Introduction

Lecturer: Dr. Nguyen Bich Ngoc

School of Trade and International Economics,
National Economics University

• Visiting professor in International Business,

• California State University Long Beach, 2017, USA

• Ph.D of International Business

• NEU, Vietnam, 2017

• Master of International Business

• La Trobe University, Australia, 2008

• Bachelor of International Economics

• Foreign Trade University, Vietnam, 2006

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 Contact
• Email: ngocnb@[Link]
• Phone: 0919956929
• Office: Room 907, Building A1, NEU campus
• NEU, 207 Giai Phong, Hai Ba Trung, Ha Noi

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 TEXT BOOK

International Business: The challenges of Globalization,

9th Edition, John J. Wild; Kenneth L. Wild (2019)
Pearson.

[Link]: Wild, J. J, Kenneth L. Wild, J. C. Y. Han

(2000), International Business: An Integrated
Approach, Prentice Hall, New Jersey 07458.
 ASSIGNMENTS

1. Multiple choice test 1 – 10 %

2. Multiple choice test 2 – 10 %
3. Individual case study report – 25 %
4. Group presentation – 25 %
5. Individual final test – 30 %
 PART I
GLOBAL BUSINESS ENVIRONMENT
What is International Business?

• International Business (IB): any business transaction

across national borders
– Trade in goods (import- export)
– Investment (FDI, FII)
– Cross-border services
consulting, advertising, legal, financial,
accounting
tourism, banking, communications/media,
construction management, etc.
LO3
Adidas

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DHL
 Q&A

• How international business differ from

domestic business?
• What benefits that a international
business brings to firms?
• What are the challenges?

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 What is Different about
International Business?

International Domestic Business

Business • deals with the domestic
• deals with 3 market
environmental forces: • But…may face foreign
1. Domestic competition in domestic
2. Foreign market
3. International

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Influence of External and Internal
Environmental Forces
Three relevant terms:
1. Environment
 all forces surrounding and influencing the life and
development of the firm.
2. Uncontrollable Forces
 external forces over which management has no direct
control, although it can exert an influence.
3. Controllable Forces
 internal forces that management administers to adapt to
changes in the uncontrollable forces.

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 External (Uncontrollable) Forces
1. Competitive – competitors, their number, locations, activities
2. Distributive – agencies available for distributing goods & services
3. Economic – GNP, GNI, unit labor cost, personal consumption variables
that impact a firm’s ability to do business
4. Socioeconomic – characteristics & distribution of populations
5. Financial – interest & inflation rates, taxation, etc.
6. Legal – laws governing international operations of MNCs
7. Physical – topography, climate, natural resources
8. Political – local political climate, government structure, international
organizations
9. Sociocultural – culture, attitudes, values, beliefs of the local environment
10. Labor – composition, skills, and attitudes of local labor
11. Technological – technical skills & equipment converting resources into
product

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 Environments

• Domestic Environment
 all uncontrollable forces originating in the home country that
surround and influence the firm’s life and development.
• Foreign Environment
 all uncontrollable forces originating outside the home country
that surround and influence the firm.
• International Environment
 interaction between domestic and foreign environmental forces
or between sets of foreign environmental forces.

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 The Foreign Environment

Forces are the same as in the domestic

environment but occur outside the home
country and operate differently:
– Forces have different values
– Forces can be difficult to assess
– Forces are interrelated

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 The International Environment
International Organizations
Consists of Interactions that affect international
Between: environment:

• Domestic and foreign • Worldwide Bodies –

environmental forces World Bank, WTO
• Between the foreign • Regional Economic
environmental forces of 2 Groupings – NAFTA, EU
countries when the • Organizations Bound by
affiliate of 1 country does Industry Agreements -
business with customers OPEC
in another country

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 Other Factors
Complexity of Decision
Making Self-Reference Criterion

• Managers must consider • Managers tend to ascribe

each force individually their own cultural values,
and collectively, how preferences, taste,
decisions might affect opinions to the host
interactions between each country.
country.

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 Complex Decision Making

Multiple forces make decision making more complex:

• Not only are there many sets of forces, but the differences among them
sometimes are extreme. For example, giving in to labor demands at one
foreign subsidiary may entail making similar compromises at another
subsidiary due to collusion among labor unions.

• Managers are frequently unfamiliar with other cultures. Moreover, many

have the tendency to refer unconsciously to their own cultural values. Self-
reference criterion, as this is called, is probably the biggest cause of
international business blunders.

– Example: Wal Mart’s venture into foreign countries like China, India, and Germany.
 Walmart’s retreat from Germany
July 28, 2006

• Walmart’s retreat is hardly surprising given its numerous

missteps in Germany.

• The biggest mistake was misjudging the German consumer and

business culture. For instance, German Walmarts adopted the
U.S. custom of bagging groceries, which many German
consumers found distasteful because they tend not to like
strangers handling their food.

• It imported its U.S.-style company ethic, which includes strongly

discouraging interoffice romances. Many employees found the
code intrusive.

• The company had repeated clashes with unions.

 CONT’D
Walmart’s retreat from Germany

Lessons learned:

• take a more arm's length (customized) approach to

management of international operations in the future.

• be increasingly open to working with local partners.

• better tailor stores to local tastes and avoid stocking goods

that are common in the U.S., but with little appeal to
shoppers outside the U.S.
CHAPTER 1
GLOBALIZATION

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 Learning Objectives

• Understand definitions for firms that operate

in international business - MNC and SMEs
• Understand drivers that lead to globalization
• Debate globalization
Case study: Apple’s global

slogan "Think Different"

 What is Globalization?

• Globalization is:
The tendency toward an international
integration of goods, technology,
information, labor, and capital, or the
process of making this integration happen.

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Toyota
 Drivers of Globalization

• Political Drivers
• Technological Drivers
• Market Drivers
• Cost Drivers
• Competitive Drivers

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 Globalization Forces
• Political:
– Trend toward unification and socialization of the global
community.

– The reduction of barriers to trade and foreign investment and

the privatization of industry are hastening the opening of new
markets by international firms.

• Technology:
– Advances in computers and communications technology are
permitting an increased flow of ideas and information across
borders.

– This enables small firms to compete globally.

 CONT’D Globalization Forces
• Market
– As companies globalize they, in turn, become global
customers.

• Cost
– Globalizing product lines help to achieve economies of
scale, which reduce development, production, and
inventory costs.
– Company can also locate where the costs of factors of
production are lower.

• Competitive
– One of the competitive driving forces for globalization is
companies defend their home markets from foreign
competitors by entering the competitors’ home markets to
distract them.
 Views On Globalization

Arguments Supporting Concerns with

Globalization Globalization

• Enhances socioeconomic • Uneven results across nations

development and people

• Promotes more and better jobs • Deleterious effects on labor

and labor standards

• Decline in environmental and

health conditions

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 What is Anti-globalization?
Anti-globalization is the umbrella term for a group of different
protest causes, including:

– environmentalism
– third world debt
– animal rights
– child labour
– anarchism, and
– anti-capitalism and opposition to multinationals
 Targets
The targets of anti-globalization protests have been meetings of:

• The International Monetary Fund (IMF) which gives countries loans

when their economies are in crisis.

• The World Trade Organization (WTO) which promote free trade

between countries.

• The World Bank, which among other things gives longer term loans
to countries for development.

• Other meetings of national leaders and businesses such as the

Summit of the Americas and the World Economic Forum.
 Reasons
Opponents of globalization say it leads to:

– exploitation of the world's poor, workers, and the

environment.

– makes it easier for rich companies to act with less

accountability.

– countries' individual cultures are becoming

overpowered by Americanization. For example,
several of the largest US brands (e.g. McDonald's and
Starbucks) face particular opposition.
 Motives for
Entering Foreign Markets
• Increase Profits & Sales:
– Enter new markets
– Create new markets
– Access faster-growing markets
– Availability of improved communications
– Obtain greater profits
– Generate greater revenue
– Lower cost of goods sold
– Seek higher profits overseas
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 Motives for
Entering Foreign Markets
• Protect Markets, Profits & Sales:
– Protect Domestic Markets by Following Customers Overseas
– Attack in Competitor’s Home Market
– Use Foreign Production to Lower Costs
– Protect Foreign Markets
– Respond to lack of foreign exchange
– Respond to local production by competitors
– Develop downstream markets
– Respond to protectionism
– Guarantee supply of raw materials
– Acquire technology and management know-how
– Diversify Geographically
– Satisfy management’s desire for expansion
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 The 7 Dimensions for
Globalizing a Business
Can standardize along all 7 dimensions or none:
1. Product
2. Markets
3. Promotion
4. Where value is added
5. Competitive strategy
6. Use of non-home-country personnel
7. Extent of global ownership in firm

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 GLOBAL • What are the potential benefits of
globalization?
DEBATE
• What are the potential drawbacks
of globalization?
The Pros and Cons • After examining the arguments of
of Globalization supporters and opponents of
globalization, are you convinced
one way or the other?
• Could we better manage
globalization in order to enhance
the welfare of the world and its
inhabitants? How?

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 Jobs and Wages
About income inequality
About Culture, sovereignty ,
environment

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