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International Business : The Challenge of Global Competition, 8/e
Donald Ball
Wendell H. McCulloch, California State University Long Beach
Paul L. Frantz, California State University Long Beach
Michael Geringer, California Polytechnic State University
Michael S. Minor, University of Texas Pan American
The Rapid Change of Global Business

E Learning Session

  1. Why you need international business experience and how to get it. (pg 3) PowerPoint (25.0K)PowerPoint (33.0K)
    1. Realization of the importance of understanding overseas business
    2. Managers of organizations assume recent graduates have knowledge of international aspects of business
    3. Distribution of products and services are worldwide and expanding
  2. International business terminology (pg 6)
    1. Multinational, Global, International and Transnational Companies
      • Terms used with a confusing array of meanings
      • Multinational used to described firms with operations in more than one country
      • Global company has been defined as one that
        1. Searches the world for (a) market opportunities, (b) threats from competitors, (c) sources of products, raw materials, and financing and (d) personnel
        2. Seeks and maintains a presence in key markets
        3. Looks for similarities, not differences among markets
        4. Concept Check: A global company exhibits all the following characteristics except
          1. Seeks and maintains a presence in key world markets
          2. Looks for similarities in markets rather than differences
          3. Searches the world for market opportunities
          4. All of the above are characteristics of a global company Concept Check
      • UN has used transnational in same meaning or multinational enterprises
      • Some business people use transnational to describe a joint venture among two or more firms from different countries
      • A combination of Global and multinational is referred to by some as transnational
    2. Organization of a Transnational
      • Generally, 50%-50% ownership
      • Examples, ABB, Shell
    3. Japanese-Dochakuka
      • Global localization
      • Serving global products to local markets with individual flexibility
    4. Supranational corporation
      • Operations an ownership are multinational
      • May be applied to firms chartered by an international legal authority
    5. Definitions used in the text
      • International business
        1. Business who conducts business across national borders
        2. Includes international trade an foreign manufacture
      • Foreign business
        1. Domestic operations in a foreign country
        2. The Mexican operations of a US company would be a foreign business
      • Multidomestic company (MDC) Concept Check: True or False: A global company and a multi-domestic company, which does business in many different world markets, differs because the global company’s strategy is more toward integration of production of marketing efforts. Concept Check
        1. A firm with multicountry operations, each of which formulates its own strategies based on local market situation
      • Global company (GC)
        1. A firm operating in multiple countries attempting to standardize and integrate operations in worldwide functional areas
      • International Company (IC)
        1. Refers to both global and multidomestic companies
  3. History of international business (pg 10)
    1. Globalization
      • The international integration of goods, technologies, labor, and capital
      • Globility-The result of globalization, a process.
    2. Globalization forces PowerPoint (35.0K)
      • Political
        1. Trend toward unification and socialization of global community
        2. Progressive reduction of trade barriers
        3. Privatization of industry previously owned by states
      • Technology
        1. Cable TV's spread homogenizing content worldwide
        2. Internet connection creating opportunities for small companies to access global presence
        3. Ease of obtaining information
      • Market
        1. As companies globalize they become global customers
        2. Saturation of home markets motivates global access
      • Cost
        1. Economies of sale (producing in larger quantities to take advantage of lower raw material or parts' costs)
        2. Local production close to less expensive raw materials or parts
      • Competitive
        1. Competition increases daily
        2. Locating in foreign trade blocks can open broader markets than available in single countries
    3. Explosive Growth
      • Foreign Direct Investment (FDI)
        1. Inflows and Inward Stock refer to FDI made in a country from an external investor
        2. Outflows and Outward stock refer to FDI investments made by entities in a country in foreign operations
      • Number of International Companies
        1. In 1999 global and multidomestic companies accounted for about 25% of total global output
        2. The growth creates new influence in the social and economic conditions in many countries
    4. Recent Developments
      • Reduced American dominance of multinational markets
      • Both Japan and European companies are rapidly expanding multinational presence
    5. Forces in the environment
      • The sum of forces surrounding and influencing the life and development of a firm
      • Management has no direct control over these influences
      • Concept Check: The international business environmental forces include all but
        1. Economic variables
        2. Distributive variables
        3. Predictive variables
        4. Financial variables Concept Check
          1. Competitive-kinds and numbers of competitors and their activities
          2. Distributive-national and international agencies available for distributing goods and services
          3. Economic-variables (such as GNP, unit labor cost, and personal consumption) that influences a firm's ability to do business
          4. Socioeconomic-characteristics and distribution of the human populations
          5. Financial-variables such as interest rates, inflations rates, and taxation
          6. Legal-the many kinds of foreign and domestic laws by which international firms must operate
          7. Physical-elements of pure nature such a topography, climate, and natural resources
          8. Political-elements of nations' political climates such as nationalism, forms of government, and international organizations
          9. Sociocultural-elements of culture (such as attitudes, beliefs, and opinions) important to international business people
          10. Labor-composition, skills, and attitudes of labor
          11. Technological-the technical skills and equipment that affect how resources are converted to products
      • Those elements that management has some control or influence are called internal forces.
      • External forces are all the rest
    6. Domestic environment
      • Comprised of all uncontrollable forces in the home country
      • Can affect foreign operations
    7. Foreign environment. PowerPoint (32.0K) Concept Check: True or False: The foreign environment includes the same variables that affect domestic operational environments Concept Check
      • Different force values
        1. Values of the same category of force differ between domestic and foreign affects
      • Changes difficult to assess
        1. Some foreign forces are difficult at assess
        2. Hidden agenda or lack of data collection contributes
      • Forces interrelated
        1. The effect of combined or interrelated forces may be compounded in international environment
    8. International environment PowerPoint (34.0K)
      • The interaction (1) between the domestic environment forces and foreign environment forces and (2) between the foreign environment forces and two countries when an affiliate in one country does business with customers in another country
    9. Decision Making is More complex. Concept Check: True or False: Decision making in international business is made more difficult because of the complexity of planning accounting for domestic environments, foreign environments, and international environments. Concept Check
      • Made complex by the differences in each environmental category
      • Made complex by management's unfamiliarity with foreign cultures
        1. Tendency to make judgments based on "back home"
        2. Referred to a self-reference criterion
  4. International business model (pg 22) PowerPoint (32.0K)
    1. Uncontrollable environment forces surround controllable internal environment forces.
    2. The domestic environment of a firm's home country is surrounded by the many sets of foreign environments in which the company does business. PowerPoint (35.0K)
    3. Solid lines in the model connect internal forces in the home office to internal forces in the affiliates
  5. Summary
    1. Appreciate the dramatic internationalization of markets
    2. Understand the various names given to firms that have substantial operations in more than one country
    3. Appreciate the profound effect of the Internet on many international business firms
    4. Understand the five kinds of drivers, all based on change, that are leading international firms to the globalization of their operations
    5. Comprehend why international business differs from domestic business
    6. Describe the three environments-domestic, foreign, and international, in which an international company operates.
  6. Internet appendix (pg 28)




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