International business consists of all commercial
Merchandise imports: goods
transactionsincluding sales, investments, and
transportationthat take place between two or more
countries.
International business comprises all commercial
transactions (private and governmental, sales, investments,
logistics, and transportation) that take place between two or
more regions, countries and nations beyond their political
boundaries.
International Business: Operations and
Influences
Globalization is the ongoing process that deepens
and broadens the relationships and interdependence
among countries. International Business is a
mechanism to bring about globalization.
Globalization is the process in which people, ideas and
goods spread throughout the world, spurring more
interaction and integration between the world's cultures,
governments and economies.
Factors in increasing globalization
1. Increase in and expansion of technology
2. Liberalization of cross-border trade and
resource movements
3. Development of services that support
international business
4. Growing consumer pressures
5. Increased global competition
6. Changing political situations
7. Expanded cross-national cooperation
Modes of operations in IB:
Merchandise exports: goods that are sent
out of a country. Merchandise exports and
imports are usually a countrys most common
international economic
transactions.
that are brought into a country For non-
merchandise, international earnings, we use
terms as service export and import and are
referred to as invisibles. Examples: tourism
and transportation, service performance as
turnkey operations and management
contracts, asset use as licensing and
franchising and investments as FDI
(foreign direct investment, investor takes
a controlling interest in a foreign company for
example joint venture) and portfolio
investment (a non-controlling financial
interest in another city). Key components of
portfolio investments are no controlling
interest of a foreign operation and extension
of loans.
Service exports: provider and receiver of
payment
Service imports: recipient and payer of
payment Service exports and imports are
international non-product sales and
purchases. They include travel,
transportation, banking, insurance and the
use of assets such as trademarks, patents
and copyrights. They are very important for
some countries and they include may
specialized international business operating
modes.
Culture Learned norms based on values, attitudes,
and beliefs of a group of people.
Cultural Diversity A means of gaining global
competitive advantage by bringing together people
of diverse backgrounds and experience.
Cultural diversity is the quality of diverse or
different cultures, as opposed to monoculture, the global
monoculture, or a homogenization of cultures, akin
to cultural decay. The phrase cultural diversity can also refer
to having different cultures respect each other's differences.
Cultural Collision Occurs in international
business when:
A company implements practices
that are less effective
Employees encounter distress
because of difficulty in accepting
or adjusting to foreign behaviors
Cultural Factors Affecting International
Business Operations