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Understanding International Business Dynamics

This document defines international business and discusses the increasing globalization of markets and production. International business involves any cross-border business activities and includes the interdependent global economy where goods and services cross national borders. Globalization refers to the increasing integration and interdependence of the world economy. It has led to the merging of national markets into a single global marketplace and the sourcing of production globally to take advantage of cost differences across countries. As a result of globalization, global institutions like the WTO, IMF, and World Bank have emerged to help regulate the global marketplace.

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43 views8 pages

Understanding International Business Dynamics

This document defines international business and discusses the increasing globalization of markets and production. International business involves any cross-border business activities and includes the interdependent global economy where goods and services cross national borders. Globalization refers to the increasing integration and interdependence of the world economy. It has led to the merging of national markets into a single global marketplace and the sourcing of production globally to take advantage of cost differences across countries. As a result of globalization, global institutions like the WTO, IMF, and World Bank have emerged to help regulate the global marketplace.

Uploaded by

mahbobullah rahmani
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Nature of International Business

Definition of IB
International Business includes any type of business
activity that crosses national borders.
It is an organization that buys and/or sells goods and
services across two or more national borders, even if
management is located in a single country.
Interdependent global economy
E.g. an American might talk to his stockbroker on a
Nokia cell phone that was designed in Finland and
assembled in Texas using chip sets produced in Taiwan
that were designed by Indian engineers working at a
firm in San Diego, California.
A world where the volume of goods, services and
investment crossing national borders expanded faster
than world output every year during the last two
decades of the 20th century.
Globalization
It refers to the shift towards a more integrated and
interdependent world economy.
Different facets of globalization:
Globalization of markets
Globalization of production
Globalization of markets
Merging of historically distinct and separate national markets into
one huge global marketplace.
Falling barriers to cross border trade have made it easier to sell
internationally.
E.g. – Coca-cola, Sony, McDonald’s
By offering a standardized product worldwide, they help to create
a global market.
Global rivalry - Coca cola and Pepsi, Ford and Toyota, Boeing
and Airbus
As a result, no longer meaningful to talk about “German market”,
“American market”, only global market.
However, imp to recognise cultural differences, differences in
tastes and prefs across borders, distribution channels, business
systems, legal regulations etc.
Globalization of Production
Sourcing of goods and services from locations around
the globe to take advantage of national differences in
the cost and quality of factors of production.
Companies hope to lower their cost of production
Emergence of global institutions
Need for institutions to help manage, regulate and
police the global marketplace and to promote the
establishment of multinational treaties to govern the
global business system.
GATT and WTO
IMF
World Bank
UN.
Why study IB?
Global jobs – Sony has only 50% Japanese workforce.
Others are non- Japanese
Use of intl products – e.g. – Toothpaste, shirts, shoes,
cars, etc.
Knowledge of IB useful for tomorrow’s managers as
business in today’s modern world is increasingly
global.
To get proper perspective about the role of political
envt on global business
Intl business executives play a powerful role in
determining the relative competitiveness of various
countries in the global arena. (Narayanmurthy et al)

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