Lecture 7 International Environment of Organisations - The...

Lecture 7 International Environment of Organisations
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The International Environment of Business The International Environment of Business Dr. Svitlana Voronkova Dr. Svitlana Voronkova
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BCBUS 2 Global Environment and International Managers Difficulties operating in borderless world The international business environment Economic Legal-political Socio-cultural International trade alliances Ways of conducting business internationally Multinational corporations
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BCBUS 3 International trade existed for many centuries. Companies operating internationally, such as English and Dutch East India Companies existed since 17 th century 20 th century was special with regard to pace international trade and business were developing. Since 1950s international trade increased in 20 times! Two forces especially influenced the development of international business: Developments in informational technologies (IT). IT, both as a product and production / communication technology stimulate international trade The availability and mobility of capital The growth of international business
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BCBUS 4 The growth of international business
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BCBUS 5 Ford Escort Spain Spain Wiring harness Battery Canada Canada Glass Radio Italy Italy Cylinder head Defroster grills Austria Austria Radiator Heater hoses USA USA Wheel nuts Hydraulic tappet Norway Norway Tires Denmark Denmark Fan belt Japan Japan Starter France France Alternator Master cylinder Netherlands Netherlands Paints Hardware Germany Germany Pistons Speedometer Belgium Belgium Seat pads Sweden Sweden Hose clamps Cylinder bolt UK UK Carburettor Clutch, Ignition
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BCBUS 6 The growth of international business Companies increasingly seek to expand internationally. Tayeb (2000) classifies reasons behind expansion into push and pull factors Push factors : Saturation of home markets Excessive competition in home markets Pull factors: Large markets (China, India) Lower labour costs (CEE, Asia) Lax environmental regulation
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BCBUS 7 A Borderless World Business is becoming a unified, global field Companies that think globally have a competitive edge Domestic markets are saturated for many companies Consumers can no longer tell from which country they are buying
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BCBUS 8 Four Stages of Globalization Domestic stage: market potential is limited to the home country production and marketing facilities located at home International stage: exports increase company usually adopts a multi-domestic approach Multinational stage: marketing and production facilities located in many countries more than 1/3 of its sales outside the home country Global (or stateless) stage: making sales and acquiring resources in whatever country offers the best opportunities and lowest cost ownership, control, and top management tend to be dispersed
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BCBUS 9 Global (stateless) Corporations Number is increasing Awareness of national borders decreasing Rising managers expected to know a 2 nd or 3 rd language Corporate Example – Nestle (Swiss)
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