assessment requirement
MAN304_T2_2020_Week_01_FINAL MAN304 Issues in International Business Week One – International Business and The Global Business Environment 1 COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969 WARNING This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (the Act). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Do not remove this notice. 2 Learning Outcomes 1 Understand what is meant by the term Globalisation 2 Recognise the main drivers of globalization. 3 Describe the changing nature of the global economy. 4 Explain the major arguments in the debate over the impact of globalisation. 5 Understand how the process of globalisation is creating opportunities and challenges for business managers. 4 Where in the World? GROUP ACTIVITY: Can you find some of the major and minor global players on a map? Each group will be given a blank World Map and a list of Countries to find – Challenge Yourself and Your Group to find as many as you can 5 The Effects of International Business (IB) 6 GROUP ACTIVITY: How Does International Business Affect Your Every Day Life? The Meaning of International Business (IB) • IB can be defined as a business activity, which involves a cross border commercial transaction (Mahoney et al., 2001). • IB occurs outside the borders of the country in which the firm is based, making it more complex and diverse than localised operations. • IB is often termed “International Trade”, “Global Business”, “Globalisation” or “International Commerce” (a transaction across national borders) Importance of International Business • Since the mid 1980’s, trade has expanded globally and economies have been created that would have been un-imaginable at the time. • Countries such as China and India have experienced exponential economic growth, mainly due to international business. • IB opens opportunities for a business to develop new markets and for people around the world to enjoy access to diversified products at competitive prices. • It is the creation of competition that allows a business to grow and develop. World’s Largest Companies 2019 • Is it Apple, Amazon, Microsoft, Alphabet or Facebook? These giants have been in a tight race for the title of the most valuable publicly- traded company for quite some time. 9 https://www.gfmag.com/global-data/economic-data/largest-companies https://www.gfmag.com/global-data/economic-data/largest-companies Top 10 Largest Companies by Market Capitalisation 10https://fortune.com/global500/ https://fortune.com/global500/ Competition and International Business • International business creates competition between them so that buyers can gain access to the most competitive products and services regardless of where they are produced. • Countries with resources that allow for the production of a good can, hence, have an advantage and sell the product at a higher quality and lower cost rather than competing in in-efficient segments of its economy. 11 Why International Business? • This video discusses how international business differs from domestic business https://youtu.be/lMdhfBQUhtI 12 GROUP ACTIVITY: Come up with at least five (5) examples of the domestic businesses (from your country) that have expanded internationally and discuss what they have done differently to become and International Business https://youtu.be/lMdhfBQUhtI Importance of International Business • A better understanding of the competitive business forces and consumer preferences around the world can also result from conducting international business. • A business can learn more about their own products, which can inspire innovation, when they commence dealing with international distributors or buyers. What Is A Multinational Enterprise? • Multinational enterprise (MNE) - any business that has productive activities in two or more countries • Almost one-third of global production is done by MNEs and about one-fourth of employment • Top Multinational Performers https://www.forbes.com/top-multinational- performers/list/#tab:rank 14 https://www.forbes.com/top-multinational-performers/list/#tab:rank International Management • International Management involves – Applying management concepts and techniques in a multinational environment – Adapting management practices to different economic, political, and cultural contexts • Multinational Corporation (MNC) – Operations in more than one country – International sales – Nationality mix among managers and owners What is Globalisation? • Globalisation - the shift towards a more integrated and interdependent world economy • The world is moving away from self- contained national economies toward an interdependent, integrated global economic system 16 What Is The Globalisation of Markets? • Historically distinct and separate national markets are merging • It no longer makes sense to talk about the “German market” or the “American market” • There is a “global market” where: • falling trade barriers make it easier to sell globally • consumers’ tastes and preferences are converging on some global norm • Business can promote the trend by offering the same basic products worldwide 17 The Power of Global Organisations/Institutions? • As the world finds itself in a phase of transition, international organisations (IOs) are crucial for global governance • The global political arena is surrounded by international organisations, which have different roles and varying degrees of influence. They help in managing many key areas from international monetary, trade and economic policies to global health concerns. 18 https://www.thenews.com.pk/print/191779-The-power-of- global-institutions https://www.thenews.com.pk/print/191779-The-power-of-global-institutions 19 https://www.researchgate.net/publication/27 1448205_An_Introduction_to_International_ Organizations https://www.researchgate.net/publication/271448205_An_Introduction_to_International_Organizations Global Institutions • World Trade Organization (WTO) https://www.wto.org/index.htm • General Agreement on Tariffs and Trade (GATT) https://www.wto.org/english/docs_e/legal_e/gatt47.pdf • International Monetary Fund (IMF) https://www.imf.org/en/About/Factsheets/IMF-at-a-Glance • World Bank https://www.worldbank.org/ • United Nations (UN) https://www.un.org/en/ • G20 https://g20.org/en/Pages/home.aspx 20 https://www.wto.org/index.htm https://www.wto.org/english/docs_e/legal_e/gatt47.pdf https://www.imf.org/en/About/Factsheets/IMF-at-a-Glance https://www.worldbank.org/ https://www.un.org/en/ https://g20.org/en/Pages/home.aspx The Projected World's Top 5 Largest Economies in 2023 • We are currently witnessing the changing of the economic guard, with emerging-market economies— particularly in Asia making huge development strides and the domination of the West looking shakier than ever 21 This Photo by Unknown Author is licensed under CC BY-SA https://en.wikipedia.org/wiki/World_economy https://creativecommons.org/licenses/by-sa/3.0/ World’s Top 5 Largest Economies USD19.5 trillion in 2023 22 Rating Country USD 1. USA 24.9 Trillion 2. CHINA 19.5 Trillion 3. Japan 5.7 Trillion 4. Germany 4.6 Trillion 5. India 4.3 Trillion https://www.focus-economics.com/blog/the- largest-economies-in-the-world https://www.focus-economics.com/blog/the-largest-economies-in-the-world World’s Top 5 Fastest Growing Economies Rating Country USD Increase % 1. Rwanda 7.7 2. Bangladesh 7,5 3. Senegal 7.3 4. Ethiopia 7.0 5. Myanmar 6.8 23 https://www.focus-economics.com/blog/the- largest-economies-in-the-world https://www.focus-economics.com/blog/the-largest-economies-in-the-world What Is Driving Globalisation? • Declining barriers to the free flow of goods, services, and capital – average tariffs are now at just 4% – more favorable environment for FDI • global stock of FDI was $20.4 trillion in 2011 – facilitates global production • Technological change – microprocessors and telecommunications – Internet: information backbone of the global economy – transportation technology 24 What Does Globalisation Mean For Business? • Lower barriers to trade and investment mean businesses can – view the world, rather than a single country, as their market • Home markets under threat by the offerings of foreign firms • Technological change – Lower transportation costs – Low cost and ease of information processing and communication – Global communication networks and global media (creating a single market where boundaries are less important) 25 The Changing Demographics of the Global Economy Four trends are important: 1. The changing world output and world trade picture 2. The changing foreign direct investment picture 3. The changing nature of the multinational enterprise 4. The changing world order 26 Rewards of International Business • Greater market opportunities • Diversification of national markets • Ability to explore greater supply chain efficiencies or value chain developments • Exploring potential local partnerships and alliances that enhance business efficiency 27 Learning Outcomes 1 Understand what is meant by the term globalisation 2 Recogise the main drivers of globalization. 3 Describe the changing nature of the global economy. 4 Explain the major arguments in the debate over the impact of globalisation. 5 Understand how the process of globalisation is creating opportunities and challenges for business managers. Any Questions? MAN304�Issues in International Business Slide Number 2 Slide Number 3 Slide Number 4 Where in the World? The Effects of International Business (IB) The Meaning of International Business (IB) Importance of International Business World’s Largest Companies 2019 Top 10 Largest Companies by Market Capitalisation Competition and International Business Why International Business? Importance of International Business What Is A �Multinational Enterprise? International Management What is Globalisation? What Is The �Globalisation of Markets? The Power of Global Organisations/Institutions? Slide Number 19 Global Institutions The Projected World's Top 5 Largest Economies in 2023 World’s Top 5 Largest Economies World’s Top 5 Fastest Growing Economies What Is Driving Globalisation? What Does Globalisation �Mean For Business? The Changing Demographics �of the Global Economy Rewards of International Business Slide Number 28 Any Questions? MAN304_T2_2020_Week_02_FINAL MAN304 Issues in International Business Week Two - Strategies for International Business 1 COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969 WARNING This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (the Act). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Do not remove this notice. 2 Learning Outcomes 1 Identify the various forms of international business entry strategies. 2 Identify general approaches to engaging in international business. 3 Identify general approaches to engaging in international business. 4 Discuss reasons for the faster globalisation of certain industries over others. Strategies International Businesses Use 4 GROUP ACTIVITY: • Pick a well-known International Business and identify some of the key business strategies that they use? • Discuss how their industry affects the type of strategy that they use? What is Strategy? • A business strategy refers to the actions that managers take to attain the goals of the business • Businesses need to pursue strategies that increase profitability and profit growth – Profitability is the rate of return the firm makes on its invested capital – Profit growth is the percentage increase in net profits over time 5 What Can Strategy Do? • To increase profitability and profit growth, business can • Add value • Lower costs • Sell more in existing markets • Expand internationally 6 Strategic Enterprise Value 7 Determinants of Enterprise Value Hill, 2015 Why is Strategic Positioning Important?