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Summary International Business Awareness
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Summary International Business Awareness year one international business course
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International business awareness – IBAInternational business is a business firm that engages in international economic activities and the
action of doing business abroad. Multinational enterprise (MNE) is a firm that engages in foreign
direct investment (FDI) by directly investing in controlling and managing activities in other countries
that add value.
Benefits to international business: access to more markets, access to cheaper labor, increased
quality or quantity of goods, access to resources that are not available at home.
World trade: 75% merchandise, 25% services. World outputs impacts trade, world trade grows faster
than world output.
Globalization is a process leading to greater interdependence and mutual awareness among
economic political and social units. Waves of globalization describe the world economy.
Liberalization is the removal of regulatory restrictions on business.
Drivers of globalization are the removal of the barriers to trade and investment and technological
innovations like communication, transportation, global supply chains, automatization and
robotization.
Benefits of globalization are reducing marketing costs, lower cost labor, creates new market
opportunities, technical expertise.
Threats to globalization are global recession, protectionism, anti-globalization protests, risks of
disruptions to global business.
Gross national product (GNP): the sum of value added by resident firms, households and
government operating in an economy. Only citizens are taken into account.
Gross domestic product (GDP): total market value of all final goods and services produced within a
country in a certain period of time. Even foreign companies are taken into account.
Gross national income (GNI): GDP + income from non-resident sources abroad.
Purchasing power parity (PPP): adjustment to the GDP to reflect differences in the cost of living.
Strategy is an integrated and coordinated set of commitments and actions designed to exploit core
competencies and gain a competitive advantage.
Strategic competitiveness is achieved when a firm successfully formulates and implements a value
creating strategy.
Competitive advantage (CA) is when a firm implements a strategy that competitors are unable to
duplicate or find too costly to imitate/ outperform its rivals.
Temporary competitive advantage is the ability to outperform rivals for a limited time.
Sustainable competitive advantage is the ability to deliver persistently above average performance.
Causal ambiguity is the difficulty of identifying the causal determinants of successful performance.
Social complexity are the social complex ways of organizing of typical of many firms.
Appropriability is the ability to appropriate the values for itself.
Ethnocentric perspective is a view of the world through the lens of one’s own culture.
Not invented here syndrome is the tendency to distrust new ideas coming from outside of one’s
own organization or community.
Cosmopolitans are the people who embrace cultural diversity and the opportunities of globalization.
Identify core competencies is the special ability of a company that competitors find extremely
difficult or impossible to equal. Coordination of multiple skills, lengthy period to develop, difficult to
teach.
, Institution based view are formal and informal rules of the game.
Resource based view are firm specific resources and capabilities.
Liability of outsider ship is the inherent disadvantage that outsiders experience in a new
environment because their lack of familiarity. (don’t know the legislation of the country)
Triad are three regions of developed economies (north America, western Europe and japan).
Bric are emerging economies (brazil, Russia, india and china).
Primary resources are tangible and intangible assets as well as human resources that a firm uses to
choose and implement its strategies.
Tangible: financial like cash, physical like factories. Intangible: technological, reputation, goodwill.
Human resources: skills and know-how, communication and collaboration skills, organizational
culture.
Location bound resources are resources that cannot be transferred abroad.
Capabilities in innovation are the assets and skills to research and develop new products.
Capabilities in operations is the ability to effectively implement regular activities. Capabilities in
marketing integrate the ability to recognize consumer demands, develop products for the demands
and communicate the benefits of the product. Capabilities in logistics and service are the
interactions with the customer and delivering products on the right time to the right customer.
Capabilities in corporate coordination are abilities to plan, command and control systems.
Dynamic capabilities are a higher level of capabilities that enable an organization to continuously
adapt to new technologies and changes in the external environment.
Goodwill is the value of a firm’s abilities to develop and leverage its reputation.
Value chain is a chain of activities vertically related in the production of goods and services.
Value chain analysis: every profitable company creates value for customers.
Companies can be divided into primary (logistics, operations, marketing and sales, services) and
support activities (infrastructure, human resource management, technological development,
procurement).
How to measure your resources: VRIO framework. Value creating, Rarity, Imitability, Organization.
Benchmarking is an examination of resources to perform a particular activity compared against
competitors.
Outsourcing is turning over an organizational activity to an outside supplier that will perform it on
behalf of the firm.
Offshoring is moving an activity to a location abroad.
Nearshoring is offshoring to a nearby location, ie in Europe.
Reshoring is bringing activities back to a firm´s home country.
Offshore outsourcing is outsourcing to another firm doing the activity abroad.
Domestic outsourcing is outsourcing to a firm in the same country.
Captive offshoring is setting up subsidiaries abroad, work in done in house but location is foreign.
At home Abroad
Internal Domestic offshoring Captive offshoring
External Domestic outsourcing Offshore outsourcing
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