IBM - Intro The World is NOT Enough

8/7/2019 IBM - Intro The World is NOT Enough

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The World

is NOT Enough

Business on anInternational Playfield

Dr. Sheelan Misra

ProfessorNew Horizon College of Engineering ,Bangalore


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Moving away from a world of..

National economies were self containedentities

Isolated from each other

Barriers to cross trade investmentBy distance

By time zone

By LanguageBy national differences in government

regulations, culture & business system


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A Fundamental shift is

occurring in the worldeconomy


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The Shrinking Globe


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MADE IN CHINA


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Leadingexporters in world merchandisetrade, 2005

(in billions of dollars) (source: www.wto.org)

0

100

200

300

400

500

600

700

800

900

1000

Germany U.S. China Japan France


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Leadingexporters in world commercial

services trade, 2005(in billions of dollars) (source: www.wto.org)

0

50

100

150

200

250

300

350

400

U.S. U.K. Germany France Japan


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Leading importers in world merchandisetrade, 2005


0

200

400

600

800

1000

1200

1400

1600

1800

2000

U.S. Germany China Japan U.K.


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Leading importers in world commercial services trade, 2005


0

50

100

150200

250

300

U.S. Germany U.K. Japan France


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World Valuein Exports and Imports


0

2000

4000

60008000

10000

12000

1948 1953 1963 1973 1983 1993 2003 2005

Exports

Imports


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Expansion of International Trade

In the past 30 years, the volume ofinternational trade has expandedfrom $200 billion to over $7.5trillion.

The sales of foreign affiliates of

multinational corporations are nowtwice as high as global exports.


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The Composition of Trade

Between the 1960s and the 1990sthe importance of manufacturedgoods increased while the role ofprimary commodities (i.e. rubber ormining) had decreased.

More recently, there has been a shiftof manufacturing to countries withemerging economies.

There has been an increase in thearea ofservices trade in recent

years.


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The Scenario..

Japan is the biggest customer forBoeing

Japan is also a dominant market(in dollar value) from whichBoeing buys major assemblies,

products and services.


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McDonalds Corporation

McDonalds does business in120 countries

65% of total revenue isderived outside the U.S.


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Volkswagen Group

One of the worlds leadingautomobile manufacturers and thelargest car producer in Europe

44 production plants in eleveneuropean countries, and sevencountries in the America, Asia and

Africa Sells in more than 150 countries


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Coca Cola

Corporate headquarters in Canadawith local operations in over 200countries around the world

More than 70% income comesoutside the US


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Exampleof Globalized Production

Of the $20,000 sticker price of aGeneral Motors Automobile LeMans:

$6,000 goes to South Korea,

where the car was

ass

embled$3,000 goes to Japan forsophisticated high-tech parts(engines, transaxles, electronics)

$800 goes to Taiwan, Singapore,and Japan for small parts


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$500 goes to Great Britain foradvertising and marketingservices

$1,000 goes

to Ireland for dataprocessing

$7,600 goes to GM and itsexternal professional firms in the

United States


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International BusinessQuestions

How will an idea, good, or servicefit into the international market?

Should trade or investment beused to enter a foreign market?

Should supplies be obtaineddomestically or abroad?

What product adjustments are

necess

ary to be res

pons

ive tolocal conditions?

What are the threats from globalcompetitors, and how can thesethreats be counteracted?


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All this is part of.

International

Business


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THE ARAB ASSIGNMENT


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International Business

All business transactions

Private or Governmental

That involves Two or more countries


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TheChanging Pattern of International

Business

The U.S. no longer dominates theworld economy

Large U.S. multinationals no longer

dominate international businessThe centrally planned communisteconomies that made up roughly half

the world suddenly become accessibleto Western businesses

The global economy has become more

knowledge-intens

ive


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TheChanging Pattern of International Business

(continued)

Lowered trade barriers

General Agreement on Tariffs andTrade (GATT)

World Trade Organization (WTO)

North American Free Trade Act

The European Union (EU)

The Assciation of Southeast AsianNations (ASEAN)

The Asia Pacific Economic

Cooperation (APEC)


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TheChanging Pattern of International Business (continued)

Global consumer

preferences

Tastes and preferences

are converging

Presence of mass media,

exposure to goods fromvarious countries, and

standardized products


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Globalized production

Cost efficiency


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TheChanging Pattern of International Business

(continued)

Technological innovations

Advances in communications,

information process

ing, andtransportation technology

Fiber optics, wireless

technology, the Internet and

World Wide Web, and

satellite technology


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Management across cultures

Adaptation to businessstrategies,

structures, operational policies, and

human resource programs


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WALMART CASE

Largest retailer in the world Established in 1962

1991 opened first store in Mexico

1995 - learned from its mistakes &adapted its Mexican operations to matchthe local environment

2002 the company had more than 1200stores outside the united states incountries like Canada, Britain, Germany,Japan & South Korea


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These differences requirecustomized marketing strategies,product features and operatingpractices to best match conditionsin a country

The most global markets are stillnot markets for consumer

products but for industrial goodsand materials that serve auniversal need the worldover


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In many global markets , samefirms confront each other ascompetitors in nation after nation

Coca

Cola x Pep

siFord x Toyota

Boeing x Airbus

Caterpillar x Kamatsu

Nintendo x Sega


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more.


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Question???

1. What is International Business?

2. What are the drivers of

Globalization?

Answers: Please refer HILL & JAIN

Chapter1: Globalization

IBM - Intro The World is NOT Enough

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