Business Awareness
Chapters 1,4,11,12,14
Week 1
Chapter 1
Internatonal business: a business that engages in internatonal economies actvites and the
actvity of doing business abroad
Multnatonal enterprise: internatonal company, a frm that engages in foreign direct investment
by directly investng in, controlling and managing value-added actvites in other countries
Emerging economies: economies that only recently established insttutonal frameworks that
facilitate internatonal trade and investment, typically with low or middle-level income and above
average economic growth (BRIC= Brazil, Russia, India and China)
FDI: invest in controlling and managing actvites in other countries that add value
GDP: the sum of value added by resident frms, households and governments operatng in an
economy
Vocabulary:
Benefits to business participatinn in IB:
Access to more markets
Access to resources
Access to cheaper labour
Increased quality or quantty of goods
Access to resources that may not be available at home
World trade and output:
everything produced worldwide
, World output impacts trade
World trade grows faster than world output
Globalization
A process leading to greater interdependence and mutual awareness among
economic, politcal and social units in the world and among actors in general
Results of globalizaton: see page 17
global agreements such as GATT aimed to liberalize trade globally
the largest emerging economies: BRIC (Brazil, Russia, India and China) contributed a
lot to the acceleraton
Accelerated spread of communicaton and transportaton technology
Rising power of MNEs and increased inequality in the world
Increased competton for jobs, especially for low-skilled workers
A force eliminatng diferences among distnctve natonal cultures and identtes
Drivers/Trends of Globalization:
Remove barriers to trade and investment
Technological innovatons: communicaton, transports, global supply chains, shipping
Liberalisaton: The removal of regulatory restrictons on businesses
Migraton has become more restricted
Benefits of nlobalization
Reduce marketng costs
Low-cost labour
Creates new market opportunites
Technical expertse
Figure 1.5 in the book!!
Threats to nlobalization
Global recession
Protectonism
Ant-globalizaton protests
Risks of disruptons to global business
, The nlobal economic pyramid
Base of the pyramid: the vast majority of humanity, about four billion people, who make
less than 1500 euros a year
The top of the pyramid (Top Tier): one billion people with per capita annual income of
15000 dollars or higher
Second Tier: in between the two
Drawbacks:
Emerging economies seemed to compete away many low-end manufacturing jobs
but also increasingly appear to threaten some high-end jobs
MNEs destroy local companies and also local cultures and values as well as the
environment
A unified framework for nlobal business
Fundamental question: What determines the success and failure of frms around the
globe?
Institution-based views: Formal and informal rules (culture, norms and value) of the game
deals with the external environment, success and failure are infuenced by their
environments
doing business around the globe requires intmate knowledge about the formal and
informal rules of doing business in various countries
Resource-based view: frm-specifc resources and capabilites
deals with a frm’s internal resources and capabilites
they possess specifc resources that enabled them to attain leadership positons around
the globe
the liability of outsidership: the inherent disadvantage that outsiders experience in a
new environment because of their lack of familiarity
Chapters 1,4,11,12,14
Week 1
Chapter 1
Internatonal business: a business that engages in internatonal economies actvites and the
actvity of doing business abroad
Multnatonal enterprise: internatonal company, a frm that engages in foreign direct investment
by directly investng in, controlling and managing value-added actvites in other countries
Emerging economies: economies that only recently established insttutonal frameworks that
facilitate internatonal trade and investment, typically with low or middle-level income and above
average economic growth (BRIC= Brazil, Russia, India and China)
FDI: invest in controlling and managing actvites in other countries that add value
GDP: the sum of value added by resident frms, households and governments operatng in an
economy
Vocabulary:
Benefits to business participatinn in IB:
Access to more markets
Access to resources
Access to cheaper labour
Increased quality or quantty of goods
Access to resources that may not be available at home
World trade and output:
everything produced worldwide
, World output impacts trade
World trade grows faster than world output
Globalization
A process leading to greater interdependence and mutual awareness among
economic, politcal and social units in the world and among actors in general
Results of globalizaton: see page 17
global agreements such as GATT aimed to liberalize trade globally
the largest emerging economies: BRIC (Brazil, Russia, India and China) contributed a
lot to the acceleraton
Accelerated spread of communicaton and transportaton technology
Rising power of MNEs and increased inequality in the world
Increased competton for jobs, especially for low-skilled workers
A force eliminatng diferences among distnctve natonal cultures and identtes
Drivers/Trends of Globalization:
Remove barriers to trade and investment
Technological innovatons: communicaton, transports, global supply chains, shipping
Liberalisaton: The removal of regulatory restrictons on businesses
Migraton has become more restricted
Benefits of nlobalization
Reduce marketng costs
Low-cost labour
Creates new market opportunites
Technical expertse
Figure 1.5 in the book!!
Threats to nlobalization
Global recession
Protectonism
Ant-globalizaton protests
Risks of disruptons to global business
, The nlobal economic pyramid
Base of the pyramid: the vast majority of humanity, about four billion people, who make
less than 1500 euros a year
The top of the pyramid (Top Tier): one billion people with per capita annual income of
15000 dollars or higher
Second Tier: in between the two
Drawbacks:
Emerging economies seemed to compete away many low-end manufacturing jobs
but also increasingly appear to threaten some high-end jobs
MNEs destroy local companies and also local cultures and values as well as the
environment
A unified framework for nlobal business
Fundamental question: What determines the success and failure of frms around the
globe?
Institution-based views: Formal and informal rules (culture, norms and value) of the game
deals with the external environment, success and failure are infuenced by their
environments
doing business around the globe requires intmate knowledge about the formal and
informal rules of doing business in various countries
Resource-based view: frm-specifc resources and capabilites
deals with a frm’s internal resources and capabilites
they possess specifc resources that enabled them to attain leadership positons around
the globe
the liability of outsidership: the inherent disadvantage that outsiders experience in a
new environment because of their lack of familiarity
