Chart 1 www.bwl.lmu.de International Management International Management BSc PO 2008: General Business Administration Modul P 13 (BWL VII) BSc PO 2015: Leadership & International Management Modul P 16 Summer Term 2017 Prof. Dr. Manfred Schwaiger Institute for Market-based Management (IMM) Kaulbachstraße 45/I D-80539 München phone +49 89 2180-5640 fax +49 89 2180-5651 email [email protected]www www.imm.bwl.uni-muenchen.de Prof. Dr. Anton Meyer Institut für Marketing Ludwigstraße 28 RG D-80539 München phone +49 89 2180-3321 fax +49 89 2180-3322 email [email protected]www www.marketingworld.de Prof. Dr. Anja Tuschke Institute for Strategic Management Ludwigstraße 28 RG D-80539 München phone +49 89 2180-2770 fax +49 89 2180-2886 email [email protected]www www.ism.bwl.uni-muenchen.de
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SEITE ‹Nr.›Chart 1 www.bwl.lmu.deInternational Management
International Management
BSc PO 2008: General Business Administration Modul P 13 (BWL VII)
BSc PO 2015: Leadership & International Management Modul P 16
SEITE ‹Nr.›Chart 8 www.bwl.lmu.deInternational Management
China and the World: Percentage of China‘s Stake of Worldwide GDP
25
0
5
10
15
20
30
Year 1 AD)Years
1600 1820 1962 2010
25 %
33 %
4 %
18 %
In %
British started importing heavily Opium
into greater China from Hong Kong to
improve their trade balance (which has
been negative due to Chinese
products like tea and silk)
First Opium War
(1839-42)
Result: China as a
dependent country
Source: Professor Agnus Maddison, University Groningen, in: Welt Kompakt, Thursday, 19.08.2010, Nr. 160, p. 2, www.economist.com (2015); www.statista.de (2017)
17.9%
as of 2016
2. Why Companies Go
International
SEITE ‹Nr.›Chart 9 www.bwl.lmu.deInternational Management
Globalization – Good or Bad?
2. Why Companies Go
International
Suicides at Foxconn
Light and Death
Source: The Economist, May 29th 2010, p. 68
SEITE ‹Nr.›Chart 12 www.bwl.lmu.deInternational Management
2.1 Eras of Globalization
2.2 Doing Business And Regulation Worldwide
2.3 It´s No Longer If, But When and How
2.4 Motives & Reasons
2.5 Internationalization Theories
2.6 Summary
Outline
2. Why Companies Go
International
SEITE ‹Nr.›Chart 13 www.bwl.lmu.deInternational Management
World Population
2. Why Companies Go
International
SEITE ‹Nr.›Chart 14 www.bwl.lmu.deInternational Management
Comparing Countries’ Performance
▪ Gross Domestic Product (GDP) is a monetary measure of the market value of all final
goods and services that are produced in a defined period (quarterly or yearly).
▪ Gross National Product (GNP) is the market value of all products and services produced
in one year by workers and property supplied by the residents of a country
• Unlike Gross Domestic Product (GDP), which defines production based on the
geographical location of production, GNP allocates production based on ownership
▪ What does GDP not measure?
• Economic and social wealth (Quality of Life)
• Measurement by the OECD: Better Life Index
▪ Since January 2011: Enquete-Commission by the German Bundestag developed a new
measurement approach for wealth in order to receive a more reliable, sustainable measure
that also incorporates (external) costs such as land consumption or species extinction
• Economic performance,
• Quality of life, and
• Sustainability
2. Why Companies Go
International
Sources: www.bundestag.de, 2017
SEITE ‹Nr.›Chart 15 www.bwl.lmu.deInternational Management
Measurements of Economic and Social Wealth
Measurement of quality of life: Better Life Index
Sources: OECD (2011). How’s Life: Measuring Well-Being, p. 23 and p. 50.
Relative well-being strengths and weaknesses,
by country
Framework for measuring well-being.
2. Why Companies Go
International
SEITE ‹Nr.›Chart 16 www.bwl.lmu.deInternational Management
Relationship of Life Satisfaction and GDP
Source: The Economist, December 2010
2. Why Companies Go
International
SEITE ‹Nr.›Chart 17 www.bwl.lmu.deInternational Management
2. Why Companies Go
International
The World’s Gross Domestic Product from 1980-2016
World: 11,8 Tr USD
Share of developing/
emerging countries:
30,9%
1980
World: 22,9 Tr USD
Share of developing/
emerging countries:
22,9%
1990
World: 31,9 Tr USD
Share of developing/
emerging countries:
20,3%
2000
2013
Slump due to
Global
Financial Crisis
World:
74,9 Tr USD
Share of
developing/
emerging
countries: 50,4 %
SEITE ‹Nr.›Chart 19 www.bwl.lmu.deInternational Management
Gross Domestic Product (2016): Nominal
2. Why Companies Go
International
2. PRC3. Japan. USA
2. China
4. Germany
1. United States.
Source: International Monetary Fund (2017), www.imf.org
SEITE ‹Nr.›Chart 20 www.bwl.lmu.deInternational Management
GDP (PPP) Top 10 Countries in 2016
2. Why Companies Go
International
Source: Central Intelligence Agency (2017), www.cia.gov
Rank Country GDP PPP
1 China $21,270,000,000,000 ($ 15,400 per capita)
(2) European Union $19,180,000,000,000 ($ 37,800 per capita)
3 United States $18,560,000,000,000 ($ 57,300 per capita)
4 India $8,721,000,000,000 ($ 6,700 per capita)
5 Japan $4,932,000,000,000 ($ 38,900 per capita)
6 Germany $3,979,000,000,000 ($ 48,200per capita)
7 Russia $3,745,000,000,000 ($ 26,100 per capita)
8 Brazil $3,135,000,000,000 ($ 15,200 per capita)
9 Indonesia $3,028,000,000,000 ($ 11,700 per capita)
10 United Kingdom $2,788,000,000,000 ($ 42,500 per capita)
SEITE ‹Nr.›Chart 21 www.bwl.lmu.deInternational Management
Countries by GDP (PPP) per capita in 2015
Source: World Economic Outlook Database, April 2016, International Monetary Fund. Database updated on 12 April 2016. Accessed on 28 April 2017.
SEITE ‹Nr.›Chart 22 www.bwl.lmu.deInternational Management
Gross Domestic Product (2017): Growth
2. Why Companies Go
International
Source: International Monetary Fund (2017), www.imf.org
SEITE ‹Nr.›Chart 23 www.bwl.lmu.deInternational Management
International Trade and Imports & Exports
International Trade is the exchange of goods and services across international borders.
Exports are goods and services produced by a firm in one country and then sent to another country.
Imports are goods and services produced in one country and bought in by another country.
export
import
Source: Rugman/Collinson (2006), p.6.
2. Why Companies Go
International
SEITE ‹Nr.›Chart 24 www.bwl.lmu.deInternational Management
Globalization is defined as “the process of social, political, economic, cultural, and
technological integration among countries around the world”1.
Regulation through Global and Regional Integration:
▪ World Trade Organization (WTO)
▪ North American Free Trade Agreement (NAFTA) renegotiation
▪ Free Trade Area of the Americas (FTAA) no agreement
▪ European Free Trade Association (EFTA)
▪ Association of Southeast Asian Nations (ASEAN)
▪ Mercado Común del Sur (Mercosur)
▪ Trans-Pacific-Partnership (TPP) -> not ratified due to US withdrawal
▪ Transatlantic Trade and Investment Partnership (TTIP) no agreement
▪ Comprehensive Economic and Trade Agreement (CETA)
2. Why Companies Go
International
Source: Hodgetts et al. (2006), p.7.; www.bbc.com (2017); www.eurpe.eu (2017)
Doing Business and Regulation Worldwide
SEITE ‹Nr.›Chart 25 www.bwl.lmu.deInternational Management
19601950 1980 1990 2000 20101970
0
30 (Index 1950 = 1)
25
20
15
10
5
World‘s Population
Factor 3
Production of
Goods
Factor 10
Flow of Goods
Factor 30
2. Why Companies Go
International
Source: World Trade Organization WTO
Ramifications of Globalization:
Strong Growth of International Flow in Goods since 1950
SEITE ‹Nr.›Chart 26 www.bwl.lmu.deInternational Management
The World Trade Organization (WTO)
The WTO is ‘rule-based’;
its rules are negotiated agreements
WTO agreements
• cover goods, services and
intellectual property.
• spell out the principles of
liberalization, and the permitted
exceptions.
• include individual countries’
commitments to lower customs
tariffs and other trade barriers,
and open services markets.
• set procedures for settling
disputes.
• prescribe special treatment for
developing countries.
• require governments to make
their trade policies transparentSource: World Trade Organization, www.wto.org.
2. Why Companies Go
International
SEITE ‹Nr.›Chart 27 www.bwl.lmu.deInternational Management
2. Why Companies Go
International
Doing Business and Regulation Worldwide - Example
Mercosur – 5th largest common market
Impact on member countries:
• Increasing international trade, competition, and foreign
investment
• Economic stabilization due to free movement of
manpower, capital, free transit of goods and services
• Reductions of trade barriers and tariffs
Impact on firms within the Mercosur:
• 1,500 German firms are located within the Mercosur
• Mercosur provides foreign firms access to countries in
South America
• 1995: Volkswagen Argentina builds production facility in
General Pachego (Argentina) to profit from free trade
within the Mercosur (export of 60% of production volume)
SEITE ‹Nr.›Chart 39 www.bwl.lmu.deInternational Management
Main players for international trade in goods, 2015 (billion EUR)
SEITE ‹Nr.›Chart 40 www.bwl.lmu.deInternational Management
2.1 Eras of Globalization
2.2 Doing Business And Regulation Worldwide
2.3 It´s No Longer If, But When and How
2.4 Motives & Reasons
2.5 Internationalization Theories
2.6 Summary
2.7 Case Study (background)
2. Why Companies Go
International
Outline
SEITE ‹Nr.›Chart 41 www.bwl.lmu.deInternational Management
Benefits from global market expansion: research has shown that firms of all sizes and
in all industries that are engaged in international marketing and as a result they:
• Outperform their strictly domestic counterparts
• Grow more than twice as fast in sales
• Earn significantly higher returns on equity and assets
2. Why Companies Go
International
Source: Czinkota et al. 2004
Motives & Reasons – Going for Gold
Company
Performance
SEITE ‹Nr.›Chart 42 www.bwl.lmu.deInternational Management
Significance of International Trade
Importance for specific industries:
• Cars, chemicals and machines are the most frequently exported goods; 98% of exporting companies are small and medium-sized enterprises.
Importance for specific nations:
• Germany is an export-oriented nation. From 1985 until 1994, Germany was the country with the highest amount of exports (3rd biggest in 2015).
• Due to globalization and the reduction of trade barriers, emerging markets became important for each exporting country.
• Emerging markets are often characterized by a previously centrally planned, isolated economy and a relatively short history of open market relations.
• Exports are an important factor for the standard of living and the development of wealth of each nation.
Source: www.ifm-bonn.org
2. Why Companies Go
International
SEITE ‹Nr.›Chart 43 www.bwl.lmu.deInternational Management
Internationalising to be Competitive - the World’s Most Competitive
Nations, 2016 Ranking
Country Rank 2015 (2014)
China/HK
Switzerland
United States
Singapore
Sweden
Denmark
Ireland
Netherlands
Norway
Canada
1 (2)
2 (4)
3 (1)
4 (3)
5 (9)
6 (8)
7 (16)
8 (15)
9 (7)
10 (5)
2. Why Companies Go
International
Source: IMD World Competitiveness Center www.imd.org (2017)
SEITE ‹Nr.›Chart 44 www.bwl.lmu.deInternational Management
2. Why Companies Go
International
Fortune Global 500 by Country: Top Ten 2012 and 2014
Ranking Country Number of MNCs 2012 Number of MNCs 2014
1 (1)
2 (2)
3 (3)
4 (4)
5 (5)
6 (6)
7 (8)
8 (7)
8 (9)
10 (10)
United States
China
Japan
France
Germany
United Kingdom
South Korea
Switzerland
Netherlands
Canada
132
73
68
32
32
26
13
15
12
11
128
95
57
31
28
28
17
13
13
10
Source: The Fortune Global 500 (2012), Number of companies data taken from the "Pick a country" box.
,
SEITE ‹Nr.›Chart 45 www.bwl.lmu.deInternational Management
Internationalizing to Earn Money - the Fortune Global Top Ten 2016
2. Why Companies Go
International
Source: Fortune Global 500, July 2014
Rank Company Country Industry Revenue (Bn. $) Profit (Bn. $)
1 Walmart United States Retail 482.3 14.7
2 State Grid Corporation China Utilities 329.6 10.2
3 China National Petroleum China Petroleum 299.3 7.1
4 Sinopec China Petroleum 294.3 3.6
5 Royal Dutch Shell Netherlands Petroleum 272.2 1.9
6 Exxon Mobil United States Petroleum 246.2 16.2
7 Volkswagen Germany Automobile 236.6 -1.5
8 Toyota Japan Automobiles 236.6 19.3
9 Apple United States Technology 233.7 53.4
10 BP Britain Petroleum 226.0 -6.5
SEITE ‹Nr.›Chart 46 www.bwl.lmu.deInternational Management
Motives & Reasons – Going for Gold
• Independency
• Lower costs
• Higher profits
2. Why Companies Go
International
Source: Czinkota et al. 2004.
Performance
SEITE ‹Nr.›Chart 47 www.bwl.lmu.deInternational Management
2.1 Eras of Globalization
2.2 Doing Business And Regulation Worldwide
2.3 It´s No Longer If, But When and How
2.4 Motives & Reasons
2.5 Internationalization Theories
2.6 Summary
2.7 Case Study (background)
Outline
2. Why Companies Go
International
SEITE ‹Nr.›Chart 48 www.bwl.lmu.deInternational Management