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• 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
• Globalization involves the elimination of barriers to international movements of goods, services, capital, technology, and people that influence the integration of world economies
• Studying international business is important because most companies are either international or compete with international companies
• Modes of operations in international business may differ from those used domestically
• An understanding of international business helps in making better career decisions and deciding what governmental policies to support
• Increase in and application of technology
• Factors in Increased Globalization
• 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
• The Costs of Globalization
• Threats to National Sovereignty
• Environmental Stress
• Growing Income Inequality and Personal Stress
• Reasons Why Companies Engage in International Business
• Expanding Sales
• Acquiring Resources
• Reducing Risk
• Modes of Operations in International Business
• Merchandise Exports and Imports
• Merchandise exports are tangible products sent out of a country
• Merchandise imports are goods brought into a country
• Service Exports and Imports
• Tourism and Transportation are important sources of revenue for airlines, shipping companies, travel agencies, and hotels
• Turnkey Operations involve construction projects performed under contract and transferred to owners when operational
• Licensing agreements allow another company to use assets under contract
• Investments
• Direct Investment or Foreign Direct Investment involves taking a controlling interest in a foreign company
• Joint ventures occur when two or more companies share ownership of an FDI
• Types of International Organizations
• Collaborative Arrangements involve companies working together in joint ventures, licensing agreements, management contracts, minority ownership, and long-term contractual arrangements
• Strategic Alliances refer to agreements critical to one or more partners or agreements that do not involve joint ownership
• Multinational Enterprise (MNE) usually refers to any company with foreign direct investments
• Reasons Why International Business Differs from Domestic Business