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[IB] Chapter 1 (part 1)_handouts

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5 views

[IB] Chapter 1 (part 1)_handouts

Uploaded by

tunnguyen10103
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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INTERNATIONAL

BUSINESS
Chapter 1
An overview of
international business and global strategy
1.1. An overview of international business
1.1.1. Concepts

the broadening set of interdependent


relationships among people from different
parts (nations) of a world
Globalization
the integration of world economies through the
reduction of barriers to the movement of trade,
capital, technology, and people
1.1. An overview of international business

all commercial transactions,


including sales, investments and
transportation
International
business
between two or more countries
1.1. An overview of international business

Why should you study international business?


• As a business
• As a government
• As a consumer
1.1. An overview of international business

1.1.2. Globalization’s driving forces


• Economic
• Technological
• Personal contact
• Political
1.1. An overview of international business

1.1.3. Modes of operations in IB


• Merchandise exports and imports
• Service exports and imports
• Investments
1.1. An overview of international business

1.1.4. International business environment


• The cultural environments
• The political and legal environments
• The economic environments
1.1.4. International business environment
1.1.4.1. The cultural environments

Learned norms based on the values,


attitudes, and the beliefs of a group of
people

Culture An integral part of a nation’s operating


environment

An elusive topic to study


1.1.4.1. The cultural environments

Questions:
Q1. Why should businesses study culture?
Q2. The impacts of culture on a business’ management?
 Culture diversity
 Culture collision
1.1.4.1. The cultural environments

‘NATION’ as a point of reference:


 Similarity among people is a cause and an effect of
national boundaries
 Laws apply primarily along national lines

LANGUAGE and RELIGION as both diffusers and


stabilizers of culture
1.1.4.1. The cultural environments
Cultural factors affecting business
a. Social stratifications
Individual characteristics and group memberships that influence a person’s social ranking:
• Performance orientation
• Open and closed societies
• Gender-based groups
• Age-based groups
• Family-based groups
• Education
• Social connections
1.1.4.1. The cultural environments
Cultural factors affecting business

b. Work motivation
Major differences in how and why people in different nations are motivated to
work:
• Materialism
• Expectation of success and reward
• Performance and achievement
• Hierarchies of needs
1.1.4.1. The cultural environments
Cultural factors affecting business

c. Relationship preferences
• Power distance
• Individualism vs. Collectivism
1.1.4.1. The cultural environments
Cultural factors affecting business

d. Risk-taking behavior
Nations differ in:
• Ease of handling uncertainties
• Degree of trust among people
• Future orientation
• Attitudes of self-determination and fatalism
1.1.4.1. The cultural environments
Cultural factors affecting business

e. Information and task processing


Nations differ in:
• Perception of cues
• Obtaining information
• Information processing
1.1.4.1. The cultural environments
Cultural factors affecting business

f. Communications
• Translating spoken and written language
• Silent language: communications by means of color associations, sense of
appropriate distance, time and status cues, body language, and prestige
1.1.4.2. The legal and political environments
Political environment

The institutions, organizations, and interest


groups along with the political norms and
rules that govern the activities of political
actors
Political system
Purpose: to integrate different groups into a
functioning, self-sustaining, and self-governing
society
1.1.4.2. The legal and political environments
Political environment

Individualism
Collectivism

The primacy of rights and The primacy of the rights


role of the individual and role of the group
Individual rights to make Economic decisions are
economic decisions made by group
Self-regulating Government intervenes
(Relatively) free of rules in market situations to
and regulations ensure that business
practices benefit society
1.1.4.2. The legal and political environments
Political environment

Ideology:
 The system of ideas that expresses the goals, theories, and aims of a
sociopolitical program, thereby stipulating how society ought to
function and outlining the methods by which it will work
 Elucidates a vision of how an ideal society should work
 Specifies the means for achieving that ideal order
1.1.4.2. The legal and political environments
Political environment - Ideology
1.1.4.2. The legal and political environments
Political environment - Ideology

Democracy:
 Calls for wide participation by citizens in a fair and just decision-
making process
 Voters have the rights to make decisions
 Emphasizes the role of individuals over the collective state,
endorsing the doctrine of individualism
1.1.4.2. The legal and political environments
Political environment - Ideology

Totalitarianism:
 Subordinates the individual to the interests of the collective
 A single agent monopolizes political power
 The agent uses this power to regulate many, if not all, aspects of
public and private life
1.1.4.2. The legal and political environments
Political environment

Trends in political systems:


Several engines that powered the rise of democracy:
 Failure of totalitarian regimes to deliver economic progress
 Improving communication technology
 Economic dividends of increasing political freedom
1.1.4.2. The legal and political environments
Political environment

Political risk:
 The potential loss arising from a change in government policy
 The likelihood that political decisions, events, or conditions will affect a
country’s business environment in ways that will cost investors some or
all of the value of their investment or force them to accept lower rates of
return
1.1.4.2. The legal and political environments
Political environment
Political risk:
 Expropriation or nationalization
 International war or civil strife
 Unilateral breach of contract
 Destructive government actions
 Harmful actions against people
 Restrictions on repatriation of profit
 Differing points of view
 Discriminatory taxation policies

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