CHAPTER I
INTERNATIONAL BUSINESS; AN OVERVIEW
Case: Euro Disney
- 1992 debut - "Cultural Chernobyl"
- Why France?: government concessions, central location Popularity
of french characters
- large number of adaptations
- Euro's problems: the leisure habits of Europeans; competition
- The cost of visiting the park; U.S-French agricultural trade
animosity.
I - Introduction
International Business is all business transactions that involve
two or more countries.
International Business comprises a large and growing portion of
the world's total business.
International Business usually takes place within a more diverse
external environment.
Why Companies Engage in International Business
A) To Expand Sales: companie's sales are dependent on two factors:
the consumers' interest in their product or services and the consumers'
ability and willingness to buy them.
B) Acquire Resources: products, services, technology, and information
C) Diversify Sources of Sales and Supplies
D) Minimize Competitive Risk: companies move internationally for
defensive reasons. Profits from one market can be used to expand
operations in other markets.
Reasons for Recent International Business Growth
- Expansion of Technology: transportation, telecommunications;
- Transportation and telecommunications
- costs are more conducive for international
- operations.
Liberalization of Cross-Border Movements: goods, services, labour,
Capital
Development of Supporting Institutional Arrangements: development
by business and governments of institutions that enable us to
effectively apply that technology.
Increase in Global Competition: new products become global;
Globalization of production
Modes of International Business
A - Merchandise Exports and Imports: visibles and invisibles
B - Performance of Services: fees; turnkey operations; management
Contracts
C- Use of Assets: licensing agreements; royalties; franchising
D - Investments:
1) Foreign Direct Investment: gives the investor a controlling
Interest in a foreign company. It gives access to:
- foreign markets
- foreign resources
- higher profits than exporting
- partial ownership
2) Portfolio Investment: stock in a company or loans to a company
or country in the form of bonds, bills, or notes that the investor
purchases.
E - Other Operational Definitions
- Strategic Alliances
F - MNCs, MNEs, TNCs, Global Company, Multidomestic Company
External Influences on International Business
Understanding a Company's Physical and Societal EnvironmentManagers
need a working knowledge of business operations, a workingKnowledge
of political sciences, law, anthropoly, sociology, economics,and
geography.
Evolution of Strategy in the Internationalization Process
A) Patterns of Expansion: passive; external to internal handling
of the business; limited to extensive modes of operations
B) Deepening mode of Commitment
C) Geographic Diversification (similar cultural background)
D) Leapfrogging of Expansion: companies are starting with a global
focus.
chapter 3