Intro to international business

© SUGIHARTO, SH.MM GICI Business School

P r e s e n t e d by S u g i h a r t o , S H . M M


International Business - all

commercial transactions between

two or more countries

Involves modes of business that

differ from those at the

domestic level

Foreign conditions diversity

company’s external

environment


International business

consists of transactions that

are devised and carried out

across national borders to

satisfy the objectives of :

INDIVIDUALS

COMPANIES

ORGANIZATIONS


Causes the flow of ideas, services,

and capital across the world

Offers consumers new choices

Permits the acquisition of a wider

variety of products

Facilitates the mobility of labor,

capital, and technology

Provides challenging

employment opportunities

Re-allocates resources, makes

preferential choices, and shifts

activities to a global level


Will an idea, good, or service fit

into the international market

Should trade or investment be used

to enter a foreign market

Should supplies be obtained

domestically or abroad

What product adjustments are necessary

to be responsive to local conditions

What are the threats from

global competitors



Expand sales greater purchasing

power in the world as a whole

Acquire resources of products,

services, components

also, foreign capital, technologies,

information

Diversify sources of sales and

supplies, takes advantage of business

cycle differences among countries

Minimize competitive risk to prevent

competitor from gaining advantages


EXPANSION OF TECHNOLOGY

transportation and communication are quicker and

less costly

Liberalization of cross-border movements

Government barriers reduced because:

desire for better access to greater variety

of goods and services

domestic producers forced to be more

competitive

lowered trade barriers to their own exports

Development of supporting services by business

and governments to:


Ease the flow of goods and

services sold abroad

Reduce risks of International

Business

Development of supporting services by

business and governments to:

Increase in global competition,

the firms have become more

global to maintain

competitiveness


j

MERCHANDISE EXPORTS

AND IMPORTS

Are the most common international

economic transaction, especially for

smaller companies. And …

Major source of international revenue

and expenditures for most companies

SERVICE EXPORTS AND IMPORTS

NONPRODUCT INTERNATIONAL

EARNINGS

Tourism and transportation

Performance of services for a fee

Use of assets by others - Licensing

Agreements


jINVESTMENTS - ownership of foreign

property in exchange for financial return

Foreign direct investment

Investor gains a controlling interest in

foreign company by joint venture or

mixed venture another option is

Portfolio investment

International Companies

the terminology

Strategic alliance

collaborative arrangement of critical

importance to the competitive viability of

one or more partners

Multinational enterprise (MNE)


jLICENSING - official or legal permission

to carry on an activity

A permit from an authority to own or use

something, do a particular thing or carry

on a trade through agreement between

licensed entity (Licensee) and granting

authority

FRANCHISING - A marketing system

revolving around a two-party agreement,

whereby the franchisee conducts

business according to the terms

specified by the franchisor

Single franchise owner

Master franchisee


O P E R AT I O N S A N D I N F L U E N C E S

External Influences

PHYSICAL AND

SOCIETAL FACTORS

Political policies and

legal practices

Cultural factors

Economic forces

Geographical

influences

The Operations

OBJECTIVES

Sales expansion

Resource acquisition

Diversification

Competitive risk

minimization

STRATEGY



External Influences

COMPETITIVE

ENVIRONMENT

Major advantage in

price, marketing,

innovation, or other

factors

Number and

comparative,

capabilities of

competitors

Competitive

differences by country

MEANS

MODES FUNCTION Overlying

alternativesImporting and

exporting

Tourism and

transportation

Licensing and

franchising

Turnkey operations

Management

contracts

Direct and portfolio

investment

Marketing

Finance

Production

Accounting

Human

resources

Choice of

countries

Organization

and control

mechanisms


M E AS U R I N G G L O B A L I Z AT I O N

ECONOMIC INTEGRATION

POLITICAL ENGAGEMENT

PERSONAL CONTACT

TECHNOLOGICAL CONNECTIVITY

Foreign Aid

Treaties

Organizations

Peacekeeping

International Trade

Foreign Direct investment

Travel and Tourism

Telephone

Transfer Payment

Internet users

Hosts

Secure servers

Note: # learn anything about Globalization, the

terms, the definition, and its History. Those will

be part on Final examination


is controversial in terms of who benefits

when costs are reduced and whether the

process exchanges good jobs for bad

ones

GLOBALIZATION Good OR Bad ?Threats to national sovereignty

Economic growth and

environmental stress

Growing income inequality and

personal stress

Offshoring – transferring of production

abroad



P O L I T I C A L that affect whether and how

International Business occurs

D O M E S T I C A N D I N T E R N A T I O N A L L A W

determines what managers can

do in International Business

E C O N O M I C S determines The types of investment

G E O G R A P H Y determine location and availability of

world’s resources

T h e E X T E R N A L I N F L U E N C E SP h y s i c a l a n d s o c i e t a l f a c t o r s


O P E R AT I O N S A N D I N F L U E N C E ST h e E X T E R N A L I N F L U E N C E S

P h y s i c a l a n d s o c i e t a l f a c t o r sTo operate within a company’s

external environment, its managers

must have :

knowledge of business operations

a working knowledge of social

sciences ….

and how they affect all

functional business fields


O P E R AT I O N S A N D I N F L U E N C E ST h e E X T E R N A L I N F L U E N C E SC o m p e t i t i v e e n v i r o n m e n t

Varies by industry, company, and country

Strategies differ across companies

e.g., importance of controlling labor cost

e.g., influence of local and international competitors

Size of market differs across

countries


Evolution of Strategy in

International Process

Risk Minimization

foreign operations viewed as

risky international commitments

evolve gradually

PATTERNS OF EXPANSION

Passive to active pursuit of

International Business opportunities

– initially wait for foreign

opportunities

External to internal handling of

International Business – rely on

intermediaries at first

Limited to extensive modes of

operations – begin with

importing or exporting

operation

Few to many foreign locations

Similar to dissimilar business

environments


THANK YOU FOR LISTENING

1st Meeting

International Business

STIE GICI Business School

January 2014

Background image provide by

slide Factory

Closing theme by A ha

‘Stays on These Roads’

Presentation created by

Ace 013 Slides factory

© MCX 2014

Intro to international business

Education

gici business school

modes of business

advantages sugiharto

competitiveness sugiharto

global level sugiharto

portfolio investment

global competitors sugiharto

licensing agreements