T.J. Joseph Globalization & International Business 2. International business - All of the business activities necessary for creating, shipping, and selling goods and service across national borders 3 Economic Questions * What to Produce? To ensure success in a foreign market, international businesses must understand the many factors that affect the competitive environment and effectively assess their impact. The concept of comparative advantage means that a nation has an advantage over other nations in terms of access to affordable land, resources, labor, and capital. International business refers to the trade of goods, services, technology, capital and/or knowledge across national borders and at a global or transnational scale. All major concepts, terms, theories and theorists are incorporated and cross-referenced. The major task of international business involves understanding the sheer size of the global marketplace. We will further discuss case studies of two successful companies where their marketing campaigns made them fortunes. The political environment of international business refers to the relationship between government and business, as well as the political risk of a nation. Competition may exist from a variety of sources, and the nature of competition may change from place to place. Because strategic management is concerned with organizational performance—be that social, environmental, or economic—your understanding of a company’s SWOT will help you better assess how international business factors should be accounted for in the firm’s strategy. As of November 2010, the sOccket prototype cost $70 to manufacture, but the team hopes to bring the cost down to $10 when production is scaled up. Increasingly, as the Google case study demonstrates, international businesses have an opportunity to create positive social, environmental, and economic values across borders. Understand how entrepreneurship is related to international business. This has the benefit of increasing the variety of goods and services available in the marketplace. Some theorists avowed that international business is defined as an organization that buys and/or sells goods and services across two or more national boundaries, even if management is located in a single country. international business is decidedly more complex that business that operates exclusively in domestic markets.The major task of international business involves understanding the sheer size of the global marketplace. Some governments may view foreign businesses as positive, while other governments may view them as exploitative. The economy of countries may be industrialized (developed), emerging (newly industrializing), or less developed (third world). An international company is involved in exporting and selling its goods and/or services to other nations, but other than exporting (and/or importing, such as purchasing raw materials), has no other investment in these other nations. Multinational – A business strategy that involves selling products and services in different foreign markets without changing the characteristics of the product/service to accommodate the cultural norms or customs of the various markets. Challenges and Opportunities in International Business. To teach a current, dynamic and complete course you need a textbook by authors as passionate and informed about International Business as you are. For consumers, international business introduces them to a variety of goods and services. Additional reading and Internet research opportunities are identified. Globalization & International Business 1. The cultural environment of a foreign nation remains a critical component of the international business environment, yet it is one of the most difficult to understand. Just a few of the issues of unstable governments that international companies must consider include riots, revolutions, war, and terrorism. Overview of International Management. International business is mainly concerned with the issues that are related to international companies and governments’ cross border transactions. International business: International business refers to all commercial activities such as trade of goods, services, technology, knowledge and capital across national borders. in Business Administration - International Business and M.B.A. in International Business, online master's programs from American University's School of International Service, Online Master of Science in International Relations, Fletcher's online Master of Global Business Administration from Tufts University, MS in International Relations and Business at American University, Associate’s Degrees in International Studies, Bachelor’s Degrees in International Relations, Master’s Degrees in International Relations, Graduate Certificates in International Relations, Best Master’s Programs in International Relations for 2018. Why is an understanding of strategy management important in the context of international business? International business remains a broad concept that encompasses the smallest companies that may only export or import with one other country, as well as the largest global firms with integrated operations and strategic alliances around the globe. Successful international businesses recognize the diversity of the world marketplace and are able to cope with the uncertainties and risks of doing business in a continually changing global market. Globalization—the shift toward a more interdependent and integrated global economy—creates greater opportunities for international business. However, the diversity between nations presents unique considerations and a plethora of hurdles, such as: Some of the challenges considered by companies and professionals involved in international business include: The economic environment may be very different from one country to the next. A nation’s economic structure as a free market, centrally planned market, or mixed market also plays a distinct role in the ease at which international business efforts can take place. The foursome invented “a soccer ball with the ability to generate electricity,” Thakkar said. Based in Raleigh, NC, International Business Concepts is a privately owned consulting firm. Some of the significant elements that have advanced international business include: Today, global competition affects nearly every company—regardless of size. Running an international business in foreign countries means that you have to comply with all relevant domestic laws if your business … It may be encouraged or discouraged in favor of cooperation, and the relationship between buyers and sellers may be friendly or hostile. Similarly, the external part of SWOT—the opportunities and threats—helps you assess those environmental conditions that favor or threaten the organization’s strategy. Intrapreneurship is a form of entrepreneurship that takes place inside a business that is already in existence. Pursuant to 20 USCS § 1132 (7), [Title 20. International Business conducts business transactions all over the world. Although most countries now function as free-market economies, China—the world’s most populous country—remains a centrally planned economy. An entrepreneurial perspective will serve you well in this regard. All four students (Jessica Lin, Jessica Matthews, Julia Silverman, and Hemali Thakkar) had experience with developing countries, so they knew that kids love playing soccer (it’s the world’s most popular sport). Even better, the soccer ball can replace kerosene lamps. On the opposite end of the spectrum, centrally planned economies are government-controlled. International business is associated with all business movement that are performed beyond national borders. The entities involved in international business range from large multinational firms with thousands of employees doing business in many countries around the world to a small one-person company acting as an importer or exporter. Participation in international business allows countries to take advantage of their comparative advantage. Education; Chapter 28. These exchanges can go beyond the exchange of money for physical goods to include international transfers of other resources, such as people, intellectual property (e.g., patents, copyrights, brand trademarks, and data), and contractual assets or liabilities (e.g., the right to use some foreign asset, provide some future service to foreign customers, or execute a complex financial instrument). International trade is the concept of this exchange between people or entities in two different countries. Know the definition of international business. The competitive environment is constantly changing according to the economic, political, and cultural environments. The oldest of all international trade theories, Mercantilism, dates back to 1630. Called the sOccket, the soccer ball can bring off-grid electricity to developing countries. The cultural environment of a foreign nation involves commonly shared beliefs and values, formed by factors such as language, religion, geographic location, government, history, and education. Many source suppliers from foreign countries and still more compete against products or services that originate abroad. While a simplistic definition, the factors that impact trade are complex, and economists throughout the centuries have attempted to interpret trends and factors through the evolution of trade theories. Fifteen minutes of play lights a lamp for three hours. Why is an understanding of entrepreneurship important in the context of international business? Entrepreneurship, like strategic management, will help you to think about the opportunities available when you connect new ideas with new markets. An entrepreneur is a person who engages in entrepreneurship. (AACSB: Reflective Thinking, Analytical Skills), http://2012books.lardbucket.org/books/challenges-and-opportunities-in-international-business/, CC BY-NC-SA: Attribution-NonCommercial-ShareAlike. Running an international business in multiple jurisdictions is an exciting endeavor, however, there are a number of legal issues you should be aware of. Taken this all together, there are many ways in which companies can do business abroad. International business can be defined as any business that crosses the national borders of a country. A strategy The central, integrated, and externally oriented concept of how an organization will achieve its performance objectives., in turn, is the central, integrated, ... International business encompasses a full range of cross-border exchanges of goods, services, or resources between two or more nations. Exporting and Importing: Exporting is concerned with the selling of domestic goods in another country. 19th Century: The broader concept of the integration of economies and societies evolved 1870: Began first phase of Globalization 1913: GDP was 22.1 After 1913: Increased Trade Barriers to Protect Domestic Production 1919: World War I: End of the first phase of … Every kick of the ball creates a current that’s captured for future use. Entrepreneurship is the recognition of opportunities (i.e., needs, wants, problems, and challenges) and the use or creation of resources to implement innovative ideas. Because nation-states have unique government systems, laws and regulations, taxes, duties, currencies, cultures, practices, etc. Let’s suppose there are two countries – Country A and Country B. An entrepreneur is starting a business, while an intrapreneur is developing a new product or service in an already existing business. An international businesses strategy, organization, and/or functional decisions categorize it as: The challenging aspect of international business, however, is that many firms combine aspects of both multi-domestic and global operations: Multi-domestic – A strategic business model that involves promoting products and services in various markets around the world and adapting the product/service to the cultural norms, taste preferences and religious customs of the various markets. This chapter explains how companies develop international operations through direct exporting and then investing overseas, and the implications for management. Executive Master’s in International Relations: Who Is It Right For? We partner with some of the world’s most recognized brands in solar, telecommunications, cable and satellite, and renewable energy, offering a … Mercantilism. These transactions include the transfer of goods, services, technology, managerial knowledge, and capital to other countries. Further, within each of these economies are a vast array of variations, which have a major effect on everything from education and infrastructure to technology and healthcare. Many scholars stated that international business is equated only with those big ente… International business encompasses numerous concepts including entry to new markets, trade and foreign direct investments, politics, economics and environmental variables of culture. Such globalization can take place in terms of markets, where trade barriers are falling and buyer preferences are changing. Entrepreneurship, in contrast, is defined as the recognition of opportunities (i.e., needs, wants, problems, and challenges) and the use or creation of resources to implement innovative ideas for new, thoughtfully planned ventures. We partner with a vast portfolio of multi-national clients and specialize in retail marketing and sales. Because nation-states have unique government systems, laws and regulations, taxes, duties, currencies, cultures, practices, etc. We will go into the history and philosophy of the marketing with examples. When a firm has economic operations located in at least two countries, they are often referred to as multinational enterprises or companies (MNE’s or MNC’s). The economic environment can be very different from one nati… The SWOT tool helps you take stock of an organization’s internal characteristics—its strengths and weaknesses—to formulate an action plan that builds on what it does well while overcoming or working around weaknesses. Not every single entity, however, gains from international trade. Globalization is a political agenda that deals with business. International business encompasses a full range of cross-border exchanges of goods, services, or resources between two or more nations. https://enterslice.com/learning/international-business-environment-ibe At … It involves cross-border transactions of goods and services between two or more countries. Learn international business concepts with free interactive flashcards. International trade is business that inevitably has political elements. One of the basic tools of strategy is a SWOT (strengths, weaknesses, opportunities, threats) assessment. 57 Downloads; Abstract. It is common for many international firms to conduct a cultural analysis of a foreign nation as to better understand these factors and how they affect international business efforts. Importing … Strategic management is the body of knowledge that answers questions about the development and implementation of good strategies and is mainly concerned with the determinants of firm performance. Strategic management is the body of knowledge that answers questions about the development and implementation of good strategies and is mainly concerned with the determinants of firm performance. Thus, the ideas of entrepreneurship can be applied not only in new ventures but also in the context of existing organizations—even government. … Its Purpose and History of Influence, Q&A with Dr. Alisa Eland, Associate Director in the International Student Services Office at University of Minnesota, Q&A With Ryan Lucas, Freelance International Photojournalist, Informal Cultural Consultants: Your Key to Success in a Cross-Cultural Environment, Guide to Gaining the Experience Employers Expect: Internships, Assistantships, Study Abroad and More, International Volunteer Recruiter and Coordinator, Where Business Intersects with Foreign Relations, The movement of goods from country to another (exporting, importing, trade), Contractual agreements that allow foreign firms to use products, services, and processes from other nations (licensing, franchising), The formation and operations of sales, manufacturing, research and development, and distribution facilities in foreign markets, A multi-domestic company with independent subsidiaries that act as domestic firms; OR, Global operations with integrated subsidiaries; OR, The formation of the World Trade Organization (WTO) in 1995, The inception of electronic funds transfers, The introduction of the euro to the European Union, Technological innovation that facilitates global communication and transportation, The dissolution of a number of communist markets, thus opening up many economies to private business. 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