International Business & Economics 5.

​ Economic/Financial 💰
●​ Covers factors like exchange rates,
What is International Business?
inflation, economic growth, and
●​ The trade of goods, services, technology, consumer purchasing power.
capital, and knowledge across national ●​ Example: If a country's currency
borders. weakens, imported goods become
●​ Operates on a global or transnational scale. more expensive, affecting

💻
●​ Involves cross-border transactions businesses that rely on imports.
between two or more countries. 6.​ Technological
●​ Includes the exchange of goods, services, ●​ Refers to advancements in
technology, and capital. technology that influence business
●​ Also known as: Globalization – the operations and competitiveness.
interconnectedness of economies and ●​ Example: A company using AI for
markets worldwide. customer service can reduce costs
and improve efficiency compared to

🌍
competitors who don’t.
Analysis of the Main Factors of the International
7.​ Geographical
Business Environment
1.​ Political🏛️ ●​ Involves location, climate, natural
resources, and physical
●​ Refers to government policies, infrastructure that affect business
stability, and regulations that affect activities.
businesses. ●​ Example: A company exporting
●​ Example: A company wants to fresh seafood must consider
expand to another country, but due transportation and storage, as
to strict trade policies or political seafood can spoil quickly in hot

⚖️
instability, it decides not to. climates.
2.​ Legal
●​ Involves laws and regulations that Factors of Growth of International Business
businesses must follow in different
countries. 1.​ Changes in Technology 📱💻
●​ Example: A foreign food company ●​ Advancements in communication,
must meet a country's food safety transportation, and the internet make
standards before selling its products international trade faster and easier.
●​ Example: E-commerce platforms
🎭
there.
3.​ Cultural like Amazon allow businesses to sell

🏛️
●​ Refers to language, customs, products worldwide.
traditions, and consumer behavior 2.​ Politics
that impact business. ●​ Government policies, stability, and
●​ Example: McDonald's changes its trade relations influence business
menu in India to exclude beef, as growth.
many people there do not eat it due ●​ Example: A country reducing trade
restrictions encourages more foreign
👥
to religious beliefs.

💰
4.​ Social investments.
●​ Deals with demographics, lifestyle 3.​ Economics
trends, and societal values that ●​ Economic conditions like growth,
influence business operations. inflation, and consumer demand
●​ Example: A company selling winter affect business expansion.
clothing may not do well in tropical ●​ Example: Companies invest in
countries where it's warm all year. fast-growing economies like China
and India due to their large markets.
4.​ Competition ⚔️ ●​ Example: The ASEAN Free Trade
●​ Businesses expand internationally to Agreement allows member countries
stay competitive and reach new to trade with fewer tariffs.
customers.
●​ Example: Car brands like Toyota Forms of International Business: Foreign
and Ford compete globally by selling Market Entry Options

👷‍♂️
in multiple countries.
5.​ Labor and Other Costs
1.​ Exporting 🚢
●​ Selling goods or services to a
●​ Companies look for cheaper labor foreign market without establishing a
and resources to reduce production physical presence.
costs. ●​ Example: A Philippine coffee brand
●​ Example: Many tech companies exports its products to Japan without
manufacture products in China due
🤝
setting up a store there.

🎓
to lower labor costs. 2.​ Joint Ventures
6.​ Education and Skills ●​ Two or more companies from
●​ A well-educated and skilled different countries form a partnership
workforce attracts businesses to to share resources and risks.
invest in a country. ●​ Example: Toyota and Tesla
●​ Example: Many IT companies collaborated on electric vehicle
outsource jobs to India because of
🏭
technology.

🌱
its skilled tech workforce. 3.​ Foreign Direct Investment (FDI)
7.​ Environmental Pressures ●​ A company invests in another
●​ Businesses adapt to sustainability country by setting up offices,
and environmental regulations in factories, or acquiring assets.
different countries. ●​ Example: Apple builds a
●​ Example: Companies develop manufacturing plant in India to
eco-friendly products to meet global
🍔
produce iPhones locally.

💱
environmental standards. 4.​ Franchising
8.​ Foreign Exchange Markets ●​ A business allows foreign
●​ Currency exchange rates impact entrepreneurs to use its brand,
international trade and investment system, and products for a fee.
decisions. ●​ Example: McDonald's expands
●​ Example: A weaker local currency worldwide by letting franchisees
makes a country's exports cheaper
📜
open branches under its brand.
and more attractive to foreign 5.​ Licensing/Patents/Copyrights

📜
buyers. ●​ A company allows a foreign
9.​ Import/Export Regulations business to use its intellectual
●​ Rules on importing and exporting property (brand name, technology,
goods affect how businesses trade or patents) for a fee.
internationally. ●​ Example: A local company pays
●​ Example: High import taxes on Disney for the right to sell products
foreign cars can discourage
🔄
with Mickey Mouse designs.
international brands from entering a 6.​ Mergers and Acquisitions (M&A)

🤝
market. ●​ A company merges with or buys a
10.​Trade Agreements foreign company to expand
●​ Agreements between countries internationally.
remove trade barriers, making it ●​ Example: Facebook acquired
easier to do business. WhatsApp to expand its global
presence in messaging services.
 7.​ Strategic Alliances 🤝 ●​ Example: Companies outsource
●​ Companies form partnerships to production to countries with lower
share expertise, resources, and labor costs, like China or India.

🔗
markets without merging. 5.​ Control Downstream and Upstream
●​ Example: Starbucks partnered with Value Chain
PepsiCo to distribute bottled coffee ●​ Manage supply chain processes

📑
drinks worldwide. from raw materials (upstream) to
8.​ Management Contracts product delivery (downstream).
●​ A company provides management ●​ Example: Apple controls its entire
expertise to a foreign business supply chain, from sourcing raw
without owning it. materials to selling iPhones in retail
●​ Example: A hotel chain like Marriott stores.

⚔️
manages hotels in different countries 6.​ Enhance International Competitiveness
under contract but doesn’t own

📦
them. ●​ Stay competitive by improving
9.​ Contract Marketing product quality, reducing costs, and
●​ A company hires a foreign firm to expanding market presence.
manufacture or market its products. ●​ Example: Toyota focuses on
●​ Example: Nike outsources shoe fuel-efficient cars to compete in the
production to factories in Vietnam global automotive industry.
but controls the brand and
marketing. What is Globalization? 🌍
●​ The increasing/growing interdependence
Goals of International Business of the world’s economies, cultures, and

1.​ Attract Foreign Demand 🌍 populations.

●​ Driven by cross-border trade in goods &
●​ Expand customer base by selling
services, flows of investment, technology,
products or services in international
people, and information exchange.
markets.
●​ Example: Samsung sells its
●​ Trade in Goods & Services – Countries
smartphones in multiple countries to
exchange products and services

🔄
reach more consumers.
internationally.
2.​ Diversify Products and Market Reach
●​ Technology Transfer – Innovation spreads
●​ Reduce reliance on a single market
across nations, improving industries.
by expanding into different regions.
●​ Investment Flows – Foreign investments
●​ Example: Coca-Cola offers different
help economies grow and develop.
flavors in different countries to cater
●​ Movement of People – Migration and

💻
to local tastes.
global workforce mobility increase cultural
3.​ Utilize Technology
exchange.
●​ Leverage advanced technology to
●​ Information Exchange – The internet and
improve production, communication,
media connect people worldwide.
and operations.
●​ Example: Amazon uses AI and
automation to manage global supply
Advantages & Benefits of Globalization 🌍
📈
chains efficiently. 1.​ Globalization boosts economies of
countries
💰
4.​ Optimize Economic Resources and
Finance ●​ Encourages trade, investment, and
●​ Reduce costs and maximize profits job creation, leading to economic
by using resources efficiently. growth.
 ●​ Example: Developing countries ●​ Example: Tech companies hire
attract foreign companies, creating software engineers from different
more jobs. countries.

⚖️ ✈️
2.​ It heightens competition that is good for 9.​ It helps manage employee immigration
consumers
●​ More competition leads to better ●​ Allows skilled workers to migrate for
quality products and lower prices. better job opportunities.
●​ Example: Smartphone brands ●​ Example: Nurses from the
compete globally, offering better Philippines work in the U.S. and

🤝
features at affordable prices. Europe to meet healthcare
3.​ It creates international cooperation demands.

🌍⚠️
●​ Countries work together on trade,
environmental issues, and security. Disadvantages of Globalization
●​ Example: Nations collaborate on 1.​ It can Exploits Workers 👷‍♂️
climate change solutions through ●​ Companies may take advantage of
global agreements. cheap labor in developing countries

🛒
4.​ It makes goods & services more with poor working conditions.
accessible ●​ Example: Some factories in Asia
●​ Consumers can buy products from have low wages and unsafe
different countries easily.
🌱
conditions to cut costs.
●​ Example: Online shopping platforms 2.​ It has Environmental Concerns
allow people to purchase ●​ Increased production and

🌏
international brands. transportation lead to pollution and
5.​ It has access to new cultures climate change.
●​ Promotes cultural exchange through ●​ Example: Factories emitting high
food, fashion, music, and traditions. carbon emissions contribute to
●​ Example: K-pop, anime, and global warming.
Hollywood movies are enjoyed 3.​ Multinational corporations often deplete

💡
worldwide. natural resources in less developed
6.​ It spreads technology & innovation
⛏️
countries without significant local
●​ Faster sharing of new ideas and benefits
advancements across borders. ●​ Multinational companies extract
●​ Example: Electric vehicle resources without benefiting local
technology developed in one country communities.

💰
can be used worldwide. ●​ Example: Mining operations
7.​ It lowers costs of products damage ecosystems while profits go
●​ Companies manufacture goods in
⚖️
to foreign corporations.
cheaper locations, reducing 4.​ Imbalanced Trade
production costs. ●​ Some countries export more than
●​ Example: Clothing brands produce they import, creating economic
garments in Southeast Asia to keep dependence.
prices low. ●​ Example: The U.S. imports more

👨‍💻
8.​ It has access to new talents & from China than it exports, leading to
international recruiting
❌💼
a trade deficit.
●​ Businesses hire skilled workers 5.​ Domestic Job Loss
globally, increasing expertise and ●​ Companies outsource jobs to
efficiency. cheaper labor markets, leading to
unemployment at home.
 ●​ Example: Many manufacturing jobs ●​ Example: Japan specializes in high-tech
in Western countries move to Asia electronics, while Brazil excels in coffee

💰⚖️ ⚙️
due to lower costs. production.
6.​ Economic Inequality Utilizes Abundant Factors of Production
●​ The rich get richer while poor ●​ Countries with rich resources (labor, land,
countries and workers struggle to raw materials) can maximize their potential.
benefit. ●​ Example: Oil-rich Middle Eastern countries
●​ Example: Billion-dollar companies export petroleum to energy-dependent

🛒
profit while workers earn minimum nations.

🌏➡️🎭
wages. Expands Market Opportunities
7.​ Cultural Homogenization ●​ Businesses can sell products globally,
●​ Local traditions and cultures may increasing revenue and economic growth.
disappear as global brands ●​ Example: Apple sells iPhones worldwide,
dominate. reaching millions of customers beyond the

📦
●​ Example: Traditional markets U.S.
decline as fast-food chains replace Increases Variety of Goods & Services

🏛️
local restaurants. ●​ Consumers have more choices, improving
8.​ Threat to National Sovereignty quality of life and economic activity.
●​ International organizations and ●​ Example: International trade allows people
corporations influence government in the Philippines to enjoy Korean cosmetics

🤝
decisions. and American fast food.
●​ Example: A country may be forced Benefits Local & Global Consumers
to change laws to attract foreign ●​ Competition leads to better prices, higher
investment. quality, and more innovation.

📉
9.​ Restrains governments by inducing ●​ Example: Global competition in
increased budgetary pressure smartphones forces brands to improve
●​ Governments may reduce social features while keeping prices affordable.

🌍💼
spending to attract foreign
businesses. Features of International Business
●​ Example: Tax incentives for
multinational companies reduce
1.​ Large-Scale Operations 📦
●​ Businesses operate on a global
public funding for education and scale, producing and distributing
healthcare. goods in large quantities.
●​ Example: Toyota manufactures
Importance of International Business millions of cars and exports them

🚧
●​ Participation in international business allows worldwide.
countries to take advantage of specialized 2.​ Immobility of Factors
expertise and abundant factors of ●​ Land, labor, and capital are not
production to deliver goods and services in easily transferable across countries.
the international marketplace. This has the -​ Example: A company cannot move natural
benefit of increasing the variety of goods resources like oil from one country to

🌎
and services available in the marketplace another, but it can trade them.
for the benefit of local and global consumers 3.​ Heterogeneous Markets

Encourages Specialization & Expertise 🎯 ●​ Different countries have unique

customer preferences, economic
●​ Countries focus on producing goods they conditions, and cultural values.
are best at, leading to efficiency and ●​ Example: McDonald's adjusts its
innovation. menu in India by offering vegetarian
options.
4.​ Integration of Economies 🤝
●​ Countries become economically
connected through trade,
investment, and financial markets.
●​ Example: A financial crisis in the
U.S. can affect stock markets
worldwide.

🏢
5.​ Dominated by Developed Countries &
MNCs
●​ Wealthy nations and multinational
corporations (MNCs) control most
international trade and investment.
●​ Example: Companies like Apple,
Amazon, and Google influence

💰
global markets.
6.​ Beneficial to Participating Countries
●​ Countries gain access to foreign
goods, investments, and job
opportunities.
●​ Example: Developing nations attract
foreign businesses, boosting

⚔️
economic growth.
7.​ Keen Competition
●​ Companies face strong global
competition, pushing them to
improve products and services.
●​ Example: Samsung and Apple
compete in the smartphone market

🔬
worldwide.
8.​ Special Role of Science & Technology
●​ Advances in technology help
businesses expand and improve
efficiency.
●​ Example: E-commerce platforms
like Alibaba and Amazon use AI to
enhance global sales.