Chapter 1 Globalizing Business
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 1/22
Chapter 1
Globalizing Business
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 2/22
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Explain the concepts of international business and global business
2. Articulate what you hope to learn by reading this book and takingthis course
3. Identify one most fundamental question and two core perspectivesthat provide a framework for studying this field
4. Participate in the debate on globalization with a reasonably balanced
and realistic view and a keen awareness of your likely bias in favor of globalization
5. Have a basic understanding of the future of the global economy andits broad trends
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 3/22
INTERNATIONAL BUSINESSAND GLOBAL BUSINESS
international business - business (firm) that
engages in international (cross-border) economic activitiesor the action of doing business abroad
global business - business around the globe,
including both international (cross-border) activities anddomestic business activities
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 4/22
INTERNATIONAL BUSINESSAND GLOBAL BUSINESS
multinational enterprise (MNE) - firm
that engages in foreign direct investments
foreign direct investment - investments
in, controlling, and managing value-addedactivities in other countries
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 5/22
INTERNATIONAL BUSINESSAND GLOBAL BUSINESS
gross national product (GNP) - measured asthe sum of value added by resident firms, households,and government operating in an economy
gross domestic product (GDP) - total market
value of all final goods and services produced within acountry in a given period of time usually a calendar year
gross national income (GNI) - GDP plusincome from nonresident sources abroad – the term usedby the World Bank and other international organizationsto supersede the GNP term
purchasing power parity (PPP) - adjustmentmade to the GDP to reflect differences in the cost of living
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 6/22
INTERNATIONAL BUSINESSAND GLOBAL BUSINESS
emerging economies (emerging markets) - term that gradually replaced the term developingcountries since the 1990s
BRIC - acronym for the emerging economies of Brazil,Russia, India, and China
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 7/22
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 8/22
INTERNATIONAL BUSINESSAND GLOBAL BUSINESS
base of the pyramid - vast majority of humanity,about four billion people, live at the base of the pyramidand make less than $2,000 a year
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 9/22
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 10/22
WHY STUDY GLOBAL BUSINESS?
expatriate manager (expat) - manager who
works abroad
international premium - significant pay raise
commanded by expats when working overseas
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 11/22
UNIFIED FRAMEWORK
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 12/22
FIRST CORE PERSPECTIVE:AN INSTITUTION-BASED VIEW
formal rules - requirements that treat domestic and
foreign firms as equals enhance the potential odds forforeign firms’ success, or those that discriminate againstforeign firms would undermine the chances for foreign
entrants
informal rules - cultures, ethics, and norms that
play an important part in shaping the success and failureof firms around the globe
liability of foreignness - inherent disadvantagethat foreign firms experience in host countries because of their nonnative status
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 13/22
WHAT IS GLOBALIZATION?
globalization - close economic integration of
countries and peoples of the worlds
semiglobalization - strategy that suggests that
barriers to market integration at borders are high but nothigh enough to completely insulate countries from eachother
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 14/22
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 15/22
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 16/22
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 17/22
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 18/22
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 19/22
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 20/22
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 21/22
NONGOVERNMENT ORGANIZATIONS
(NGOS)
nongovernment organizations (NGOs) – heterogeneous organizations with numerousclassifications:
advocacy - environmentalists, human rights
activists, consumers, etc. that raise awareness,acceptance, and knowledge by lobbying, press work,and activist events
operational - design and implementation of development-related projects that may stressservice delivery or participation; can be religious orsecular; can be more public- or private-oriented; canbe community-based, national, or international
7/29/2019 Business Globalisation
http://slidepdf.com/reader/full/business-globalisation 22/22