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Summary International Business IBA
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summary of international business - iba. Q1Y1 Business Organization, International Business Studies, Avans University of Applied Sciences
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By: martynasmikalauskas • 5 year ago
By: ValentijnvanWalsum • 5 year ago
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International Business Awareness IBWeek 1
Globalizing Business
International Business = 1) a business that engages in international economic activities and
2) the act of doing business abroad 3) business around the globe including both international
activities and domestic business activities.
MNE = Multinational Enterprise.
An MNE engages in foreign direct investments (FDI). This means they invest in controlling
and managing activities in other countries that add value.
Benefits to international business are:
- Access to many more markets
- Access to cheaper labor
- Increased quality and quantity of goods
- Access to resources that may not be available at home
Gross national product (GNP) = measured as the sum of value added by resident firms,
households and government operating in an economy.
Gross domestic product (GDP) = total market value of all final goods and services produced
within a country.
Gross national income (GNI) = GDP plus income from nonresident sources abroad.
Purchasing power parity (PPP) = adjustment made to the GDP to reflect differences in the
cost of living.
Globalization = a process leading to greater interdependence and mutual awareness among
economic, political and social units in the world among actors in general.
Per example;
- Accelerated spread of communication and transportation technology.
- Rising power of MNEs and increased inequality in the world.
- Increased competition for jobs, especially low-skilled workers.
- A force eliminating differences among distinctive national cultures and identities.
Drivers and trends of globalization:
1. Liberalization: the removal of barriers and regulatory restrictions on trade and
investment.
2. Technological innovations
a. Communication, coordination and control
b. Transportation
c. Global supply chain
d. Automatization, robotization, AI
3. Waves of globalization: the pattern of globalization arising from a combination of long-
term trends and pendulum swings.
Threads to globalization:
- Global Recession, an extended period of economic decline around the world.
- Protectionism (US/Trump vs China)
- Anti-globalization protests from NGOs
- Risks of disruptions to global business
,What determines success and failure of firms around the globe?
Institution-based view: formal and informal rules of the game.
- Doing business around the globe requires intimate knowledge about the formal and
informal rules of doing business in various countries.
- Formal rule: requirements to treat domestic and foreign firms as equals
- Informal rule: culture, value and norms play a big role.
- The “liability of outsidership” = the inherent disadvantage that outsiders experience in
a new environment, because of a lack of familiarity, networks and legitimacy in the
local context.
Resource-based view: firm-specific resources and capabilities. They possess specific
resources that enabled them to attain leadership position around the globe.
The reason globalization speeded so fast in 1990s is that emerging companies were joining
the global state. This caused many more people with much lower incomes into the global
stage. Countries realized it was a must to join in.
Emerging economies are important for Europe and for the European business because most
of the import and export goes through European countries, which causes the GDP to rise. A
higher GDP is better for the economy.
Risk management = the identification and assessment of risks and the actions to take to
minimize their impact.
The Global Economic pyramid:
, Week 2
Chapter 4: Firm resources: competitiveness and growth.
Resource-based view = a leading perspective in global business that posits that firm
performance is fundamentally driven by firm-specific resources. Focuses on the inside.
International Business
Michael Porters’ ValueSChain
trategy
activities
Firms need resources to gain competitive advantages. Resources come in multiple ways. We
have primary resources and capabilities. Together they form firms’ core competencies.
Michael Porters’ValueChain Activities
Value-chain =
most goods and
services are
produced
through a chain
of vertical
activities that
add value. This
can be divided in
primary and
support
activities.
7-
24
(Introductionto
International Business 6e
VRIO framework = resource-based framework that focusses on V - value creation, R - rarity,
I – imitability, O – organization.
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