of FDI Since the 1980s September 11, 2001 interrupted FDI inflows with the worldwide panic that ensued following the terrorist attacks in the United States. Developed economies = Australia, Canada, Japan, the United States, and most countries in Western Europe. Developing economies = Parts of Africa, Asia, and Latin America. Of particular significance is the growth of FDI into developing economies despite widespread poverty and less investment capital than advanced economies. The improved lives of billions are directly linked to world trade and investment.

Foreign Direct Investment (FDI) Inflows into World Regions (in Billions of U.S. Dollars per Year)

Leading Countries in International Services Trade

Service Industry Sectors That Are Rapidly Internationalizing

The Four Risks of International Business

Geographic Location of Multinational Enterprises, 2006

International Business: Strategy, Management, and the New Realities Globalization of Markets and the Internationalization of the Firm

International Business: Strategy, Management, and the New Realities Globalization of Markets: A Macro Concept Two mega trends have altered the international business landscape: the globalization of markets or economies and technological advances. Market globalization is a broad term referring to the interconnectedness of national economies and the growing interdependence of buyers, producers, suppliers, and governments in different countries. Globalization allows firms to view the world as one large marketplace for goods, services, capital, labor, and knowledge.

Phases of Globalization 1 st Phase: 1830, peaking around 1880 Aided by railroads, ocean transport; resulting in the rise of manufacturing and trading companies 2 nd Phase: 1900, peaking late 1920s Fueled by electricity and steel; early MNEs 3 rd Phase: 1948, peaking around 1970 GATT, end of WW II, Marshall Plan; gradual reduction of barriers to trade 4 th Phase: 1980, peaking around 1997 Fueled by Internet and other technologies: rapid liberalization in Emerging Markets…

Phases of Globalization Since the 1800s

International Business: Strategy, Management, and the New Realities The Death of Distance Airbus 380

The Drivers and Consequences of Market Globalization

International Business: Strategy, Management, and the New Realities Information Technology The cost of computer processing fell by 30 percent per year during the past two decades, and continues to fall. The remarkable performance of the U.S. economy in the 1990s was due in large part to aggressive integration of IT into firms’ value-chain activities, which accounted for 45 percent of total business investments at the time. IT alters industry structure, changes the rules of competition, and creates new ways to outperform rivals, thus forming the basis for competitive advantage. Data, information, and experience can be readily shared via collaboration software within a multinational company. Smaller firms can leverage IT to design and produce customized products that can be targeted to narrow, cross-national niches. The impact of IT on our daily lives has been profound- cell phones, Google, Yahoo, etc.

Declining Cost of Global Communication and Growing Number of Internet Users

Examples of How Firms Value Chain Activities Can Be Internationalized

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