Chapter I: Introduction o Location advantage – advantages due to choice of

What is International Business? foreign markets and can include better access to
o Globalization – the shift towards a more raw materials, less costly labour, key suppliers,
interdependent and integrated global economy key customers, energy, and natural resources
o International Business – all cross-border International Forms of Government
exchanges of goods, services, or resources o Government – the body of people that sets
between two or more nations and administers public policy and exercises
o Strategic Management – the body of knowledge executive, political, and sovereign power
that answers questions about the development through customs, institutions, and laws
and implementation of good strategies; mainly within a state, country, or other political unit
concerned with the determination of firm o Nongovernmental Organizations (NGOs) –
performance any non-profit, voluntary citizen’s group that
o Strategy – the central, integrated, and externally is organized on a local, national, or
oriented concept of how an organization will international level
achieve its performance objectives The Globalization Debate
o SWOT – a strategic management that helps and - Not so much a debate as it is a stark difference of
organization take stocks of its internal opinion on how the internationalization of
characteristics to formulate and action plan that businesses is affecting countries’ cultural,
builds on what it does well while overcoming or consumer, and national identities- and whether
working around weaknesses and also assess these changes are desirable; globalization debate
external environmental condition that favour or surround whether and how fast markets are
threatens the organization’s strategy actually merging together
o Entrepreneurship – the recognition of
opportunities and the use of or creation of “We live in a Flat World”
resources to implement innovative ideas for new, o Flat-World View – largely credited to Thomas
thoughtfully planned ventures Friedman; it is a metaphor for viewing the world
o Entrepreneur – a person who engages in as a level playing field in terms of commerce,
entrepreneurship where all competitors have an equal opportunity
o Intrapreneurship – a form of entrepreneurship Three Stages of Globalization
that takes place in a business that is already in • Globalization 1.0 – started with
existence Columbus’s discovery of the New
o Intrapreneur – a person within an established World and ran from 1492 to
business who takes direct responsibility for about 1800; driven by
turning an idea into a profitable finished product nationalism and religion, this
through assertive risk taking and innovation lengthy stage was characterized
Who is Interested in International Business? by how much industrial power
o Stakeholder – an individual or organization whose countries could produce and
interests may be affected as the result of what apply; nations dominated global
another individual or organization does expansion
o Stakeholder Analysis – a technique used to • Globalization 2.0 – from about
identify and assess the importance of key people, 1800-2000; disrupted by the
groups of people, or institution that may Great Depression and both World
significantly influence the success of an activity, Wars and was largely shaped by
project or business the emerging power of huge,
multinational corporations; was
What Forms Do International Business Take?
driven by ascension of
o Business – a person or organization engaged in
multinational companies, which
commerce with the aim of achieving a profit
pushed global development
Three-Part Mission Statement
• Globalization 3.0 – began around
• Social and Environmental Mission
2000, with advances in global
• Product Mission
electronic interconnectivity that
• Economic Mission allowed individuals to
o Importer – a person or organization that sells communicate as never before;
products and services from other countries major software advances have
o Exporter – a person or organization that sells allowed an unprecedented
products and services in foreign countries that are number of people worldwide to
sourced from the home country work together with unlimited
o Foreign Direct Investment – the investment of potential
foreign assets into domestic structures,
equipment, and organizations
How the world got flat? (Details are in the book) A framework for thinking ethically
Friedman identifies ten major events that helped reshape 1. Is it and ethical issue?
the modern world and make it flat: 2. Get the facts
1. 11/9/98: When the walls came down and the 3. Evaluate the alternative actions
windows went up a. Utilitarian Approach
2. 8/9/95: When Netscape went public b. Rights-based Approach
3. Work-flow software c. Fairness or Justice Approach
4. Open-sourcing: Self-organizing, collaborative d. Common Good Approach
communities e. Virtue Approach
5. Outsourcing: Y2K 4. Test your decision
6. Offshoring: Running with gazelles, eating with 5. Just do it – but what did you learn?
lions
7. Supply-chaining: Eating sushi in Arkansas
8. Insourcing: What the guys in funny brown shorts
are really doing
9. Informing: Google, Yahoo!, MSN Web Search
10. The steroids: Digital, mobile, personal, and virtual

These ten factors had powerful roles in making the world

smaller, but each worked in isolation until the convergence
of three (3) more powerful forces:
1. New software and increased public familiarity
with Internet
2. The incorporation of that knowledge into business
and personal communication
3. The market influx of billions of people from Asia
and the former Soviet Union who want to become
more prosperous
“We Live in a Multidomestic World, Not a Flat One!”
o Multidomestic View – a metaphor for viewing the
world’s markets as being more different than
similar, such that the playing fields differs in
respective markets; if the world is flat,
international business would be easy
o CAGE Framework – the analytical framework used
to understand country and regional differences
along the distance dimensions of culture,
administration, geography and economics
• Culture – refers to people’s norms, common
beliefs and practices
• Administration – refers to historical
governmental ties
• Geography – differences includes time zones,
access to ocean ports, shared borders,
topography and climate
• Economics – economic distance refers to
differences in demographic and
socioeconomic conditions

A Framework for Ethical Decision Making

o Ethics – a branch of philosophy that seeks virtue
and morality, addressing questions about “right”
and “wrong” behaviour for people in a variety of
settings; the standards of behaviour that tell how
human beings ought to act
o Business ethics – the branch of ethics that
examines various kinds of business activities and
asks, “Is this business conduct ethically right or
wrong?”