INTERNATIONAL BUSINESS

- Relates to any situation where the production or distribution of goods or services crosses country borders.
- encompasses a full range of cross-border exchanges of goods, services, or resources between two or more
nations.

GLOBALIZATION
- The shift toward a more interdependent and integrated global economy - creates greater opportunities for
international business.

STRATEGIC MANAGEMENT
- is the body of knowledge that answers questions about the development and implementation of good strategies
and is mainly concerned with the determinants of firm performance

STRATEGY
- is the central, integrated, and externally oriented concept of how an organization will achieve is performance
objective. (Upper Saddle River NJ Pearson Education, 2007)

SWOT (STRENGTHS, WEAKNESSES, OPPURTUNITIES, and THREATS)

- Helps us take stock of an organization's internal characteristics
- its strengths and weaknesses
- to formulate an action plan that builds on what it does well while overcoming or working around weaknesses.
- (external)opportunities and threats
- helps us assess those environmental conditions that favor or threaten the organization's strategy.

ENTREPRENEURSHIP
-The activity of setting up a business or business, taking on financial risks in the hope of profit.
-Defined as the act of starting and running your own business or a tendency to be creative and wish to work for
yourself in your own ventures
-The process of setting up a business is known as entrepreneurship.

INTRAPRENEURSHIP
-Is a form of entrepreneurship that takes place inside a business that is already in existence.

INTRAPRENEUR
- person within the established business who takes direct responsibility for turning an idea into a profitable
finished product through assertive risk taking and innovation.

ENTREPRENEUR
-refers to who create his own business with a new idea or concept.

Who has an interest in International Business?

STAKEHOLDERS
- Is an individual or organization whose interests may be affected as the result of what, another individual or
organization does (Mason Carpenter et.al, 2003)
- Stakeholders include: employees, managers, businesses, governments and nongovernmental organizations

STAKEHOLDER ANALYSIS
- a techniques you use to identify and assess the importance of key people, group of people, or institutions that
may significantly influence the success of your activity, project or business

What forms of International Businesses take?

BUSINESS - can be a person or organization engaged in commerce with the aim of achieving a profit. Business
profit is typically gauged in financial and economic terms

International forms of Government

GOVERNMENT
- is generally considered to be the body of people that sets and administers public policy and exercises
executives, political, and sovereign power through customs, institutions, and laws within a state, country, or other
political unit
-is the organization, or agency, through which a political unit exercises tis authority, controls and administers
public policy, and directs and controls the actions of its members or subjects

NON-GOVERNMENTAL ORGANIZATION
-NGOs include nonprofit, voluntary citizens, groups that are organized on a local, national, or international level

CAGE
CULTURE
-refers to a people’s norms, common beliefs, and practices. Cultural distance
refers to differences based in language, norms, national or ethnic identity, levels of trust,
tolerance, respect for entrepreneurship and social networks, or other country-specific qualities.

ADMINISTRATION
-Administrative distance refers to historical governmental ties, such as those between India and the United
Kingdom. This makes sense; they have the same sorts of laws, regulations, institutions, and policies.

GEOGRAPHY
-This is perhaps the most obvious difference between countries. As distance usually increases the cost of
transportation. Geographic differences also include time zones, access to ocean ports, shared borders,
topography, and climate.

ECONOMICS
-Economic distance refers to differences in demographic and socioeconomic
conditions. The most obvious economic difference between countries is size. This distance is likely to have the
greatest effect when:
(1) the nature of demand varies with income level
(2) economies of scale are limited
(3) cost differences are significant
(4) the distribution or business systems are different
(5) organizations have to be highly responsive to their customers’ concerns.

What is the relationship between International and Business Ethics?

ETHICS
- a branch of philosophy that seeks virtue. Ethics deals with morality about
what is considered right and wrong behavior for people in various situations,
DECISION MAKING FRAMEWORK.
1. Is it an ethical issue?
2. Get the facts
3. Evaluate alternative actions
1. Utilitarian approach
2. Rights-based approach
3. Fairness or justice approach
4. Common good approach
5. Virtue approach
4.Test your decision
5.Just do it- but what did you learn?

What ethics is NOT

1.Ethics is not the same as feelings
2.Ethics is not religion
3.Ethics is not following the law
4.Ethics is not following culturally accepted norms
5.Ethics is not science
INTERNATIONAL TRADE THEORIES
-are simply different theories to explain international trade. Trade is the concept of exchanging goods and services
between two people or entities.

INTERNATIONAL TRADE
-is then the concept of this exchange between people or entities in two different countries. People or entities trade
because they believe that they benefit from the exchange.

Different International Trade Theories

Modern and firm-based or company-based. Both of these categories, classical and modern, consist of several
international theories.

Classical Country- Based Theories

 Mercantilism- mercantilists believed that a country should increase its holdings of gold and silver by
promoting exports and discouraging imports. In other words, if people in other countries buy more from
you (exports) than they sell to you (imports), then they have to pay you the difference in gold and silver
 Absolute Advantage- focused on the ability of a country to produce a good more efficiently than another
nation. Smith reasoned that trade between countries shouldn’t be regulated or restricted by government
policy or intervention.
 Comparative Advantage- occurs when a country cannot produce a product more efficiently than the other
country; however, it can produce that product better and more efficiently than it does other goods. The
difference between these two theories is subtle. Comparative advantage focuses on the relative
productivity differences, whereas absolute advantage looks at the absolute productivity.
 Heckscher-ohlin (Factor Proportions Theory)- Political, economic, and legal stability. Host-country
governments seek to reassure businesses that the local operating conditions are stable, transparent (i.e.,
policies are clearly stated and in the public domain), and unlikely to change
 Leontief paradox-
Modern Firm-Based Theories
 Country Similarity- This theory is often most useful in understanding trade in goods where brand names
and product reputations are important factors in the buyers’ decision-making and purchasing processes.
 Product Life Cycle- . The theory, originating in the field of marketing, stated that a product life cycle has
three distinct stages: (1) new product, (2) maturing product, and (3) standardized product. The theory
assumed that production of the new product will occur completely in the home country of its innovation.
 Global Strategic Rivalry- Their theory focused on MNCs and their efforts to gain a competitive advantage
against other global firms in their industry. Firms will encounter global competition in their industries and in
order to prosper, they must develop competitive advantages. The critical ways that firms can obtain a
sustainable competitive advantage are called the barriers to entry for that industry.
 Porter’s National Competitive Advantage- theory focused on explaining why some nations are more
competitive in certain industries. To explain his theory, Porter identified four determinants that he linked
together. The four determinants are (1) local market resources and capabilities, (2) local market demand
conditions, (3) local suppliers and complementary industries, and (4) local firm characteristics

Political system is basically the system of politics and government in a country. It governs a complete set of rules,
regulations, institutions, and attitudes. A main differentiator of political systems is each system’s philosophy on the
rights of the individual and the group as well as the role of government. Each political system’s philosophy
impacts the policies that govern the local economy and business environment.

Different Political System

Anarchism- which contends that individuals should control political activities and public government is both
unnecessary and unwanted.
Totalitarianism- which contends that every aspect of an individual’s life should be controlled and dictated by a
strong central government. In reality, neither extreme exists in its purest form
Pluralism, which asserts that both public and private groups are important in a well-functioning political system.
Although most countries are pluralistic politically, they may lean more to one extreme than the other.
Democracy is the most common form of government around the world today. Democratic governments derive
their power from the people of the country, either by direct referendum (called a direct democracy) or by means of
elected representatives of the people (a representative democracy).
Different Legal Systems
Civil law- is based on a detailed set of laws that constitute a code and focus on how the law is applied to the facts.
It’s the most widespread legal system in the world.

Common law- is based on traditions and precedence. In common law systems, judges interpret the law and
judicial rulings can set precedent.

Religious law- is also known as theocratic law and is based on religious guidelines. The most commonly known
example of religious law is Islamic law, also known as Sharia.

How Do Governments Intervene in Trade?

1. Tariffs-Tariffs are taxes imposed on imports. Two kinds of tariffs exist—specific tariffs, which are levied as
a fixed charge, and ad valorem tariffs, which are calculated as a percentage of the value.

2. Subsidies- A subsidy is a form of government payment to a producer. Types of subsidies include tax
breaks or low-interest loans; both of which are common.

3. Import quotas and VER- Import quotas and voluntary export restraints (VER) are two strategies to limit
the number of imports into a country. The importing government directs import quotas, while VER are
imposed at the discretion of the exporting nation in conjunction with the importing one.

4. Currency controls- Governments may limit the convertibility of one currency (usually its own) into others,
usually in an effort to limit imports

5. Local content requirements- Many countries continue to require that a certain percentage of a product or
an item be manufactured or “assembled” locally. Some countries specify that a local firm must be used as
the domestic partner to conduct business.

6. Antidumping rules- Dumping occurs when a company sells product below market price often in order to
win market share and weaken a competitor.
-Export financing. Governments provide financing to domestic companies to promote exports.
7. Free-trade zone. Many countries designate certain geographic areas as free-trade zones. These areas
enjoy reduced tariffs, taxes, customs, procedures, or restrictions in an effort to promote trade with other
countries.

8. Administrative policies. These are the bureaucratic policies and procedures governments may use to deter
imports by making entry or operations more difficult and time consuming.

What is Culture? Culture is the beliefs, values, mindsets, and practices of a group of people. It includes the
behavior pattern and norms of that group - the rules, the assumptions, the perceptions, and the logic and
reasoning that are specific to a group.

What Kinds of Culture Are There? Nationalities, Subcultures, Organizations

Five Key Value Dimensions Power Distance Individualism Masculinity Uncertainty Avoidance (UA) Long-Term
Orientation
Hall is best noted for three principal categories that analyze and interpret how communications and interactions
between cultures differ: context, space and time
What Else Determines a Culture?
-Communication (Verbal and Body Language) - language is one of the more conspicuous expressions of culture.
-Ethnocentrism - the view that a person's own culture is central and other cultures are measured in relation to it.
Ethics- is a branch of philosophy that seeks to address questions about morality - that is, about concepts such as
good and bad, right and wrong, justice, and virtue.
Philosophers today usually divide ethical theories into three general subject areas: Metaethics, Normative Ethics
and Applied Ethics

Impact of Ethics on Global Business Ethics and Management, Ethics and Corruption, Corporate Social
Responsibility

World Econimies- refer to the ways in which goods and services are produced, distributed, and consumed across
different countries.

Statistics used in Classification

GNP (Gross National Product)
GDP (Gross Domestic Product)
PPP (Purchasing Power Parity)
HDI (Human Development Index)
HPI (Human Poverty Index)
GDI (Gross Domestic Income)
GEM (Global Entity Management)

WHY DOES ALL THIS GNP, GDP, PPP AS WELL AS HDI, HPI, GDI, AND GEM MATTER TO GLOBAL
BUSINESS?
- these indicators matter to global businesses as they provide a broader perspective on the social and economic
conditions in different countries, which can inform business decisions, such as investment, expansion, and market
entry.

THE DEVELOPED WORLD

often used to refer to nations that have achieved a high level of economic and social development.

EMERGING MARKETS
- Former developing economies that have achieved substantial industrialization, modernization, and rapid
economic growth since the 1980s. Example the "BRICS"

WHO WILL GONNA SAY?

 PRIVATE SECTOR BUSINESS.
 WORLD BANK.
 INTERNATIONAL MONETARY FUND (IMF).
 WORLD TRADE ORGANIZATION (WTO).
 UNITED NATION.
 ANY GLOBAL ECONOMIC, POLITICAL, AND TRADE ORGANIZATION.

BRIC
Is an acronym for the developing nations of Brazil, Russia, India, and China. They are countries that some believe
will be the dominant suppliers of manufactured goods, services, and raw materials by 2050. - CHRISTINA
MAJASKI (2022).

KEY TRENDS AND DEVELOPMENTS

 ECONIMIC GROWTH
 URBANIZATION
 TECHNOLOGY
 SUSTAINABILITY
OPPORTUNITIES FOR INVESTORS
 CONSUMER GOODS
 INFRASTRUCTURE
 TECHNOLOGY
 RENEWABLE ENERGY
RISKS FOR INVESTORS
 POLITICAL RISKS
 CURRENCY RISKS
 REGULATORY RISKS