1. Rapid Change of International Business
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Key take away
• International business: Key concepts
– International business
• Kinh doanh (Business)/ Quốc tế (International)/ Trong nước (Domestic)/ Nước ngoài
(Foreign)/ Quản trị (Management)
– Types/forms of international business
– Motivations for companies to participate in international business
– Players in international business
– International business environment
– Applying the concept (A1): Roles of TNCs (transnational corporations) in
international business
• Globalization: Key concepts
– Globalization and its contents
– Motivations
– Discussing the concept (D1): Discuss the reasons to do international
business of Unilever
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CASE
CANON TO MOVE PRODUCTION BACK TO JAPAN
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DISCUSSION
1. Why does Canon move
production back to
Japan in 2015?
2. How does yen
depreciation affect the
profit formula of
Canon worldwide?
3. Examine Michael
Porter’s diamond and
assess reasons that are
back the decision.
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INTERNATIONAL BUSINESS
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What is International Business?
• International Business (IB): any business transaction across national
borders
• International business transactions
– Trade in goods
– Cross-border services
• consulting, advertising, legal, financial, accounting
• tourism, banking, communications/media, construction management, etc.
• Company activity inputs may involve IB activity even if outputs do not
– Firm’s revenues may come entirely from the home country
– Key raw materials, knowledge, processes may come partially or entirely from
other countries
• International Business vs Foreign Business
– Foreign Business: The operations of a company outside its home or domestic
market
• Remember: across national borders and production network
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Rapid Growth of International Business
• The rapid growth of international business is a result of dramatic
increases of foreign direct investment (FDI) and exports
– FDI: A firm invests in equipment, structures, and organizations in another
country while retaining significant management control
– Exports: Sale and transfer of any good or service from the firm’s home
country to another country
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Rapid Growth of International Business
Source: Ball et al (2010), International Business: The Challenge of global competition, 12th edition, McGraw-Hill Irwin
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Players in international business
•
Who are key players in international business?
– Governments? Companies? Customers?
– Who does this subject focus on?
•
Why companies participate in international business?
– Profit formula
– Increase sales revenue
– Optimize resources
Companies
Financial
organizations
Customers
Governments
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Terms for companies doing international business
•
Thiết lập chiến lược dựa trên yêu cầu của từng thị trường: Công ty quốc tế (IC –
International Company)
– Công ty toàn cầu (GC - Global Company)
• Attempts to standardize and integrate operations worldwide in most or all functional areas
– Công ty đa quốc nội (MDC – Multi Domestic Company)
• An organization with affiliates in many countries
• Each formulates its own business strategy
• Strategy based on perceived differences in markets
•
Trụ sở chính và việc thích nghi với các yêu cầu địa phương
– Công ty đa quốc gia (MNC – Multi National Corporation)
– Công ty xuyên quốc gia (TNC – Transnational Corporation)
• vs (National Home – nước chủ nhà)
•
Size of companies by capital, number of employess and revenues
– Doanh nghiệp lớn (Big enterprises)
– Doanh nghiệp vừa và nhỏ (SME – Small & Medium Enterprise)
• 2013: Việt Nam -10 người trở xuống  doanh nghiệp siêu nhỏ/ từ 10 đến dưới 200 người 
doanh nghiệp nhỏ/ từ 200 đến 300 người lao động  doanh nghiệp vừa
• Ngân hàng thế giới: 10 người trở xuống  doanh nghiệp siêu nhỏ, từ 10 đến dưới 50 người 
doanh nghiệp nhỏ và từ 50 đến 300 người lao động  doanh nghiệp vừa
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International business environment
International business
management
National
environment
Foreign
environment
International
environment
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Two sets of forces in the IB environment
• Two sets of forces in the IB environment influence the
development and operations of a firm
– External Forces (Uncontrollable)
• Those that management cannot control
– Internal Forces (Controllable)
• Those that management can develop and use to formulate and execute the
firm’s strategy given particular external forces
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External Forces That Affect IB Due To CrossBorder Differences
1.
Competition
–
2.
Michael Porter’s 5 forces
PESTLE
–
–
–
–
–
–
Political
Economic
Social
Technological
Legal
Environmental
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Internal Forces That Managers Can Influence
Across Borders
• Factors of production
– Capital, raw materials, people
• Activities of the organization
– Personnel management, finance, production, marketing
• The Value Chain of the Company
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The Value Chain of the Company
Adapted from M. E. Porter, Competitive Advantage, New York: Free Press, 1985
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Online Resource
http://globaledge.msu.edu/
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Transnational Corporations
•
500 biggest corporations control 42% of world assests (1998)
– List of 500 largest corporations: http://fortune.com/global500
•
Top 100 biggest countries and companies in 2000
– 51 companies and 49 countries
– Top 5 biggest companies in Top 30 (GM, Wal-Mart, Exxon Mobil, Ford Motor,
Daimler Chrysler)
– Details at: http://www.corporations.org/system/top100.html
– Details at : http://www.forbes.com/sites/scottdecarlo/2012/04/18/the-worldsbiggest-companies/
•
There were only 22 nations that had GNP larger than sales revenue of GM (2000)
•
Vietnam in the list of Top 100 in 2013
– http://makewealthhistory.org/2014/02/03/the-corporations-bigger-than-nations/
•
A small number of global companies overwhelm most of industries
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Countries that have large number of biggest
companies in Fortune 500
1. Wal-Mart Stores (U.S.)
1996
1999
2006
2013
Ranking
in 2013
USA
162
167
162
128
1
Japan
126
111
67
57
3
France
42
29
38
31
4
Germany
41
32
37
28
5
England
34
43
33
28
6
24
95
2
China
2. Royal Dutch Shell
(Netherlands)
3. Sinopec Group (China)
4. China National Petroleum
(China)
5. Exxon Mobil (U.S.)
6. BP (UK)
7. State Grid (China)
8. Volkswagen (Germany)
List of 2014: 23 new companies of which 7 are Chineses companies.
Source: http://edition.cnn.com/2014/07/08/business/fortune-500/
Rank 7, 8, 9, and 10 in the list of 2014 are, in turn, Korea, (17),
Switzeland (13), Netherlands (13), Canada (10)
9. Toyota Motor (Japan)
10. Glencore (Switzerland)
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GLOBALIZATION
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Globalization
• Globalization?
– The shift towards a more integrated and interdependent world economy (Charles W. L. Hill,
University of Washington, International Business: Competing in the Global Marketplace, 5/e)
– Other definitions?
• Two components
– The globalization of markets
– The globalization of production
• Drivers for greater globalization
– Decline in trade & investment barriers
– Technological change: communication, Internet, transportation
• Impact on business?
– Impact on production: reduce transportation cost, optimize cost structure, reduce
communication cost
– Impact on markets: global consumers
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How Iphone is made?
Giá bán trong cửa hàng: 499 bảng Anh, chi phí sản xuất: 112,89 bảng Anh (22,62% giá bán)
http://www.tutor2u.net/blog/index.php/gcse-economics/comments/costs-of-production-iphone-4s
http://financesonline.com/how-iphone-is-made/
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