Chapter 1, 2, and 3

Topics: International trade, International economics, Globalization Pages: 8 (2583 words) Published: January 26, 2013
Chapter 1: Rapid Change of International Business
* There is an impact of extensive foreign investments in the United States taking place especially in recent years * Even some of the best known “American” products and brands are now produced by foreign firms * American companies such as Coca-Cola, Starbucks, McDonalds, the Gap and Levi’s are found in Japan, Australia, Singapore and nearly every European nation * One out of six jobs is tied to international trade and investment * All managers need to have a basic knowledge of international trade to be able to meet the challenge of global competition * Consultants and managers often use the word globalization in describing a firm’s strategy for beating their competitors * HOWEVER…globalization and it’s root, global, are overused and misused in international business because of the prestige that managements believe these words bring to their companies * A global company is an organization that:

-Searches the world for market opportunities, threats from competitors, sources of products, raw materials, knowledge, innovation, and financing, and personnel. (It has global vision) -Maintains a presence in key markets around the world

-Looks for similarities, not differences, among markets
-Standardizes operations worldwide in one or more of the firms functional areas -integrates its operations worldwide
* Multinational company is a company with a number of overseas operations, each of which is left to adapt its products and marketing strategy to what local managers perceive to be unique aspects for their individual markets * International business: business whose activities are carried out across national borders. * Foreign business: the operations of a company outside its home or domestic market-business that takes place within a foreign country * Multidomestic company: (MDC) an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences * Global company: (GC) an organization that attempts to standardize and integrate operations worldwide in most or all functional areas * International company: (IC) a global or multidomestic company * China was the world’s leading manufacturing country for about 1800 years until Britain took over in 1840 * The history of international business dates back to before the time of Christ, Phoenician and Greek merchants who were sending representatives abroad to sell their goods * Politics, the arts, agriculture, industry, public health and other sectors of human life were influenced by the goods and ideas that came with trade * The rise of the Ottoman Empire before 1300 influenced the emerging trading routes for people, goods, money, animals and microorganisms that spanned from England to China, across the Mediterranean and Northern Africa, and through Central Asia and the Indian Ocean region * The 17th and 18th centuries have been termed the “age of mercantilism” because the power of nations depended directly on the sponsorship and control of merchant capital, which expanded under the direct subsidization and protection of national governments * Many multinational companies existed in the late 1800’s * Economic globalization: the tendency toward an international integration of goods, technology, information, labor and capital, or the process of making this integration happen * Five major kinds of drivers all based on change, are leading international firms to the globalization of their operations: 1. Political

-progressive reduction of barriers to trade and foreign investment by most governments, which is hastening the opening of new markets by international firms that are both exporting to them and building production facilities in them -the privatization of much of the industry in formerly communist nations and the opening of their economies to global competition 2. Technological

-advances in...
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