C1 International Business and Trade.pdf - International...

This preview shows page 1 out of 17 pages.

Unformatted text preview: International business and trade: introduction Presented by: Amabella Grace N. Siaton, MBA Learning objectives: Chapter 1 ● ● ● Introduction to International Business and Trade Economic Uncertainties (that affects the value of international trade and investment) Degree of globalization in relation to the countries’ sizes Benefits of International business Today most business activities are global in scope. Technology, research, capital investment, and production, as well as marketing, distribution, and communications networks, all have global dimensions. QUESTION: “ARE WE ALL READY TO TAKE THE CHALLENGE?” Benefits of International business ★ ★ ★ ★ ★ ★ ★ ★ Increased revenues Longer product life span Easier cash-flow management Better risk management Benefiting from currency exchange Disposal of surplus goods Enhanced reputation Opportunity to specialize Introduction INTERNATIONALIZATION GLOBALIZATION is the practice of designing products, services and internal operations to facilitate expansion into international markets. refers to the widening set of interdependent relationships among people from different parts of a world that happens to be divided into nations. the process of designing products to meet the needs of users in many countries or designing them so they can be easily modified, to achieve this goal. Retrieved from: refers to the processes by which a company brings its business to the rest of the world. Introduction INTERNATIONALIZATION GLOBALIZATION Companies in this stage are fully committed to and involved in international marketing activities. Such companies seek markets all over the world and sell products that are a result of planned production for markets in various countries. This planning generally entails not only the marketing but also the production of goods outside the home market. At this point, a company becomes an international or multinational marketing firm. At this stage, companies treat the world, including their home market, as one market. Market segmentation decisions are no longer focused on national borders. Instead, market segments are defined by income levels, usage patterns, or other factors that frequently span countries and regions. Retrieved from: Factors in international business operation Factors in international business operation 1. Consider the MODES 2. The OPERATING ENVIRONMENT differs from one country to another 3. Set REALISTIC business objectives based in number 2. 4. Outline your strategies based in your data in number 3 5. The MEANS will follow Increasing globalization ● Increase in and application of technology ● Liberalization of cross-border trade and resource movements ● Development of services that support international business ● Growth of consumer pressures ● Increase in global competition (consider BORN GLOBAL COMPANIES) ● Changes in political situations and government policies ● Expansion of cooperation How? cross-national globalization How much it will cost? ● Threats to National Sovereignty ● Environmental Stress ● Growing Income Inequality & Personal Stress Threats to National Sovereignty (Freedom to act locally) ➔ Local Objectives and Policies: there are set of countries’ priorities. ➔ Overdependence of Small Economies: small economies depend so much on larger ones for supplies and sales that they are vulnerable to foreign mandates. ➔ Cultural Homogeneity: globalization homogenizes products, companies’ work methods, social structures, and even language, thus undermining the cultural foundation of sovereignty. Environmental Stress ➔ Growth consumes more nonrenewable natural resources and increases environmental damage—despoliation through toxic runoffs into rivers and oceans, air pollution from factory and vehicle emissions, and deforestation that can affect weather and climate. ➔ Globalization opponents contend that by buying from more distant locations, theadded transportation increases the carbon footprint, which refers to the total set of greenhouse gases emitted. Growing Income Inequality & Personal Stress ➔ Income Inequality: social inequality is increasing. Accdg to Childfund International (2020), 92.3 million lives are below the poverty line in the Philippines. ➔ Personal Stress: the growth in globalization goes hand in hand not only with increased insecurity about job and social status but also with costly social unrest. Engage in international business Why? ● Expanding the sales ● Acquiring resources ● Reducing risks Modes of international business operations ● ● Imports Exports ● Merchandise exports imports ● Service exports imports ○ ○ ○ and and Tourism & Transportation Service Performance Asset use ● Investments ○ ○ ○ Foreign Direct Investments the investor takes a controlling interest in a foreign company. Joint Venture- when two or more companies share ownership of an FDI. POrtfolio Investmenta non-controlling financial interest in another entity (stocks or loans). Types of international organizations Multinational Company (MNC) Transnational Company (TNC) ➔ ➔ ➔ This is a corporation that has assets and facilities in one or more countries, other than the home country, and has a centralized office where global management is coordinated. Decision making affects all the subsidiaries globally. Retrieved from: ➔ These are corporations which operate in other countries, other than the home country, and do not have a centralized management system. Decisions are made to suit the operating zone. Similar firms operating in other countries cannot be referred to as subsidiaries, since the management system is not centralized. International Business & domestic business How they differ? ● Physical factors (such as a country’s geography or demography) ● Social factors (such as its politics, law, culture, and economy) ● Competitive factors (such as the number and strength of a company’s suppliers, customers,and rival firms) ...
View Full Document

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture