GEB+3373+S2011+PP+Ch01+E-book

GEB+3373+S2011+PP+Ch01+E-book - Chapter 1 Globalizing...

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1 Chapter 1 Globalizing Business GEB 3373, Spring 2011 1
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2 GEB 3373, Spring 2011 2 Global Business in the 21 st Century Is there a difference between the terms International Business (as used in the title of this course) and Global Business (the title of the textbook)? s Most courses in your academic program assume a domestic reference frame with a homogeneous cultural, legal, and economic environment. “International Business” implies grafting a foreign dimension onto this homogeneous framework to see how domestic institutions and practices might be affected by the broader context. It still keeps separate the idea of a “home country” and “foreign operations,” and thus maintains a somewhat ethnocentric orientation.
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3 GEB 3373, Spring 2011 3 Global Business in the 21 st Century s “Global Business” has a broader connotation. It views the MNE as an entity that spans numerous countries with subsidiaries that have relatively co- equal status within the firm. The importance of a “home country” is diminished because the essence of concern is how to integrate the various parts into a single organism that transcends the geographic, political, and cultural constraints of the nation-state.
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4 GEB 3373, Spring 2011 4 Global Business in the 21 st Century The modern business enterprise of the 21 st century has evolved over many years from a purely local company to regional, national, and now, international operations and markets. Some important developments and innovations have occurred over the past few decades that have driven the rise of these Multinational Enterprises (MNE) and their preeminent position in the world’s commerce.
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5 GEB 3373, Spring 2011 5 Global Business in the 21 st Century We have identified five factors, divided into 3 groups, that together create a critical mass of capabilities that set the stage for the expansion of business enterprises from their home bases into many parts of the world. Environmental factors include The computer/telecommunications revolution Globalization Production and Logistics factors include Economies of scale Containerization Integration and Coordination factors include Supply chain management
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6 GEB 3373, Spring 2011 6 Global Business in the 21 st Century These five factors have also made it critical that companies, whether international in scope or purely local, must consider global issues: Where to produce Where to sell Which markets to serve from each production facility How to respond when local conditions change How to maximize the after-tax free cash flow of the overall company
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7 GEB 3373, Spring 2011 7 Global Business in the 21 st Century Most commercial transactions in today’s world are between private companies rather than between countries. The objective of these private companies is to create
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GEB+3373+S2011+PP+Ch01+E-book - Chapter 1 Globalizing...

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