MGT 361 InTernaTIonal BusInessChapTer 1:an overvIew of InTernaTIonal BusIness
By end of the chapter, students should be able to:Understand the meaning of International BusinessIdentifyanddescribethebasicformsofInternationalBusiness activitiesIdentify the reasons why firms doing International BusinessThe chapter objectives:
∗IB consists of business transactions betweenparties from more than one country∗The business transactions includes:∗Buying materialsin one country and shipping themto another for processing or assembly (like Applecompany)∗Shipping finished productsfrom one country toanother for retail sale (like high-end cars such asFerrari)∗Building a plantin a foreign country (Samsung)∗Borrowing money from banks in one country tofinance operation in anotherWhat is International Business?
∗Individual∗Investors and businessmen∗Companies∗Private or public∗Company Clusters∗Alliance, subsidiaries, associates∗Government Bodies∗Central Bank∗International Institution∗World Bank, International Monetary FundParticipants
∗Transactions∗IB transactions cross national boundaries∗Legal System∗Forcing one or more countries to adjust the practices to comply withlocal law∗Culture∗For IB, each party needs to adjust its behaviors to meet the expectationof others∗Currency∗In IB, at least 1 party has to convert its currencies into another or bothparties using third country’s currencies∗Availability of Resources∗For IB, natural resources are differ by country∗Operation Nature∗IB is riskier and more complexDomesticvsInternational Business (IB)vs
∗Career Opportunities∗To be prepared for a career in any facet of business world∗Start own Business∗Doing business with partners from other countries∗Job Assignment∗Work for a firm that is owned by corporation headquarters in anothercountry∗To keep pace with future competitors∗To ensure that you have global skills and knowledge to aid your career∗To keep track of latest business instruments∗IB and companies keep improving their technologies, methods,processes and skills in conducting the business, so do we∗Cultural literacy∗Understand and appreciate the similarities and differences of variouscultural backgroundsWhy study International Business?
International Business ActivitiesImportingInternationalInvestmentLicensingFranchisingManagement ContractsExportingFDIPI
•Exporting and Importing•Export: selling of products made in one’s home country for use/resale in othercountries•Import: buying of products made in other countries for sale/resale in one’scountry•International Investment– capital supplied by residents of one country toresidents of another country. Divided into 2 categories:•Foreign Direct Investment(FDI) – investment made for the purpose of controllingproperty, assets or companies located in host country. The most common FDIpractices is throughmerger and acquisition. The firms then can integrate alloperations of the acquired company with their parents company.