1. CH1- What is International Business??
International business consists of all commercial transactions
(eg : sales, investments, transportation ) between two or more
countries.
Private companies – for profit
Governments – profit or political reasons

2. EXTERNAL INFLUENCES
PHYSICAL AND SOCIETAL
FACTORS
•Political policies and legal
practices
•Values, attitudes, and
beliefs
•Economic forces
•Geographical
influences
COMPETITIVE
ENVIRONMENT
•Major advantage in
price,marketing,innovation
or other factors
•Number and relative
capabilities of competitors
•Competitive differences
by country
OPERATIONS
OBJECTIVES
•Sales expansion
•Resource acquisition
•Diversification
•Competitive risk minimization
STRATEGY
MEANS
Modes
•Importing & exporting
•Tourism &
transportation
•Licensing & franchising
•Turnkey operations
•Management
contracts
•Direct & portfolio
investment
Functions
•Marketing
•Production
•Accounting
•Finance
•Human
Resources
Overlaying Tactical
Alternatives
•Choice of countries
•Organization &
control mechanisms
•Degree of
integration among
countries’ operations

3. 1. Economic- International trade and investment
2. Technological – Internet connectivity
3. Personal contact – International trade & tourism, international telephone
traffic & personal transfers of funds internationally
4. Political – Participation in international organizations & government
monetary transfers

4. Factors in Increased Globalization
1. Increased in & expansion of technology
2. Liberalization of cross-border trade & resource movements
3. Development of services that support international business
4. Growing consumer pressures
5. Increased global competition
6. Changing political situations
7. Expanded cross-national cooperation

5. What wrong with Globalization ????
1. Threats to national sovereignty
2. Economic growth & environment stress
3. Growing income inequality

6. Expanding sales
Acquiring resources

7. Modes of Operations in IB
EXTERNAL INFLUENCES OPERATIONS
PHYSICAL & SOCIETAL
FACTORS
•Political policies & legal
practices
•Values, attitudes & beliefs
•Economic forces
•Geographical influences
COMPETITIVE
ENVIRONMENT
•Major advantage in price,
marketing, innovation or
other factors
•Number & relative
capabilities of competitors
•Competitive differences
by country
OBJECTIVES
•Sales expansion
•Resource acquisition
•Diversification
•Competitive risk
minimization
STRATEGY
MEANS
Modes
•Importing & exporting
•Tourism &
transportation
•Licensing & franchising
•Turnkey operations
•Management
contracts
•Direct & portfolio
investment
Functions
•Marketing
•Production
•Accounting
•Finance
•Human
Resources
Overlaying Tactical
Alternatives
•Choice of countries
•Organization &
control mechanisms
•Degree of
integration among
countries’ operations

8. 1. Physical & social factors
- Physical ( eg: geography)
- Social ( eg: politics, law, culture, economy)
2. Competitive factors
- Number & strengths of a company’s suppliers, customers and rival
firms)

9. International Strategy Evolution
Patterns of international expansion :
Strategy for heavy international commitments usually evolve gradually
from
•Passive to active expansion
•External to internal handling of operations
•Deepening mode of commitment
•Geographical diversification
Leapfrogging of Expansion

10. Usual Pattern of Internationalization

11. Global Operations
Operations Strategy in a Global Environment

12. Reasons of Globalize
Tangible
Reasons
Intangible
Reasons
Reasons to Globalize
1. Reduce costs (labor, taxes, tariffs, etc)
2. Improve supply chain
3. Provide better goods & services
4. Understand markets
5. Learn to improve operations
6. Attract & retain global talent

13. Reduce Costs
Foreign locations with lower wage rates can lower direct & indirect coats
World Trade Organization (WTO)
North American Free Trade Agreement (NAFTA)
APEC, SEATO, MERCOSUR
European Union (EU)

14. Improve the Supply Chain
Locating facilities closer to unique resources
•Auto design to California
•Athletic shoe production to China
•Perfume manufacturing in France

15. Culture and Ethical Issues
•Cultures can be quite different
•Attitudes can be quite different towards
Punctuality
Lunch breaks
Environment
Intellectual property
Thievery
Bribery
Child labor

16. You May Wish To Consider
National literacy rate
Rate of innovation
Rate of technology change
Number of skilled workers
Political stability
Product liability laws
Export restrictions
Variations in language
Work ethic
Tax rates
inflation
Availability of raw materials
Interest rates
Population
Number of miles of highway
Phone system

17. Match Product & Country
•Braun Household Appliances
•Firestone Tires
•Godiva Chocolate
•Haagen-Dazs Ice Cream
•Jaguar Autos
•MGM Movies
•Lamborghini Autos
•Alpo Pet Foods
1. Great Britain
2. Germany
3. Japan
4. United States
5. Switzerland

18. Marketing
Distribution
Promotion
Channels of distribution
Product positioning
(image, functions)
Finance/Accounting
Leverage
Cost of capital
Working capital
Receivables
Payables
Finance control
Lines of credit
Production/Operations
Decisions Sample Options
Product
Quality
Process
Location
Layout
Human resource
Supply chain
Inventory
Schedule
maintenance
Customized or standardized
Define customer expectations & how to achieve them
Facility size, technology, capacity
Near supplier or near customer
Work cells or assembly line
Specialized or enriched jobs
Single or multiple supplier
When to reorder, how much to keep on hand
Stable or fluctuating production rate
Repair as required or preventive maintenance

19. Activity Mapping southwest Airlines
Courteous
but Limited
Passenger
Service
Competitive
Advantage :
Low Cost
Short Haul,
Point to point
Routes, Often
to Secondary
Airports
Frequent,
Reliable
Schedules
Standardized
Fleet of
Boeing 737
Aircraft
Automated ticketing machines
Lean,
Productive
Employees
Empowered
employees
High employees
compensation
Hire for attitude,
than train
20 minute gate turnarounds
High Aircraft
Utilization
No baggage transfers
No meals (peanuts)
Lower gate costs at
secondary airport
High number of
flight reduces
employees idle time
between flights
Saturate a city
with flights,
lowering
administrative
costs (
advertising, HR,
etc) per
passenger
For that city
Pilot training required on only one
type of aircraft
Reduced maintenance inventory
required because of only one type
of aircraft
Maintenance personnel
trained on only one type of
aircraft
Flexible employees & standard
planes aid scheduling
Flexible union contracts
Excellent supplier relation
with Boeing has aided
financing
High level of stock
ownership
No seat assignments

20. Four International Operations Strategies
Global Strategy
•Standardized product
•Economies of scale
•Cross-cultural learning
Examples
•Texas Instruments
•Caterpillar
•Otis Elevator
International Strategy
•Import-export or license
existing product
Examples
•U.S Steel
•Harley Davidson
Transnational Strategy
•Move material, people, ideas
across national boundaries
•Economies of scale
•Cross-cultural learning
Examples
Coca-Cola
Nestle
Multidomestic Strategy
•Use existing domestic model
globally
•Franchise, joint ventures,
subsidiaries
Example
•Heinz
•The Body Shop
•McDonald’s
High
Low
Cost Reduction Considerations
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiations)