International business

Regional and global strategyBy Aziz Ahmed Chaudhryazizahmedch@gmail.com

Introduction

International businessThe study of transactions taking place across national borders for the purpose of

satisfying the needs of individuals and organizations.

Multinational enterprises (MNEs)

A company headquartered in one country but having operations in other countries.

Exxon Wal-MartGeneral motorsToyota

World business: A brief overview

Exports and importsExports:

Goods and services produced by a firm in one country and then sent to another country.

Imports:

Goods and services produced in one country and bought in by another country.

Foreign direct investment (FDI)FDI is equity funds invested in other

nations. The FDI is undertaken by MNEs who

exercise control of their foreign affiliates.Most of the world’s FDI is invested both

by and within three major groups:The USWestern EuropeJapan

The triadTriad:

The three major trading and investment blocs in the international arena:

The united states, the EU and Japan.NAFTA:

(North American free trade agreement)

A regional free trade agreement between Canada, the US and Mexico.

Today’s global environment

World economicsOECD

(Organization for economic cooperation and development)

A group of 30 relatively wealthy member countries that facilitates a forum for the discussion of economic, social and governance issues across the world.

International trade regulationWTO

(World trade organization)

An international organization that deals with the rules of trade among member countries.

One of its most important functions is to act as a dispute-settlement mechanism.

International trade regulationGATT

(General agreements on tariffs and trade)

A major trade organization that has been established to negotiate trade concessions among member countries.

TechnologyAnother major development that is

changing the way MNEs do business is technology.

Communication technology that has advanced at such a rapid rate that all businesses now use computers and rely on the world wide web to both access and send information.

Application of technology is for the production of goods and services.

Small and medium-sized enterprises (SMEs)

The definition of SMEs varies according to the nation.

In the US, SMEs are companies with up to 500 employees.

In the EU, SMEs have between 11 and 200 employees and sales of under US $40 billion.

In the Japan, SMEs in industry have up to 300 employees while those in wholesale and retail have up to 150 and 50 employees respectively.

Globalization and strategic management

Regional triad strategiesThere are number of misconceptions that

people have about the world of international business.

One is the belief that multinationals have far-flung operations and earn most of their revenues overseas.

Nestle is an exception to the rule.Most MNEs earn the bulk of their revenues

either within their home country or by selling in nearby locales.

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In order to be successful, MNEs need to create strategies that are regional not worldwide in focus and they need to be responsive to local consumers as opposed to being global in nature and uniform throughout.

Another misunderstanding about MNEs is the belief that they are globally monolithic and excessively powerful in political terms.

Strategic alliancesA business relationship in which two or

more companies work together to achieve a collective advantage.

Maintaining economic competitiveness:one way was by continuing to be

innovative.

Porter’s determinants of national competitive advantage

Porter’s determinants of national competitive advantage

After conducting a comprehensive study of 100 industries in 10 countries, porter found that the success of nation in international competition is determined by four broad attributes that individually and interactively determine national competitive advantage:

Factor conditions, demand conditions, related and supporting industries and the environment in which firms compete.