This summary contains notes from the lectures of International Strategy, the summary of the book and useful articles. Because of this summary, I had an 8 for the exam.
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International Business Administration
International Strategy (E_IBA2_IS)
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Lectures international strategy + book
Lecture 1 – Chapter 1
The globalization of markets
Globalization: the shift toward a more integrated and interdependent world economy.
- Globalization of markets: the merging of historically distinct and separate national
markets into one huge global marketplace.
o Robert Reich -> global products: products that are the same or similar around
the world
- Globalization of production: the sourcing of goods to take advantage of differences in
cost and quality of factors of production.
- Main reason: falling barriers to cross-border trade and investment
o Benefits small and larger companies
Institutions that help manage, regulate, and police the global marketplace:
- GATT -> General Agreement on Tariffs and Trade
- WTO
- IMF -> International Monetary Fund
- World bank
- UN
International trade occurs when a firm exports goods or services to consumers in another
country.
Foreign Direct Investment (FDI) occurs when a firm invests resources in business activities
outside its home country.
Standards are the guidelines that describes the best way doing something
- ISO
- Fairtrade
Drivers of globalization
- Declining barriers around 1948
- WTO
- Between 1960 and 2018 the value of the world economy increased 9.4 times, the
value of international goods increased 22.4 times
- Communication is much easier
- The internet
- Transportation technology
- Implications for the globalization of production
- Implications for the globalization of markets
The changing world output and trade
- 1960: US accounted for 38% of world output
- 2018: US accounted for 24% of world output
- Reflects the growth of other countries
- Changing foreign direct investment
- Changing nature of multinational enterprise
o Rise of mini-multinationals
, - Changing of the world order
o Former communist countries present export and investment opportunities
o China moving to industrial superpower
- Global economy of the 21st century
o Barriers to the free flow of goods, services and capital have been coming
down
o Countries may pull back
o Risks are high
Outward stock of foreign direct investment: the total cumulative value of foreign
investments by firms domiciled of that nation’s border.
An international business is any firm that engages in international trade or investment.
Lecture 2 – Chapters 13/14/15
International firms face two pressures: cost reduction and local responsiveness
4 international strategies: on exam!!
1. Global standardization (IKEA)
a. Looks to reap the cost
reductions that come from
economies of scale.
b. Goal is to pursue low-cost
strategy on global scale.
c. Avoids customization
d. Companies tend to have an
informal corporate culture,
few titles, no corporate
dining rooms, no executive
parking places etc.
2. Localization strategy (Netflix)
a. Customizes the firm’s goods or services so they are a good match to tastes
and preferences in different national markets.
b. Customization limits the ability of the firm to capture the cost reduction
associated with mass-producing a standardized product for global
consumption.
c. Not McDonalds because they’re not under cost reduction pressure
d. Netflix delivers different content in different countries,
3. Transnational strategy (Babybel)
a. Achieve low costs, differentiate product offerings to account for local
differences.
b. Places conflicting demands on the company: differentiating the product to
respond to local demands in different geographic markets raises costs, which
runs counter to the goal of reducing costs
4. International strategy (Microsoft)
a. Taking products developed for domestic market and selling them
internationally with minimal local customization.
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