International business main theories
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Transcript of International business main theories
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• International Business – the main theoretical concepts
• Internationalization of companies – def?• Different theoretical models to explain international
business and trade• Method international expansion• Retain ownership and control• Regionalization• Shearing or even shedding
International Business
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• Increase in globalization since 1970s• Prior to that – Singapore phenomenon• Export/Import balance• 16th century – gold and silver• Portfolio approach• Standardizing product range• Product varieties
© Dr . Steyn Heckroodt
International Business
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• Internationalization refers to the increasing importance of international trade, international relations, treaties, alliances, etc. Inter-national, of course, means between or among nations. The basic unit remains the nation, even as relations among nations become increasingly necessary and important. Globalization refers to global economic integration of many formerly national economies into one global economy, mainly by free trade and free capital mobility, but also by easy or uncontrolled migration. It is the effective erasure of national boundaries for economic purposes.
Herman E. Daly
International Business
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• Mercantilists theory• Absolute advantage (Interregional trade)• Comparative advantage (International trade)• Hecksher-Ohlin (Factor endowments)• Product life-cycle theory (US)• New trade theory (Economies of scale)• Porter’s national competitive theory
International Business
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• Mercantilists theory• Absolute advantage (Interregional trade)• Comparative advantage (International trade)• Hecksher-Ohlin (Factor endowments)• Product life-cycle theory (US)• New trade theory (Economies of scale)• Porter’s national competitive theory
International Business
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Porter
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12 © Dr Heckroodt, SSource: Amended from Heckroodt, S. Strategic Thinking
– GAME OVER. Epubsa.co.za
Basic and advanced factors
Advanced – direct
correlation with
competitive ability
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• Size• Managerial ability• Skills• Extend of up- and downstream integration• Combination of CSA & OSA• Costs and risks• Distance, culture, administrative/political,
geographical and economic dynamism
© Dr . Steyn Heckroodt
International Business
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Cou
ntry
spe
cific
adv
anta
ges
Organisation specific advantages
High
Medium
Low
Medium HighLow
Retain mostup- and downstream
control
Integrate most up- and downstreamactivities and share
or relinquish – in part –control
Retain upstreamcontrol and
relinquish or sharedownstream control
only
No go zone
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Short
lead times
Long
lead times
Supply
characteristics
Demand characteristics
Hybrid De-couple through
postponement
Continuous replenishment
Predictable Unpredictable
Lean plan and optimize
Agile quick response
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© Dr . Steyn Heckroodt
Trader
TraderTraderTraderTraderTrader Trader
TraderTraderTraderTraderTrader
Master
Trader X
International Business – informal and/or second economies