Welcome to class ofInternational Business

byDr. Satyendra Singh

University of WinnipegCanada

Objectives:

• History of International Business• The Debate• Definitions• Globalization• The International Business Model• Characteristics of International Business

History of International Business

• Early Traders– Well before the time of Christ and Greek merchants – China stimulated the emergence of an internationally integrated trading

system• “all roads lead to China”

• 17th Century Mercantilism/Colonialism– British East India Company– Dutch East India Company– France, Portugal, Spain– …

Globalization Debate

• World Trade Organization– Extensive public protests about globalization and the liberalization of international

trade

• Debate– For:

• poverty , living standards– Against:

• Income inequality • Labor standard • Environmental health conditions

Opposition to Globalization!

• Albania• Algeria• Burundi• Congo• Madagascar• Myanmar• Syria• Ukraine•

Definitions

• International/foreign/multidomestic Firm– An organization with multicountry affiliates

• Each formulates its own business strategy on perceived market differences

• Global Firm– an organization that attempts to standardize and integrate operations

worldwide in most of all functional areas– Ratio of foreign to total employment– Ratio of foreign to total assets– 20 countries

Globalization

• Globalization – Coined by Theodore Levitt

• “as if the entire world (or major regions of it) were a single entity; [such an organization] sells the same things in the same way everywhere”

• Economic Globalization– International integration of goods, technology, information,

labor, and capital– Process of making this integration happen

International Business Model

Characteristics of International Business…

• Domestic Environment All the uncontrollable forces in the home country that surround and

influence the firm’s life and development Shortage of foreign currency FDI in home country

Foreign Environment All the uncontrollable forces originating outside the home country

that surround and influence the firm different values (Conflict: bypass country A to serve B) difficult to assess (Clause: quality of welfare/life) Interrelated (Technology vs. mass labor)

Characteristics of International Busines

• International Environment Interaction between domestic and foreign environmental

forces Intl. Organizations (WTO, NAFTA…) affect businesses Decisions are linked to other subsidiaries (strike)

Decision making more complex Prefer time off vs. more money Cultural differences Self-reference criterion: decisions based on your own cultural values