International business facilitates the globalization process.
International business: all commercial transactions between parties in two or more countries-Privatefirms are profit-oriented. -Government organizations may or may not be profit-oriented. The international business environment is more complex and diverse than the domestic business environment.
The Forces Behind Globalization -Increased expansion and technological improvements in transportation and communications networks-Liberalization of cross-border trade and resource movements -Development ofservices that support international business activities -Growing consumer demand for foreign products-Increased global competition-Changing political and economic situations-Expanded cross-national treaties and agreements
The Criticisms of Globalization Threats to national sovereignty-Negative costs of economic growth-Increasing income inequality/ Antiglobalization forces may use both peacefuland violent means to stop or slow the globalization process. Offshoring (the transferring of production to foreign sites) is particularly controversial
To acquire resources-Products, components, services -Foreign capital –Technologies -Information
To minimize risk-Take advantage of business cycle differences amongst countries-Diversify suppliers across countries-Counter competitors’ advantagesStrategic alliance: a collaborative arrangement of critical importance to one or more of the alliance partners
Multinational enterprise [MNE]: a firm that takes a global approach to its foreign markets and production
Multinational corporation [MNC] and transnational company [TNC] may be used in this same context.
Managing an international business differs from managing a domestic businessbecause:-countries and cultures are different-international business operations are more complex than domestic operations.
A company’s own competitive strategy influences how and where it can best operate. From one country to another, a company’s relative competitiveness will vary because of the differences in the local and foreign competitors that are present.
2lekcia The CulturalEnvironments Facing Business
Culture: the specific learned norms of a society that reflect attitudes, values, and beliefs
Major problems of cultural collision are likely to occur if: -a firm implements practices that do not reflect local customs and values and/or -employees are unable to accept or adjust to foreign customs. Cultures consist of societies, i.e., relatively homogeneous groups ofpeople, who share attitudes, values, beliefs, and customs. Cultures are dynamic; they evolve over time. Cultural value systems are set early in life, but may change because of: -choice or imposition -contact with other cultures.-The basic similarity amongst people within countries is both a cause and an effect of national boundaries.-National identity is perpetuated through the rites and symbols ofa country and a common perception of history. Subcultures may link groups from different nations more closely than certain groups within nations.Cultural Formation and Change- Societal values and customs constantly evolve in response to changing realities. -Cultural imperialism is brought about by the imposition of one culture upon that of another.
-Certain elements introduced from outside aculture may be known as creolization, indigenization, or cultural diffusion. Language as a Cultural Stabilizer - Isolation from other groups, especially because of language, tends to stabilize cultures. -Some countries see language as being so important that they regulate the inclusion of foreign words and/or mandate the use of the country’s official language for business purposes.