ECON

• International Business consists of all commercial transactions between two or more countries
• The goal of private business is to make profits
• Government business may or may not be motivated by profit
• Globalization refers to the widening set of interdependent relationships among people from different parts of a world that happens to be divided into nations
• Elimination of barriers to international movements of goods, services, capital, technology and people that influence integration of world economies
• Studying international business is important because most companies are either international or compete with international companies
• Modes of operations may differ from those used domestically
• The best way of conducting business may differ by country
• An understanding helps you make better career decisions
• An understanding helps you decide what governmental policies to support
• Factors in Increased Globalization
• Increase in and application of technology
• Liberalization of cross-border trade and resource movements
• Development of services that support international business
• Growth of consumer pressures
• Increase in global competition
• Changes in political situations and government policies
• Expansion of cross-national cooperation
• Includes new products, such as hand-held mobile technology devices and new application of old products
• Reasons for technical developments include population growth, rising productivity, advances in communication and transportation
• Allows people to discover and desire products and services developed in far parts of the world
• Most governments have reduced restrictions on the movements of goods, services, and resources across the country's borders
• Their citizens want a greater variety of goods and services at lower prices
• Competition spurs domestic producers to become more efficient
• They hope to induce other countries to lower their barriers in turn
• Services that Support International Business
• Companies and governments have developed a variety of services that facilitate global commerce
• Growth in Consumer Pressures
• More consumers know more today about products and services available in other countries
• Can afford to buy them, and want the greater variety in quality, price, and characteristics that access to them offers
• Born-global companies start out with a global focus
• Clustering or agglomeration - new companies locate in areas with numerous competitors and suppliers
• Today, only a few countries do business almost entirely within a political bloc
• Political changes sometimes open new frontiers for international business
• Expansion of Cross-National Operations
• Governments realize that their own interest can be addressed by means of treaties, agreements, and consultations
• The willingness to pursue such policies is due to the need to gain reciprocal advantages, to attack problems jointly that one country acting alone cannot solve, and to deal with areas of concern that lie outside the territory of any nation
• Critics of globalization claim that countries' sovereignty is diminished, the resultant growth hurts the environment, and some people lose both relatively and absolutely
• Threats to National Sovereignty
• Some worry that international agreements will diminish a nation's sovereignty