Title: INTERNATIONAL BUSINESS, 7e
1INTERNATIONAL BUSINESS, 7e
- Czinkota
- Ronkainen
- Moffett
2Chapter 1
- The International Business Imperative
3Learning Objectives
- To understand the history and impact of
international business. - To learn the definition of international
business. - To recognize the growth of global linkages today.
- To understand the U.S. position in world trade
and the impact international business has on the
United States. - To appreciate the opportunities and challenges
offered by international business.
4Need for International Business
- More and more firms around the world are going
global, including - Manufacturing firms
- Service companies (i.e. banks, insurance,
consulting firms) - Art, film, and music companies
5Need for International Business
- International business
- causes the flow of ideas, services, and capital
across the world - offers consumers new choices
- permits the acquisition of a wider variety of
products - facilitates the mobility of labor,
capital, and technology - provides challenging employment opportunities
- reallocates resources, makes preferential
choices, and shifts activities to a global level
6What is International Business?
- International business consists of transactions
that are devised and carried out across national
borders to satisfy the objectives of individuals,
companies, and organizations.
7Types of International Business
Export-import trade
Foreign direct investment
Licensing
Franchising
Management contracts
8International Business Questions
- How will an idea, good, or service fit into the
international market? - Should trade or investment be used to enter a
foreign market? - Should supplies be obtained domestically or
abroad? - What product adjustments are necessary to be
responsive to local conditions? - What are the threats from global competitors, and
how can these threats be counteracted?
9International Business and the Roman Empire
- Pax Romana, or Roman Peace ensured that merchants
were able to travel safely and rapidly. - Common coinage simplified business transactions.
- Rome developed a systematic law, central market
locations, and an effective communication system
all of which enabled international business to
flourish in the Roman Empire. - The growth of the Roman Empire occurred mainly
through the linkages of business
10International Business and the Roman Empire
(cont.)
- The decline of the Roman Empire can be attributed
in part to - infighting and increasing decadence
- the Pax Romana being no longer enforced
- the decline of use and acceptance of the common
coinage - declining levels of communication
- As a result, former Roman allies cooperated with
invaders.
11United States A Global Leader
- The United States has developed a world
leadership position due to - its use of market-based transactions in the
Western world - a broad flow of ideas, goods, and services across
national borders - an encouragement of international communication
and transportation - Pax Americana, an American sponsored and enforced
peace
12The Smoot-Hawley Act
- The the 1930s, the U.S. passed the Smoot-Hawley
Act, which raised import duties to reduce the
volume of goods coming into the U.S. - The act was passed in the hope that it would
restore domestic employment. - The result was a worldwide depression and the
collapse of the world financial system.
13Expansion of International Trade
- In the past 30 years, the volume of international
trade has expanded from 200 billion to over 7.5
trillion. - The sales of foreign affiliates of multinational
corporations are now twice as high as global
exports.
14Global Links Today
- International business has created a network of
global links that bind countries, institutions,
and individuals with trade, financial markets,
technology, and living standards. - For example, a reduction in coffee production in
Brazil would affect individuals and economies
worldwide.
15Recent Changes in International Business
- Total world trade declined dramatically after
2000, but is again on the rise. - The rate of globalization is accelerating.
- Regionalization is taking place, resulting in
trading blocs. - The participation of countries in world trade is
shifting.
16The Composition of Trade
- Between the 1960s and the 1990s the importance
of manufactured goods increased while the role of
primary commodities (i.e. rubber or mining) had
decreased. - More recently, there has been a shift of
manufacturing to countries with emerging
economies. - There has been an increase in the area of
services trade in recent years.
17The Current U.S. International Trade Position
Exports and Imports of Goods and Services per
Capita for Selected Countries
Country
Exports per Capita
Imports per Capita
Australia Brazil China Japan Kenya United
Kingdom United States
4,296 379 222 4,165 91
4,767 3,472
4,525 428 199 3,622 125
5,500 4,962
18The Impact of International Business on the
United States
- U.S. international business outflows are
important on the macroeconomic level in terms of
balancing the trade account. - On the microeconomic level, participation in
international business can help firms achieve
economies of scale that cannot be achieved in
domestic markets.
19Average Plant Salary and Wages (per worker,
dollars per hour)
20Globalization
- Because of globalization, for the first time in
history, the availability of international
products and services can be accessed by
individuals in many countries, from diverse
economic backgrounds.
21The Structure of this Book
- Part One introduces the importance of
international business and its global linkages. - Part Two presents the environment of
international business, addressing culture,
policies, politics, and law. - Part Three provides coverage of the theory of
international trade and investment and presents
balance of payments issues. - Part Four discusses markets, financial systems,
economic integration, and emerging market
concerns.
22The Structure of this Book (cont.)
- Part Five presents the strategy considerations
surrounding international business. - Part Six targets the operational issues
surrounding international business, using an
implementation-oriented perspective. - Part Seven concludes the book with a focus on the
future of the field and the readers career.