International

Business,
8th Edition

Griffin & Pustay

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-1

Learning Objectives
Discuss the meaning of international
business
Explain the importance of understanding
international business
Identify and describe the basic forms of
international business activities
Discuss the causes of globalization
Comprehend the growing role of emerging
markets in the global economy
COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-2

What Is International Business?

International business consists of business
transactions between parties from more
than one country
Boundaries
International
Business
vs.
Domestic
Business

Currencies
Cultures
Legal Systems
Availability of Resources
Skills & Knowledge
COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-3

Why Study International Business?

Provides the knowledge and skills that are
essential for your career in today's
business environment
Helps you make better career assessments
Compete successfully with peers and
future competitors
Stay abreast of the latest business
techniques and tools
Obtain cultural literacy
COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-4

International Business Activities

Exporting & Importing
International Investments
International Licensing
International Franchising
International Management Contract

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1- 5

International Business Activities:

Exporting and Importing

Exporting: selling
of products made in
ones own country
for use or resale in
other countries.
Importing: buying
of products made in
other countries for
use or resale in
ones own country.

Trade in goods: tangible products

Trade in services: intangible products

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-6

International Business Activities

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-7

International Business Activities:

International Investments

Foreign Direct
Investments
(FDI)

Foreign Portfolio
Investments
(FPI)

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-8

International Business Activities:

Other Forms

International licensing
Intellectual Property
International franchising
The Franchisor
The Franchisee
International management contract
Management Services

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-9

International Business Activities:

An International Business

Multinational Corporation (MNC) OR

Multinational Enterprise (MNE)
Multinational Organization (MNO)

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-10

International Business Activities

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-11

Contemporary Causes of Globalization

What is Globalization?
Manifestation of globalization
Intensification of the role of international
trade
Growing importance of FDI
Causes of Globalization
Strategic Imperatives
The Environmental Causes of Globalization
Globalization and Emerging Markets
COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-12

Contemporary Causes of Globalization

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-13

Contemporary Causes of Globalization

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-14

Contemporary Causes of Globalization:

Strategic Imperatives

Leveraging a firms core competencies

Acquiring resources at low cost
Expanding into new markets
Competing with industry rivals

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-15

Contemporary Causes of Globalization:

Environmental Causes

Changes in the Political Environment

Reduction of trade and investment barriers
The collapse of European Communism
The ideological and policy changes
undertaken by China and India
Changes in the Technological Environment
Advances in Transportation
Improvements in Information Processing
Changes in Communications Technology
COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-16

Contemporary Causes of Globalization:

Globalization and Emerging Markets

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-17

Contemporary Causes of Globalization

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1- 18

Contemporary Causes of Globalization

COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1- 19

Review Questions
What is international business? How does it differ
from domestic business?
Why is it important for you to study international
business?
What are the basic forms of international business
activity?
How do merchandise exports and imports differ
from service exports and imports?
What is portfolio investment?
What are the basic reasons for the recent growth
of international business activity?
COPYRIGHT 2015 PEARSON EDUCATION, INC.

Chapter 1-20