Introduction To International Business Environment Analysis
Introduction To International Business Environment Analysis
INTRODUCTION TO INTERNATIONAL
BUSINESS ENVIRONMENT ANALYSIS
• FDI and link patterns are no longer the way we have been used to.
2. Disruptive change
1. DEFINING INTERNATIONAL BUSINESS
• ”International business (IB) is about (1) businesses (firms”
engaging in international (cross-border) economic activities
and/or (2) the activity of doing business abroad…
• The most important actors in international business are known
as multinational enterprise (MNE), defined as a firm that
engages in foreign direct investment (FDI) by directly investing
in, controlling and manageing value-added activities in other
countries.”
(Peng and Meyer (2017) International Business, p. 5)
Typical IB focus
• Internationalization of firms
Economic history
The CIBS faculty
• 10 economic geographers
• 10 organization/strategy researchers
• Local infrastructure
• Natural resources
“Again, in all but the earliest stages of economic development a
localized industry gains a great advantage from the fact that it offers a
constant market for skill. Employers are apt to resort to any place
where they are likely to find a good choice of workers with the special
skill which they require; while men seeking employment naturally go
to places where there are many employers who need such skill as
theirs and where therefore it is likely to find a good market. The owner
of an isolated factory, even if he has access to a plentiful supply of
general labour, is often put to great shifts for want of some special
skilled labour; and a skilled workman, when thrown out of
employment in it, has no easy refuge.”
2019-09-02
The business environment: national factors
• ”Business culture”
The business environment: international factors
• Trade block membership
• Regulatory reforms
– Transport regulations and harmonization
• Logistic innovations
– Containers
– Digitalization
• Digitalization
Economic liberalization
• Lower barriers to trade
– GATT and WTO
– International investment agreements
• Consumer markets
• It is a local-regional-national-international-global process.
• Global competition not only for final products, but on factor- and
intermediate markets too: globality
• Some call it
– Global production networks
– Global value chains
– Global factory
Indicators
1. Trade
1. Since 1960, trade has grown much faster (20-fold) than total
production (6-fold)
2. FDI
1. FDI: Since 1985 until the mid 1990s, FDI has grown much faster
(250%) than exports (100%)
2. Shift towards services
3. Shifts from greenfield to M&As (sevenfold increase in foreign-owned
employment in Sweden since 1980)
4. Developing regions play a more significant role than before
Globalization also means a locational shift
• ”…different locations play different roles in global value chains”
(Buckley et al 2018, p. 18).
• geographical division of labour
• Specialization from industries to tasks (for firms, this already
happened)
• The big trade players, by far, is Europe, Asia and North America
(“The Triad”)
• Developing countries play a more important role in FDI
FDI and link patterns are no longer the way we
have been used to!
The Asian Miracle
• Japan after WWII
• China
• Environmental issues
• FDI and link patterns are no longer the way we have been used to.