INTERNATIONAL BUSINESSInternational business consists of all

commercial transactions between two or more countries.

Today global events and competition affect almost all companies large and small because most sell output to and secure supplies from foreign countries.

Many companies also compete against products and services that come from abroad

Thus most managers, regardless of industry or company size, need to approach their operating strategies from an international standpoint.

GlobalisationIt refers to the integration of world

economies through the reduction of barriers to the movement of trade, capital, technology

and people

Forces driving globalisationIncrease in and expansion of technologyLiberalisation of cross border trade and

resource movement.Development of services that support

international businessGrowing consumer pressuresIncreased global competitionChanging political situationsExpanded cross national cooperation.

Arguments against globalizationThreats to national sovereigntyEconomic growth and environmental stressGrowing income inequality

Threats to national sovereigntyHarm to the local objectives and policiesLocal overdependenceThreat to cultural homogeneity

Economic growth and environmental stress

As globalization brings in growth, it consumes more non renewable resources and increases environ mental damage.

Water pollution through toxic and pesticide runoffs into rivers and oceans

Air pollution from factory and vehicle emissions

Deforestation

Growing income inequality

GDP rising but the benefits do not percolate to level of the ordinary masses.

Why international businessTo create value for their organisationExpanding salesAcquiring resourcesMinimising risk

Modes of operation in international businessMerchandise exports and importsService exports and importsInvestments

Merchandise exports and importsMerchandise exports are tangible products

that are sent out of a countryMerchandise imports are goods bought in a

countryBecause we can actually see these goods as

they leave and enter the country, we sometimes call them visible exports and imports.

Service exports and imports

When we refer to non product international earnings we use the term service exports and imports.

The company or individual that provides the service and receives payments makes a service export.

The company or individual that receives the service and pays for it makes a service import.

It can be of three forms :- Tourism and transportation, Service performance , Asset use.

Investments

Foreign investment means ownership of foreign property in exchange for a financial return such as interest and dividends.

It can be of two forms :- Direct investment & Portfolio investments.

How international business differs from domestic businessPhysical and social factors• Geographic influences• Political policies• Legal policies• Behavioral factors• Economic forces

The competitive environment• Competitive strategy for products• Company resource and experience• Competitors faced in each market