International Business, Chapter 1

Chapter 1: Globalization and International Business

Introduction 1. The meaning of globalization * Broadly: the widening set of interdependent relationships among people from different parts of a world that happens to be divided into nations. * Narrowly: the integration of world economies through the elimination of barriers to movements of goods, services, capital, technology, and people.

A. How Does International Business Fit In? * International business consists of all commercial transactions between two or more countries. The goal of private business is to make profits; Governments may undertake them either for profit or for other reasons. a. The Study of International Business * Most managers need to approach their operating strategies from an international standpoint. * Managers in almost any industry need to consider (1) where to obtain the inputs they need of the required quality and at the best possible price and (2) where you can best sell the product or service you’ve put together from those inputs. * Studying IB is important because (1) most companies either are international or compete with international companies, (2) the best way of conducting business may differ by country, (3) an understanding helps you make better career decisions, and (4) an understanding helps you decide what governmental policies to support. b. Understanding the Environment/Operations Relationship

The Forces Driving Globalization * Globalization (1) has been growing, (2) is less pervasive than generally thought, (3) has economic and non economic dimensions, and (4) is stimulated by several factors. * The A.T. Kearney / Foreign Policy Globalization Index: some countries are more globalized than others, and a given country may be highly globalized on one dimension and not another. This index ranks countries across four dimension; * Economic – international trade and investment * Technological – Internet

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