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2004 Prentice Hall. 1-2. Chapter Objectives. Discuss the meaning of international businessExplain the importance of understanding international businessIdentify and describe the basic forms of international business activitiesDiscuss the causes of globalization. 2004 Prentice Hall. 1-3. The Bus
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1. ©2004 Prentice Hall 1-1 Chapter 1:An Overview ofInternationalBusiness International Business, 4th Edition
Griffin & Pustay
2. ©2004 Prentice Hall 1-2 Chapter Objectives Discuss the meaning of international business
Explain the importance of understanding international business
Identify and describe the basic forms of international business activities
Discuss the causes of globalization
3. ©2004 Prentice Hall 1-3 The Business of the Olympics Intense reflection of international business
Government of games by IOC
Competition for hosting
Revenue sources for the Olympics
Broadcast rights
Corporate sponsorships
4. ©2004 Prentice Hall 1-4 What is International Business? Business transactions between parties from more than one country
Parties may include
Private individuals
Individual companies
Groups of companies
Governmental agencies
5. ©2004 Prentice Hall 1-5 How Does International BusinessDiffer from Domestic? Currency conversion
Legal systems
Culture
Availability of resources
6. ©2004 Prentice Hall 1-6 Why Study International Business? Large organizations
Foreign-owned subsidiaries
Small businesses
Competitors
Business techniques and tools
Cultural literacy
7. ©2004 Prentice Hall 1-7 International Business Activities Exporting and Importing
International Investments
Licensing, Franchising, and Management Contracts
8. ©2004 Prentice Hall 1-8 Exporting and Importing Exporting: selling of products made in one’s own country for use or resale in other countries
Importing: buying of products made in other countries for use or resale in one’s own country
9. ©2004 Prentice Hall 1-9 53% of Boeing’s aircraft sales are to foreign airlines
10. ©2004 Prentice Hall 1-10 Visible and Invisible Trade Trade in Goods
Merchandise exports and imports
Visible trade
Trade in Services
Service exports and imports
Invisible trade
11. ©2004 Prentice Hall 1-11 International Investments Capital supplied by residents of one country to residents of another
2 categories:
Foreign direct investments
Portfolio investments
12. ©2004 Prentice Hall 1-12 Other Forms of International Business Activity Licensing: firm in one country licenses the use of its intellectual property to a firm in a second country in return for a royalty payment
Franchising: firm in one country authorizes a firm in another country to utilize its operating system and intellectual property
13. ©2004 Prentice Hall 1-13 Management Contracts A firm in one country agrees to operate facilities or provide other management services to a firm in another country for an agreed-upon fee
Common in upper-end international hotel industry
14. ©2004 Prentice Hall 1-14 This Beijing restaurant is one of 430 that McDonald’s has built in China
15. ©2004 Prentice Hall 1-15 Variations of Organizations Multinational Corporation (MNC)
Multinational Enterprise (MNE)
Multinational Organization (MNO)
16. ©2004 Prentice Hall 1-16 Multinational Corporations (MNCs) Engage in foreign direct investment
Own and control foreign assets
Buy resources in multiple countries
Create goods and services in multiple countries
Sell goods and services in multiple countries
17. ©2004 Prentice Hall 1-17 Table 1.1 The World’s Largest Corporations – 2002
18. ©2004 Prentice Hall 1-18 Motives for Globalization To leverage core competencies
To acquire resources and supplies
To seek new markets
To better compete with rivals
19. ©2004 Prentice Hall 1-19 Environmental Change and Globalization Changes in Political Environment
Technological Changes
20. ©2004 Prentice Hall 1-20 Framework of Book The World’s Marketplaces
International Environment
Managing International Business
Managing International Business Operations