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Making, buying, and selling goods andservices within a country is calleddomestic business.If you purchase a soft drink or milk madein your own country, you are participatingin domestic business
Local or international businessOn the other hand, if you buy a shirt inReykjavik made in China while shoppingat your favorite store, you are involved inthe global economy.The purchase was made on yourshopping trip and the garment was madehalfway around the globe.
The nature of international businessInternational business:The study of transactions taking place acrossnational borders for the purpose of satisfying theneeds of individuals and organizations.What is it?
International businessInternational businessincludes allbusiness activities needed to create, ship,and sell goods and services acrossnational borders.International business may also be calledglobal business,international tradeandforeign trade.
27Need for International BusinessInternational business:causes the flow of ideas, services, andcapital across the worldoffers consumers new choicespermits the acquisition of a widervarietyof productsfacilitates the mobility of labor,capital, and technologyprovides challenging employmentopportunitiesreallocates resources, makes preferentialchoices, and shifts activities to a globallevel
Management in InternationalBusinessIn additional to domestic business management skills,international business management requiresSocial science understandingPolitical science appreciationLegal awarenessAnd an innate ability in:AnthropologySociologyPsychology• Economics• Geography1-4
Why Engage in InternationalBusinessExpand salesVolkswagen (Germany)Ericsson (Sweden)IBM (United States)Acquire resourcesBetter components, services, productsForeign capitalTechnologiesinformationMinimize riskTake advantage of the business cycle for products/servicesDiversify among international markets1-5
Globalization
Interdependence
Globalization of marketsEconomic Globalization: The growing interdependence oflocations and economic actors across countries and regions.Consequences of Globalization:Figure 1.1The consequences of globalizationIncreasinginterdependence of peoplearound the globe
Globalization– driving forcesFigure 1.2The dynamics of globalization
What are institutions?
What are institutions?Institutions:“Sets of common habits, routines, established practices, rules, or laws thatregulate the interaction between individuals and groups.”Formal:Rules that can be of the form of legal codes and laws. Can exist within a firmsuch as responsibilities, job descriptions, codes of conduct, and accounting andfinancial regulations. (E.g. GATT, WTO)Informal:Are not always laid out in the form of written instruction, but come out ofusage and tradition and are often unwritten and tacit.
GATT

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Term
Fall
Professor
Ásta Dís Óladóttir
Tags
Business, Globalization,

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