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MNB3701: Global Business Management

Prescribed Book: International Business 3

Edition (Peng & Meyer, 2019)

CHAPTER 1: GLOBALIZING BUSINESS

 Explain the concept of International Business (IB)

International Business (IB) is about

(1) companies engaging in international (cross-border) economic undertakings and

(2) this business undertakings is completed in a foreign country

International Business (IB)

is managed by several performers known as

Multinational

Enterprises (MNEs)

Multinational Enterprises (MNEs)

is companies that is involved in

Foreign Direct

Investment (FDI)

Foreign Direct Investment (FDI)

is involved in directly investing in,

controlling and

managing value added undertakings in other countries

Example of Multinational Enterprises (MNEs):

Adidas (as a MNE)

has embark on

numerous FDI projects, such as manufacturing plants in the UK or retail shops in

China

Emerging Economies (also known as Emerging Markets)

economies that only in recent

times established institutional frameworks that enable international trade and

investment,

characteristically with low-or middle-level income and above average economic

growth.

The largest 4 Emerging Economies

are indicated as

Brazil,

Russia, India and China

(BRICS).

Approximately 85% of the world population live in an emerging market,

but they

jointly add only about 30% of global Gross Domestic Product (GDP)

Gross Domestic Product (GDP)

is the sum of value added by resident

firms, households

and governments functioning in an economy

 Explain what is Globalization

What is Globalisation?

 New technologies advancing communication and transportation and generating new

business

opportunities

 Growing power of Multinational Enterprises (MNEs) and more inequality in the world.

 Increased competition for employment opportunities (jobs), particularly for low-skilled

employees.

 A force eliminating differences between distinctive national cultures and identifies

 For young people, globalization is often firstly the internet and the information and

communication

opportunities it generates. It is now easy to chat with friends all over the world as if you

sitting in

the same room

 Globalization is a process leading to greater interdependence and mutual awareness

among

economic, political and social units in the world and among actors in general

 Globalization has generated unique acquaintances between cultures, but it has just

slightly

decreased conflicts between them. Therefore in business you have to work more regularly

with

others who operate under a somewhat different environment than yourself

MNB3701: Global Business Management – Prescribed Book Summaries – Willmary Murtz –

Prescribed Book: International Business 3

Edition (Peng & Meyer, 2019)

 Views on Globalization

1. First view on Globalization is that new technologies evolving communication and

transportation and generating new business opportunities. Globalization is seen by the

youth,

firstly as the internet and the information and communication opportunities it generates

2. Second view on Globalization links globalization with the increasing power of MNEs and

increasing inequity around the world. Several individuals feel they are losing the control of

even their elected representatives. MNEs has grown big and have attained considerable

bargaining power when negotiating with national governments. Countries have less control

over what take place within their borders, and politicians have lost some of their control to

shape events.

Essential rules and guidelines are established or activated by the European Union, the

World

Trade Organization or the International arbitrage tribunals. Over these organizations elected

national politicians have little influence

3. Third view of Globalization is that inexperienced and uneducated workers seem to fail to

benefit from, at least in relative terms. The relative income of the highest skilled individuals is

increasing, while the share of income from capital is increasing comparative to income from

work. Globalization has reduced inequity among nations, but it give the impression to also

have added to increasing inequity within nations, especially in big countries such as USA

and

China

4. Fourth view of Globalization is that it can be perceived as an influence that makes us all

alike and that removes the uniqueness of our national cultures and identities. Certain

academics in marketing, debate that the world is shifting where consumers become more

comparable and companies thus sell similar merchandise/products the world over

Globalization is a procedure leading to better interdependence and joint mindfulness

between

economic, political and social components in the world and between role players in general

 Explain the implications of globalization for business

(Implications

of Practice)

Draw Implications for action by integrating global and local

knowledge

1. Ethnocentric perspective: is the interpretation of the world through the lens of one‘s own

culture,

these people are known as Universalists. The first implication is impressions that the best

practices that your business has developed is one place should consistently be rolled out

worldwide. People with an ethnocentric perspective has their confidence coming from a

superior

practice and may be grounded in success they experience in their own country, prior to

growing a

business internationally. On the other hand some people reject advice from the outside

because of

the advisors lack of local knowledge.

Those who approach International Business (IB) with an ethnocentric perspective will hit a

wall

when their best practices fail to deliver; complaints about the incompetence of local

employees or

customers are symptoms of not-invented-here syndrome.

MNB3701: Global Business Management – Prescribed Book Summaries – Willmary Murtz –

Prescribed Book: International Business 3

Edition (Peng & Meyer, 2019)



Draw Implications for action by integrating global and

local knowledge

2. Not-Invented-Here syndrome: is the tendency to distrust new ideas coming from outside

of one’s

own organization or community. Some people reject advice from outside because of the

advisors

presumed lack of local knowledge. They are called Exceptionalist. Their not-invented-here

syndrome, to mistrust new ideas coming from outside, is particularly prevalent in countries

with

distinct social histories and limited international exchange, Examples is China and Russia at

the

beginning of economic transition.

The exceptionalist can even fail in their own country because international competition is a

reality

virtually everywhere. There is many things a company can learn and pick up from other

countriesregardless how successful the company already are – if a company observe others

with an open

mind you will learn new things

Successful managers function within the context between Universalists and

Exceptionalists.

Some activities might be proper in a wide range of several countries but might need

adjustment to

accommodate local habits. In addition, each country has unique institutions, but adapted

practices

informed by experiences elsewhere may outperform traditional local practices. Successful

managers not only know about global best practices and local idiosyncrasies but they are

able to

integrate such knowledge to develop practices that outperform competitors in a given

context.

Hence as an international manager, you have to iterate across levels: think global, think local

and

integrate those two lines of thinking.

Global economic linkages affect every business. For example: Supply chains crossing

countries

and continents face risks of disruptions through local events that impact businesses at the

other

end of the world. Such disruptions may be caused by natural disasters such as epidemics.

As an International Manager (in globalization): You have to iterate across levels:

 Think global, think local and integrate those two lines of thinking.

 Global economic linkages affect virtually every business.

 For example: Supply chains crossing countries and continents face risks of disruptions

through

local events that impact businesses at the other end of the world. Such disruptions may be

caused

by natural disasters such as epidemics.

 Business around the globe thus have to continuously ask questions about their business

environment and be able to respond flexibly.

 At the same time as a manager you have to think local, because every country has its own

habits

Chapter 1 Summaries

Explain the concepts of International Business (IB):

International Business is defined as a business (firm) that participates in international (cross-border)

economic

activities and the actions of doing business abroad.

Identify 1 fundamental question and 2 Core Perspectives that provide a framework for

studying this field

(1) Our most fundamental question is: What determines the success and failure of firms that cross

national

boundaries?

(2) The two core perspectives are the institutional based view and the resource-based view.

Participate in the debate on globalization

 Globalization has created unprecedented contacts between nations and cultures, with both positive

and

negative consequences for individuals.

 Globalization has been evolving in waves, with a major peak in the late 19th/early 20th century.

 The recent wave of globalization has accelerated with the rising powers of emerging economies, yet

remains highly volatile.

Draw implications for action by integrating global and local knowledge