This is a combined course: international business awareness.
It consists:
- International business (ISBN 9588)
- Economics (info from slides)
- Law (ISBN 6261)
Emerging economies = economies that only recently settled institutional frameworks
that facilitate international trade and investment (typically with low- or middle level
income and above average economic growth).
Ethnocentric perspective = View of the world through the glasses of one’s own
culture.
Expatriate assignments = temporary job abroad with an MNE
Globalization = Process leading to greater interdependence and mutual awareness
among economic, political and social units in the world, and among actors in general.
Liability of outsidership = inherent disadvantage that outsiders experience in a new
environment because of lack of familiarity
Liberalization = removal of regulatory restrictions on business.
Not-invented-here-syndrome = tendency of distrust new ideas coming from outside
of someone's organisation.
Cosmopolitans = people embracing cultural diversity and the opportunities of
globalization.
Waves of globalization = the pattern of globalization arising from a combination of
long-term trends and pendulum swings.
Base of the pyramid = the vast majority of humanity (4 bl. People) who makes less
than €1500 per year.
Risk management = the identification and assessment of risks and the actions taken
to minimize their impact.
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FDI = Foreign direct investment = Investments in, controlling and managing value-
added activities in other countries. Buy/set a company abroad.
TNI = transnationality index = measures the share of activities outside the home
country of companies (MNE’s).
GDP = Gross domestic product = Sum of value added by resident firms, households
and governments operating in an economy.
GNP = gross national product = GDP + income from non-resident sources abroad.
GNI = Gross national income = GDP + income from non-resident sources abroad
(term is only used by World bank and other international organisations)
,IB = international business = a business that engages international economic
activities and/or the action of doing business abroad.
MNE = Multinational Enterprise = firm that engages in foreign direct investments and
operates in multiple countries.
PPP = purchasing power parity = a conversion that determines the equivalent
amount of goods and services different currencies can purchase. Usually used to
capture differences between costs of living in different countries.
(een conversie die de hoeveelheid goederen en services bepaalt die verschillende
valuta kunnen kopen).
what is the cost of a bigmac, to compare with other countries!
Summary chapter 1
What is international business?
business that does international economic activities
the action of doing business abroad
business around the globe including both international (cross-border) activities
and domestic business activities
Benefits doing international business:
1. Access to more markets
2. Access to cheaper labour
3. Increased quality or quantity of products
4. Access to resources that may not be available at home.
Most important actors are MNE’s, that do FDI’s. Invest in controlling and managing
activities in other countries that add value. Example:
Production of goods in China Head office in Belgium.
Emerging economies = BRIC countries. Brazil & Russia oil and gas. India & China
low cost of labour.
One fundamental question and 2 ways to find the answer:
Institution-based view:
Formal rules: legislation (law)
Informal rules: adopt yourself in the other culture. Know the norms and values
of a country.
Resource-based view:
Firm’s internal resources and
capabilities.
When a company goes abroad, it has to
deal with liability of outsidership. The
customers in a new country don’t know
you, you don’t know the language and
the culture. Result is you do not get
, the trust from the locals.
Solutions:
-hire someone from the specific country to work for you
-buy a company in that country
What is globalization?
a process leading to greater interdependence and mutual awareness among
economic, political, and social units in the world and among actors in general.
Different views on globalization:
1. Rising power of MNE’s in the world.
2. Because of internet, communication and transportation is easier.
3. Unskilled workers appear to lose out
4. Distinctiveness (uniqueness) of our countries (national cultures) disappears.
Globalization was is nothing new and still going on, but there have been quite
substantial and costly setbacks
(because of World War 1 and 2).
After 1990, emerging economies
started raising really fast. This was
because of the end of the Cold War,
trading with SUbecame possible.
Waves of globalization may
appropriately describe the world
economy.
Result of globalization: base of the
pyramid.
Drivers of globalization:
remove barriers to trade and investment (WTO)
Technological innovations
Communication, coordination and control
Transportation
Global supply chains
Automatization, robotization
Benefits of globalization:
1. Reduce marketing costs
2. Lower-cost labour
3. Creates new market opportunities
4. Technical expertise
Threats to globalization:
1. Global recession
2. Protectionism (current trade war China/US TRUMP)
3. Anti-globalization protests (NGO’s)
4. Risks of disruptions to global business
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