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International, multinational, global and transnational business
The term international business simply implies that an organization is operating in more than
one country or, to put this another way, organizations from different countries are trading across
their national boundaries. In this sense it is a generic term.
A business that is multinational is one conducting international business and operating in
several countries; but, in addition, Bartlett and Ghoshal (1989) suggested the term implies some
decentralization of strategy and management decision making to overseas subsidiaries, with little
co-ordination of activities and subsidiaries across national boundaries. In other words
subsidiaries operating in different countries are allowed considerable autonomy in terms of their
strategies, which are largely determined by local conditions.
In contrast, a global business is one conducting its activities in a large range of countries across
the world with a single strategy that is highly co-ordinated and integrated throughout the world.
Company strategy is determined centrally and subsidiaries have little autonomy in their
operations.
Finally, the term transnational business describes the situation when an organization conducts
its activities across national boundaries, with varying degrees of co-ordination, integration and
local differentiation of strategy and operations, depending on market and business conditions.
Globalization
One of the most used yet complex terms in international business is globalization. The word is
used to describe a range of related but distinct, sociological, economic, political and business
phenomena. In general terms, globalization refers to the development of global or worldwide
, 2
business activities, competition and markets and the increasing global interdependence of
national economies.
In economic terms, globalization refers to the increasing interdependence between national
economies and markets. From a sociological perspective, it describes an increasing degree of
cultural interaction and convergence between the countries of the world. From the standpoint of
business, globalization describes the increasingly global nature of markets, the tendency for
transnational businesses to configure their business activities on a worldwide basis, and to co-
ordinate and integrate their strategies and operations across national boundaries.
Difference between International and Domestic business
Striking difference lies in the environment in which the two take place. Some
important points of the difference include:
1. Sovereign political entities -Each country is a sovereign political entity and
they impose several restriction
2. ns for import and export of goods and services including tariffs, quotas,
exchange control, total ban etc.p
3. Different legal systems - The legal systems differ from one country to
another.
4. Different monetary system’s – different countries have their own monetary
systems and currencies.
5. Lower mobility or factors of production – Factor mobility between countries is
low for factors such as land, labour and capital.
6. Differences in market characteristics - Different markets have different
cultures, language, population, physical environment etc.
7. Difference in procedures and documentation - the laws of countries and
customs of trade in each country demand different procedures and
documentation.
Similarities between International Marketing and Domestic business
1. Both aim at maximizing the firm’s profitability.
2. There is a managerial process involved.
3. Forces of demand and supply apply in both markets.
, 3
4. In both markets, consumers have needs and seek satisfaction.
5. There is competition in both cases.
6. Market research is a must for firm to thrive in either market.
7. Similar marketing techniques apply - the 4P’s of the marketing mix apply in
both markets.
Definitions of globalization
Globalization of economies – increasing interdependence between national economies
throughout the world.
Globalization of markets – increasing homogenization of consumer tastes and product
preferences in certain markets, as evidenced by the popularity of global brands in certain
markets, like Armani, Hugo Boss and Calvin Klein in fashion clothing, McDonald’s, Burger
King and Pizza Hut for fast food, and Coca-Cola and Pepsi-Cola for soft drinks.
Globalization of industries – the increasing globalization of the productive process, with firms
choosing to concentrate or disperse value-adding activities around the world according to the
locational advantages to be obtained.
Globalization of strategy – the extent to which an international business configures and co-
ordinates its strategy globally. A global strategy will normally include a global brand name and
products, presence in major markets throughout the world, productive activities located so as to
gain maximum advantage, and co-ordination of strategy and activities throughout the world.
Although the origins of globalization can be traced back to the early history of international
business, its rapid acceleration in the 19th and 20 th centuries can be attributed to relatively recent
developments in:
1. manufacturing technology, which began during the industrial revolution, making mass
production possible;
2. transportation technology, like railways, motor transport, steam shipping and
aeroplanes, allowing the movement of people, materials and finished products from
country to country and continent to continent more quickly and cheaply;
3. information and communications technology, like the telephone, computers, the
Internet, satellite television, which have together contributed to both the globalization of
markets and the global co-ordination of worldwide business activities;
, 4
4. trade liberalization, through GATT (the General Agreement on Tariffs and Trade) and
its successor, the WTO (the World Trade Organization), which have reduced tariff and
other barriers to trade between countries;
5. rising real term incomes, which have contributed to an increase in demand for products
and services worldwide
Transnational strategy
A transnational strategy is one that combines a global configuration and co-ordination of
business activities with local responsiveness, based on continuous organizational learning, and
consists of:
global knowledge-based core competences giving access to global markets;
extensive participation in major world markets;
global configuration of value-adding activities which exploits both national similarities
and differences;
global co-ordination and integration of activities;
local responsiveness where required;
differentiated structure and organization.
The controversies in strategic management
. The approaches can be broadly identified as:
1. The prescriptive approach (also called the deliberate or planned approach);
2. The emergent (or learning) approach;
3. The competitive positioning approach;
International, multinational, global and transnational business
The term international business simply implies that an organization is operating in more than
one country or, to put this another way, organizations from different countries are trading across
their national boundaries. In this sense it is a generic term.
A business that is multinational is one conducting international business and operating in
several countries; but, in addition, Bartlett and Ghoshal (1989) suggested the term implies some
decentralization of strategy and management decision making to overseas subsidiaries, with little
co-ordination of activities and subsidiaries across national boundaries. In other words
subsidiaries operating in different countries are allowed considerable autonomy in terms of their
strategies, which are largely determined by local conditions.
In contrast, a global business is one conducting its activities in a large range of countries across
the world with a single strategy that is highly co-ordinated and integrated throughout the world.
Company strategy is determined centrally and subsidiaries have little autonomy in their
operations.
Finally, the term transnational business describes the situation when an organization conducts
its activities across national boundaries, with varying degrees of co-ordination, integration and
local differentiation of strategy and operations, depending on market and business conditions.
Globalization
One of the most used yet complex terms in international business is globalization. The word is
used to describe a range of related but distinct, sociological, economic, political and business
phenomena. In general terms, globalization refers to the development of global or worldwide
, 2
business activities, competition and markets and the increasing global interdependence of
national economies.
In economic terms, globalization refers to the increasing interdependence between national
economies and markets. From a sociological perspective, it describes an increasing degree of
cultural interaction and convergence between the countries of the world. From the standpoint of
business, globalization describes the increasingly global nature of markets, the tendency for
transnational businesses to configure their business activities on a worldwide basis, and to co-
ordinate and integrate their strategies and operations across national boundaries.
Difference between International and Domestic business
Striking difference lies in the environment in which the two take place. Some
important points of the difference include:
1. Sovereign political entities -Each country is a sovereign political entity and
they impose several restriction
2. ns for import and export of goods and services including tariffs, quotas,
exchange control, total ban etc.p
3. Different legal systems - The legal systems differ from one country to
another.
4. Different monetary system’s – different countries have their own monetary
systems and currencies.
5. Lower mobility or factors of production – Factor mobility between countries is
low for factors such as land, labour and capital.
6. Differences in market characteristics - Different markets have different
cultures, language, population, physical environment etc.
7. Difference in procedures and documentation - the laws of countries and
customs of trade in each country demand different procedures and
documentation.
Similarities between International Marketing and Domestic business
1. Both aim at maximizing the firm’s profitability.
2. There is a managerial process involved.
3. Forces of demand and supply apply in both markets.
, 3
4. In both markets, consumers have needs and seek satisfaction.
5. There is competition in both cases.
6. Market research is a must for firm to thrive in either market.
7. Similar marketing techniques apply - the 4P’s of the marketing mix apply in
both markets.
Definitions of globalization
Globalization of economies – increasing interdependence between national economies
throughout the world.
Globalization of markets – increasing homogenization of consumer tastes and product
preferences in certain markets, as evidenced by the popularity of global brands in certain
markets, like Armani, Hugo Boss and Calvin Klein in fashion clothing, McDonald’s, Burger
King and Pizza Hut for fast food, and Coca-Cola and Pepsi-Cola for soft drinks.
Globalization of industries – the increasing globalization of the productive process, with firms
choosing to concentrate or disperse value-adding activities around the world according to the
locational advantages to be obtained.
Globalization of strategy – the extent to which an international business configures and co-
ordinates its strategy globally. A global strategy will normally include a global brand name and
products, presence in major markets throughout the world, productive activities located so as to
gain maximum advantage, and co-ordination of strategy and activities throughout the world.
Although the origins of globalization can be traced back to the early history of international
business, its rapid acceleration in the 19th and 20 th centuries can be attributed to relatively recent
developments in:
1. manufacturing technology, which began during the industrial revolution, making mass
production possible;
2. transportation technology, like railways, motor transport, steam shipping and
aeroplanes, allowing the movement of people, materials and finished products from
country to country and continent to continent more quickly and cheaply;
3. information and communications technology, like the telephone, computers, the
Internet, satellite television, which have together contributed to both the globalization of
markets and the global co-ordination of worldwide business activities;
, 4
4. trade liberalization, through GATT (the General Agreement on Tariffs and Trade) and
its successor, the WTO (the World Trade Organization), which have reduced tariff and
other barriers to trade between countries;
5. rising real term incomes, which have contributed to an increase in demand for products
and services worldwide
Transnational strategy
A transnational strategy is one that combines a global configuration and co-ordination of
business activities with local responsiveness, based on continuous organizational learning, and
consists of:
global knowledge-based core competences giving access to global markets;
extensive participation in major world markets;
global configuration of value-adding activities which exploits both national similarities
and differences;
global co-ordination and integration of activities;
local responsiveness where required;
differentiated structure and organization.
The controversies in strategic management
. The approaches can be broadly identified as:
1. The prescriptive approach (also called the deliberate or planned approach);
2. The emergent (or learning) approach;
3. The competitive positioning approach;
