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PART 1
FOUNDATION CONCEPTS
CHAPTER 1
INTRODUCTION: 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 initiate
introductions is distribute random pages torn from business magazines, in which each
person receives one page. Next each student circles words on the page that describe
him/her. In groups of two or three, each student shares the rationale behind each word
that he/she circled. Finally, one of the group members introduces another group member
to the class. This process enables students to immediately know at least one other
student in the class. The circled words and explanations are often humorous, which
serve as icebreakers during your first classroom encounter.
■ globalEDGE™ (globaledge.msu.edu) assembles a collection of tools and games that
will allow you to compare countries on a variety of statistical indicators, rank countries
based on these indicators, and test your knowledge of country capitals from around the
world.
Get Insights By Country:
http://globaledge.msu.edu/Global-Insights/By/country
Currency Converter:
http://www.xe.com/
Country Comparator:
http://globaledge.msu.edu/comparator
Ranking Countries:
http://globaledge.msu.edu/global-resources/resource/5128
Country Tools and Data:
http://globaledge.msu.edu/tools-and-data
Global Resource Directory:
http://globaledge.msu.edu/global-resources/
■ Under Country Insights click on a region, then select a country, Zimbabwe for example.
http://globaledge.msu.edu/Countries/Zimbabwe
Everyone in the class should be assigned a different country. Each student is then
responsible for becoming an expert on that country. Twice during the term, each student
could report on their country, and summarize a newspaper article published in their
country, i.e. an International Newspaper Memorandum assignment.
[1] An exciting way to introduce your students to International Business is the CIA Maps,
from the CIA World Factbook, which provides an interactive and fun tool to introduce to
international business:
https://www.cia.gov/library/publications/the-world-factbook/
[2] Another great way to introduce student to the world of international business is to
direct them to the BBC website:
http://news.bbc.co.uk/1/hi/country_profiles/default.stm
[3] Comic relief- Humorous (possibly offensive) introduction to IB 2:09 minutes
Catherine Tate- Translator:
http://www.youtube.com/watch?v=ma8Vwkpx5y8
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INTERNATIONALIZATION AT HARLEY-DAVIDSON [CLOSING CASE]
■ Harley Davidson is the chapter Closing Case. These questions serve as hooks for
students to familiarize themselves with the chapter concepts
■ 1908- Harley Davidson sold the first Harley police motorcycle to which police
department?
ANSWER: Detroit; Nearly every large U.S. police department employed Harley
motorcycles
■ 1988- Harley Davidson opened up its first foreign production facility. Which country
was it in?
ANSWER: Brazil (Manaus)… Why is Brazil an important foray into the international
arena? It represents a key emerging market country.
II. LEARNING OBJECTIVES AND THE OPENING VIGNETTE
LEARNING OBJECTIVES
After studying this chapter, students should be able to:
1.1 Describe the key concepts in international business
1.2 Understand how international business differs from domestic business
1.3 Identify major participants in international business
1.4 Describe why firms internationalize
1.5 Appreciate why you should study international business
Key Themes
■ In this chapter, there are five themes:
[1] Key concepts in international business
[2] How international business differs from domestic business
[3] Who participates in international business
[4] Why firms internationalize
[5] Why you should study international business
■ This chapter is the introduction to the text, as well as to the foundation concepts. The
first part of this text (chapters 1 - 8) explores globalization from a macro, environmental
level, while the second part (chapters 9 -17) examines international business from a
more micro, organizational level. The fundamental concepts introduced in Chapter 1 are
central to both macro and micro perspectives for understanding international business.
Thus, these basic concepts permeate the entire text, and students should be
well-acquainted them.
■ In this chapter, use a macro lens to introduce students to some of the fundamental
international business concepts.
■ Cross-border trading has been around for centuries; contemporary international
business has gained considerable momentum/complexity over the past four decades.
■ International business refers to the trade and investment activities by companies
across national borders. Globalization of markets refers to ongoing economic
integration and growing interdependency of countries worldwide. Stress the dramatic
growth in world trade, which now exceeds some $18 trillion annually.
■ There are two ways to invest internationally- passively (portfolio investment -financial
assets) or actively (foreign direct investment- capital, technology, labor, land, plant and
equipment).
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■ Also important are importing (global sourcing)-buying products/services from abroad
and bringing them back to the home country. Exporting- manufacturing a product 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 and globalization?
Former- Expansion of international business activities vs, Latter- Integration,
interdependency & interconnectedness of internationalization (the 4 I’s) Example:
Increasing exports vs. Sourcing value-chain activities strategically around the
globe to leverage factor efficiencies
◘ How international business is different from domestic business:
Complexity and Risks (4)
◘ Who participates in international business-
Multinational Enterprise (MNE)
Small and Medium-sized Enterprise (SME)
Born Global - entrepreneurial firm that is international from almost inception
◘ Why you should study international business- Competitive advantage- for
you and your firm!
■ Note that international business is both a cause and a result of increasing national
prosperity.
Teaching Tips
■ In this chapter, use a broad brush approach in generating excitement about the
importance of international business activity. Ask students to examine their clothing,
watches, iPhones, iPods and report where in the world each item was manufactured.
This discussion underscores the profound and pervasive impact that globalization has
had on all of us.
■ Next, ask students what they would like to do professionally, after they graduate. Once
they respond, ask if they can accomplish that successfully without understanding
international business, and the impact of global trends on their industry and business?
The answer is, of course, a resounding NO!!!
Commentary on the Opening Vignette:
FACEBOOK: A GLOBAL PHENOMENON
Key message
Facebook, a social networking platform, serves both personal and professional needs.
Founded in 2004, by Mark Zuckerberg and his Harvard University classmates, Facebook
underscores the economic, political and personal interconnectedness among countries,
companies, and consumers.
Uniqueness of the situation described
■ What is striking about this vignette is that by the time the reader finishes this vignette,
Facebook usage will have again jumped exponentially- globally, users spend more than
700 billion minutes every month on Facebook; one of every six people on the planet-
about 1.3 billion users- has a Facebook account.
■ Half of all U.S. residents have a Facebook account; some 70% of Facebook users live
outside the United States and speak over 75 languages.
■ There are 100 million users in each of Africa and India.
Classroom discussion
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■ This example illustrates how the global economy has permeated our everyday lives.
■ International business activity is increasingly complex and impacts our everyday lives
- shopping, listening to music, watching a movie, or surfing the Internet- involve
international business transactions that connect us to the global economy, and influence
quality of life, standard of living, and economic well-being.
■ Facebook’s vision mirrors this activity by empowering individuals, mapping the social
relationships among them, and creating a new system for exchanging information that
many find indispensable.
■ Mode of Entry:
◘ FDI- foreign direct investment establishing offices around the world.
■ Which countries is it especially popular in?
◘ France, Italy, Japan, and the United Kingdom. It is the fastest growing social
networking site in Indonesia, and is establishing a loyal user base throughout Africa.
■ Which countries have banned Facebook at one time or another:
◘ China, Egypt, Iran, Pakistan, Saudi Arabia
■ Primary revenue generation:
◘ Advertising- Brand awareness- Key
■ Who are Facebook’s competitors?
◘ Google and Microsoft
■ Competitive Advantage:
◘ Precise information on user interests, which is priceless to brand managers in a
world of targeted advertising.
■ Specific country examples (India, France, Sweden, Japan, Australia, & Poland) enrich
the overall theme: the Facebook phenomenon illustrates how converging lifestyles,
modern communications technology, and imaginative entrepreneurship are 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.
Break students into small groups to work on the following questions, with each group
providing a brief presentation of their answers.
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