CHAPTER 1 INTRODUCTION: WHAT IS INTERNATIONAL BUSINESS .

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International Business The New Realities 3rd Edition Cavusgil Solutions ManualFull Download: lutions-manuCHAPTER 1INTRODUCTION: WHAT IS INTERNATIONAL BUSINESS?Instructor’s Manual by Marta Szabo White, Ph.D.I. LECTURE STARTER/LAUNCHER Consider having everyone in class introduce themselves. One way to initiateintroductions is distribute random pages torn from business magazines in whicheach person receives one page. Next, each student circles words on the pagethat describe him/her. In groups of two or three, each student shares therationale behind each word that he/she circled. Finally, one of the groupmembers introduces another group member to the class. This process enablesstudents to immediately know at least one other student in the class. The circledwords and explanations are often humorous and serve as icebreakers duringyour first classroom encounter. globalEDGE (globaledge.msu.edu) assembles a collection of tools andgames that will allow you to compare countries on a variety of statisticalindicators, rank countries based on these indicators, and test your knowledge ofcountry capitals from around the world.Get Insights By By/countryCurrency encyconverter.aspCountry king es/resource/5128Countries Capital Memory:http://globaledge.msu.edu/Knowledge-ToolsIB Knowledge Check :http://globaledge.msu.edu/Global-Resources Under Country Insights click on a region, then select a country, Zimbabwe babweEveryone in the class should be assigned a different country. Each student isthen responsible for becoming an expert on that country. Twice during the term,each student could report on their country, and summarize a newspaper articlepublished in their country, i.e. an International Newspaper Memorandumassignment.5Copyright 2014 Pearson Inc.This sample only, Download all chapters at: AlibabaDownload.com

Another exciting way to introduce your students to International Business is theCIA Maps from the CIA World Factbook, which provides an interactive and funtool to introduce to international lications/cia-maps-publications/index.html Another great way to introduce student to the world of international business isto direct them to the BBC website:http://news.bbc.co.uk/1/hi/country profiles/default.stm Comic relief- Humorous (possibly offensive) introduction to IB 2:09 minutesCatherine Tate- Translatorhttp://www.youtube.com/watch?v ma8Vwkpx5y8II. LEARNING OBJECTIVES AND THE OPENING VIGNETTELEARNING OBJECTIVESIn this chapter, you will learn about:1.2.3.4.5.6.What is international business?What are the key concepts in international business?How does international business differ from domestic business?Who participates in international business?Why do firms internationalize?Why study international business?Key Themes This chapter is the introduction to the text, as well as to the foundationconcepts. The first part of this text (chapters 1-10) explores globalization from amacro, environmental level, while the second part (chapters 11-20) examinesinternational business from a more micro, organizational level. The fundamentalconcepts introduced in Chapter 1 are central to both macro and microperspectives for understanding international business. Thus, these basicconcepts permeate the entire text, and students should be well-acquainted withthem. In this chapter, use a macro lens to introduce students to some of thefundamental international business concepts. International business refers to the trade and investment activities bycompanies across national borders. Globalization of markets refers to ongoingeconomic integration and growing interdependency of countries worldwide.Stress the dramatic growth in world trade, which now exceeds some 10 trillionannually.6Copyright 2014 Pearson Inc.

There are two ways to invest internationally- passively (portfolio investment financial assets) or actively (foreign direct investment- capital, technology,labor, land, plant and equipment). Also important are importing (global sourcing)-buying products/services fromabroad and bringing them back to the home country. Exporting- manufacturing aproduct or service in one country and selling it to another. Address the broader questions of: Why firms go international? Primarily to increase sales and profits! What is the difference between internationalization andglobalization? Former- Expansion of international business activities dnessofinternationalization (the 4 I’s) Example: Increasing exports vs. Sourcingvalue-chain activities strategically around the globe to leverage factorefficiencies How international business is different from domestic business:Complexity and Risks (4) Who participates in international businessMultinational Enterprise (MNE)Small and Medium-sized Enterprise (SME)Born Global - entrepreneurial firm that is international from inception Why you should study international business- Competitiveadvantage- for you and your firm! Note that international business is both a cause and a result of increasingnational prosperity.Teaching Tips In this chapter, use a broad brush approach in generating excitement about theimportance of international business activity. Ask students to examine theirclothing, watches, cell phones, i-phones, i-pods and report where in the worldeach item was manufactured. This discussion underscores what Julie in theopening vignette experiences, as well as the profound and pervasive impact thatglobalization has had on all of us. Next, ask students what they would like to do professionally after theygraduate. Once they respond, ask if they can accomplish that successfullywithout understanding international business and the impact of global trends ontheir industry and business? Of course the answer is a resounding NO!!!Commentary on the Opening Vignette:FACEBOOK: A GLOBAL PHENOMENON Key messageFacebook, a social networking platform, serves both personal and businessneeds. Founded in 2004 by Mark Zuckerberg and his Harvard Universityclassmates, Facebook underscores the economic, political, and personalinterconnectedness among countries, companies, and consumers.7Copyright 2014 Pearson Inc.

Uniqueness of the situation described What is striking about this vignette is that by the time the reader finishes thisvignette, Facebook usage will have again jumped exponentially- globally, usersspend more than 700 billion minutes every month on Facebook; one of everyeight people on the planet- about one billion users- has a Facebook account. Half of all U.S. residents have a Facebook account, some 70% of Facebookusers live outside the United States and speak over 75 languages. Classroom discussion This example illustrates how the global economy has permeated our everydaylives. International business activity is increasingly complex. It impacts our everydaylives - shopping, listening to music, watching a movie, or surfing the Internetinvolves international business transactions that connect us to the globaleconomy, and influences quality of life, standard of living, and economic wellbeing. Facebook’s vision mirrors this activity by empowering individuals, mapping thesocial relationships among them, and creating a new system for exchanginginformation that many find indispensable. Mode of Entry: FDI- foreign direct investment establishing offices around the world. In which countries is it especially popular? France, Italy, Japan, and the United Kingdom. It is the fastest growingsocial networking site in Indonesia and is establishing a loyal user basethroughout Africa. Which countries have banned Facebook at one time or another: China, Egypt, Iran, Pakistan, Saudi Arabia Revenue generation: Advertising- Brand awareness Who are Facebook’s competitors? Google and Microsoft Competitive Advantage: Precise information on user interests, which is priceless to brandmanagers in a world of targeted advertising. Specific country examples (India, France, Sweden, Japan, Australia, & Poland)enrich the overall theme: the Facebook phenomenon illustrates how converginglifestyles, modern communications technology, and imaginative entrepreneurshipare facilitating the emergence of global enterprises. Use this vignette as a springboard for the first teaching tip offered above. Also ask students to update the Facebook saga since its Initial Public Offering(IPO) on May 18, 2012.III. DETAILED CHAPTER OUTLINEWHAT IS INTERNATIONAL BUSINESS?8Copyright 2014 Pearson Inc.

International business refers to cross-border trade and investment activitiesby firms. Primarily, individual firms engage in international business, but governmentsand international agencies also conduct international business activities. Exhibit 1.1- Six Key Dimensions of International Business1] Globalization of markets2] International trade3] International investment4] Risks5] Participants: Firms, distribution channel intermediaries, facilitators, andgovernments.6] International entry strategies, including exporting and direct investment Globalization of markets (or the globalization of economies) refers to ongoingeconomic integration and growing interdependency of countries worldwide. The Facebook phenomenon is a notable expression of this. Integration/interdependence/interconnectedness are central to globalization,which has resulted in the widespread diffusion of products, technology, andknowledge worldwide. Internationalization refers to the tendency of companies to systematicallyincrease the international dimension of their business activities. Macro perspective (trend) - globalization of markets means intense economicinterconnectedness between/among countries.Market globalization is characterized by several related trends: Cross-border transactions- unprecedented growth rates - from 100billion per year in1960 to current numbers of 14 trillion annually Trade Substantial international flows of capital, technology, andknowledge Development of highly sophisticated global financial systems to facilitatethe cross-border flows of products, money, technology, and knowledge. Greater collaboration among nations through multilateral regulatoryagencies such as the World Trade Organization (WTO: www.wto.org)and the International Monetary Fund (IMF: www.imf.org) Micro perspective (focus) - firm level, activity- Value-Chain Perspective Firms conduct value-adding activities on a global scale, i.e. organize, source,manufacture, market, etc. This text focuses primarily on the international business activities of theindividual firm.9Copyright 2014 Pearson Inc.

Globalization both compels and facilitates companies to expand abroad;international expansion is easier for companies small and large due to marketand product globalization. A “level playing field” has made cross-border activities appealing to all types offirms- large and small; manufacturing and service sectors (e.g. banking,transportation, engineering, insurance, advertising, and retailing). Globalization impacts everyone, as evidenced by the recent global financialcrisis (2008). The economic contagion, or interconnectedness, was underscoredas the crisis began in the U.S. and rapidly spread to U.S. trade partners,eventually impacting Canada, Mexico, Japan, China, and the world. Thismanifestation illustrates the integration and interdependency of nationaleconomies throughout the world.WHAT ARE THE KEY CONCEPTS IN INTERNATIONAL BUSINESS? International trade and investment are the most conventional forms ofinternational business transactions.International Trade Cross-border exchange of products (merchandise) and services (intangibles)typically through exporting and importing Exporting (outbound activity) - entry strategy involving the sale of products/services to customers located abroad. Importing (global sourcing; inbound activity) - the procurement ofproducts/services from foreign suppliers for consumption in the home country ora third country Exporting and importing may include both intermediate (raw materials andcomponents) and finished products.International Investment Cross-border investment is the transfer of assets to another country or theacquisition of assets in that country. The factors of production (assets) include capital, technology, managerialtalent, and manufacturing infrastructure. Trade products and services cross-national borders. Cross-border investment the firm itself crosses borders.Two Types of International Investment: International portfolio investment (typically short-term) is the passiveownership of foreign securities such as stocks and bonds for the purpose ofgenerating financial returns. Foreign direct investment (FDI) (typically long-term) is a foreign-market entrystrategy that gives investors partial or full ownership of a productive enterprise.The firm establishes a physical presence abroad through the acquisition ofproductive assets such as capital, technology, labor, land, plant, and equipment.10Copyright 2014 Pearson Inc.

The Nature of International Trade Macro-International Trade: Aggregate export and import flows of products andservices between nations. Micro-International Business: Cross-border transactions of an individualbusiness enterprise. Gross domestic product (GDP) is the total value of products and servicesproduced in a country during a year. Exhibit 1.2 contrasts the growth of world GDP and world exports since 1970. Due to the global recession, world trade declined in 2009, ending a 27-yearboom period. Glob

International business refers to cross-border trade and investment activities by firms. Primarily, individual firms engage in international business, but governments and international agencies also conduct international business activities. Exhibit 1.1- Six Key Dimensions of International Business 1] Globalization of markets

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