Intro to International Business

Intro to International Business

International Business: The New Realities

CH1: Introduction: What is International Business?

What is international business?

International business- Performance of trade and investment activities by firms across national borders

-firms seek foreign customers and engage in collaborative relationships with foreign business partners

-international business activity has been grown a lot over the past 30 years. Its growth coincides with the phenomenon of the globalization of markets

Globalization of markets- the ongoing economic integration and growing interdependency of countries worldwide

-while internationalization of the firm refers to the tendency of companies to increase the international dimension of their business activities, globalization refers to a macro trend of intense economic interconnectedness b/w countries

-globalization is associated with countless firms internationalizing and the dramatic growth in volume of cross border transactions in goods and services. It has led to widespread diffusion of products, tech and knowledge

-globalization is obvious in several related trends:

1. Unprecedented growth of international trade- accounts for $13 trillion annually vs $100 billion (1960)

2. Trade b/w nations is accompanied by flows of capital, tech and knowledge

3. The development of sophisticated global financial systems that facilitate cross border flow of products, money, tech etc.

4. A greater degree of collaboration among nations through multilateral regulatory agencies (International Money Fund IMF, World Trade Organization WTO etc)

What are the Key Concepts in International Trade and Investment?

-the most common international business transactions are international trade and investment

International trade- an exchange of products and services across national borders

-exchange can be through exporting- an entry strategy involving sale of products or services to customers located abroad, from a base in home country or a third country

-exchange can also take the form of importing or global sourcing- the procurement of products or services from suppliers located abroad for consumption in the home country or a third country

-both finished products and intermediate goods (raw materials, components) are subject to import and export

International investment refers to the transfer of assets to another