International Business Environment (MOD001098)

Module Leader: Dr Noah KarleyEmail: Noah.Karley@anglia.ac.uk

Room LAB322 Ext. 5739

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Module Objectives• Critically assess the principles, practices and institutions

underpinning international trading relationships• Evaluate the political, legal, socio-cultural, ethical, ecological,

economic and technological factors which play a key role in determining both the direction and outcomes of international business activity

• Analyse and assess the processes by which international business strategies are devised, developed and implemented

• Critically evaluate the factors influencing senior managers in their overseas diversification strategies

• Apply the principles of international business activity to help evaluate the resources, competences and strategies of selected international businesses and international business sectors

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Module Structure• Lecture 1: An Overview of International Business• Lecture 2: Theory of International Trade • Lecture 3: International Business and Globalisation• Lecture 4: Multinational Enterprises (MNEs)• Lecture 5: International Trade Institutions• Lecture 6: International Politics • Lecture 7: International Socio-Cultural Environment• Lecture 8: Environment, Technology and Legal System• Lecture 9: International Financial Markets & Institutions

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Assessment• This module is assessed by means of an

assignment of no more than 4,000 words. • The Assignment accounts for 100% of the

overall module assessment• The completed assignment must be submitted

by 5pm GMT on Monday 6th January 2014.• For this module you are required to submit your

final assignment via Turnitin.

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Reading List

• Key text – Rugman, A. and Collinson, R. (2012) International Business

6th edition, FT/Prentice Hall

• Others texts– Albaum, G., Duerr, E. and Strandskov, J. (2005)

International Marketing and Export Management, 5th edition FT/Prentice Hall

– Bradley, F. (2005) International Marketing Strategy, 5th edition, FT/Prentice Hall

– Daniels, J., Radebaugh, L. and Sullivan, D. (2007) International Business 11th edition, FT/Prentice Hall

– Dicken, P. (2003) Global Shift: Transforming the World Economy 4th edition, Paul Chapman Publishing Ltd.

• Other useful resources

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Lecture 1

Introduction to the Module:

An Overview of International Business

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Session Outline• Definition and meaning of IB• Scope of International Business• Today’s International Environment• Special difficulties in IB• Benefits of IB

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Background

• Dramatic and significant world trends in past few decades

• Markets have become truly global for most– Goods– Services– Financial instruments

• Now difficult for economies to avoid external impacts

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Why these changes?

• New Technologies• Emergence of corporate empires• The World as production and market

places for Global corporations• Freely mobile resources• Greater interdependence

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IB: Spectrum of Definitions• Buying and selling across two or more

countries regardless of management location

• Institutional arrangements providing managerial direction of activities taking place abroad with no ownership, e.g. JVs.

• IB equated only with big enterprises with operating units outside their own countries

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Definition and Meaning of International Business

• International Business (IB) includes any type of business activities that crosses national boarders

• IB is the study of transactions taking place across national borders for the purpose of satisfying the needs of individuals and organizations.

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Scope of International Business

• But focus on particular problems and opportunities that emerge as a firm operates in more than one country

• Domestic business is a special limited case of IB

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IB Distinguishing Features

• Operating in Environment that is:– Highly uncertain– Ambiguous, – Contradictory, – Subject to rapid change

• Foreign legal systems• Foreign exchange market• Cultural differences• Different rates of inflation

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IB Guiding Principles

• Generally firm’s guiding principles are– Products offered/market served– Capabilities– Results

• But IB must incorporate in mission– Identifying new ways of doing things– Adapting to changing priorities– A global perspective

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IB Plan

• Formulate firm’s guiding principles– Taking long term view of firm

• Identify interrelated strategic choices– Input strategies– Marketing– Finance strategies etc

• Essentially answering questions relating to whom to sell what and from where and how?

• Until the 2000’s or so, dominance of Triad economies (US, EU and Japan)

• The IB Environment has changed rapidly due to– An overall slowdown of triad

economies;– Increased trade liberalisation through

trade agreements;– Improvements in technology;– The emergence of SMEs.

Today’s International Environment

Note: Data for European Union include intra-EU trade. Exports are calculated by including freight and insurance while imports do not include freight and insurance. As a result data might not be consistent with other data in this bookSource: Adapted from International Monetary Fund, Direction of Trade Statistics Yearbook, 2006 (Washington, DC: IMF, 2006), pp. 2–5

World Trade, 2005

Slowdown of Triad Economies

• In the late 1990s and early 2000s, the United States, the EU and Japan all experienced a reduction in economic activity, which in turn decreased IB activity.

• New and Emerging Markets, e.g. China

Trade liberalisation

• Emergence of regional and global trade• Investment liberalisation and • International regulation.

– The World Trade Organization (WTO).– General Agreement on Tariffs and Trade

(GATT).

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Special Difficulties in IB

• Virtually everything becomes a variable• Factors of complexity

– Multiple currency and trade restrictions– Legal system/ different trade practices– Marketing infrastructure differences– Economy and restrictions – Political, cultural and language

• Everything influences everything else

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Reasons to Enter Foreign Markets

• New Pastures – avoiding market saturation

• Geographical Vagaries• Testing• Changing Demographics and Conditions• Competitive Equity

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Benefits of IB

• Survival• Growth of overseas markets• Sales and profit• Diversification• Inflation and price moderation• Employment• Standard of living

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Seminar Questions

• PESTEL – focus on country of choice - to be distributed .