International Business

International Business Operations.

Chapter 1 – Introduction: What is international business?

Distinguish between international business and globalisation markets.

• International business refers to the performance of trade and investment activities by firms across national borders.

- Is characterised by international trade and investment.

• Globalisation markets are the on-going economic integration and growing interdependency of countries worldwide. International

What makes international business different from domestic business?

• Firms that engage in international business operate in environments characterised by unique economic conditions, national culture and legal and political systems.

• Cross-cultural risk refers to a situation or even where some human value has been put at stake due to a cultural misunderstanding.

• Country risk refers to the potentially adverse effects on company operations and profitability caused by developments in the political, legal and economic environments in a foreign country.

• Currency risk refers to the risk of adverse fluctuations in exchange rates.

• Commercial risk arises from the possibility of a firm’s loss or failure from poorly developed or executed business strategies, tactics or procedures.

What are some of the key motivations for firms to engage in international business?

• Some motives are strategic in nature, while others are reactive.

- E.g. Strategic/proactive: foreign market opportunity or acquire new knowledge.

- E.g. Reactive: need to serve a key customer that has expanded abroad.

• Seek opportunities for growth through market diversification

- E.g. The first ATM was installed outside a London branch of Barclays Bank in 1967. Next adopted in US and Japan  now 1.5 million ATM worldwide.

• Earn higher margins and profits

- Market growth in mature economies is sluggish or flat.

- Intense competition  slim profit margins.

- E.g. Bathroom fixture manufacturers American Standard...