Master of Business Administration University of Hertfordshire, UK

July 2009
Prepared by Yaw Chooi Fun Norazian Abdullah Lee Tai Keong Eu Wee Khai

 International

business (IB) is the study of business activities that cross national borders.
is concerned with firms that undertake business and the national governments that regulate them with interventions of governments of home and host countries in inter-country business activity

It

Business

 No

unique theory to explain responses of business to government policies and policy making of governments towards international firms
of theoretical focus has diverted emphasis on policies to conflicts and cooperation among corporations and governments.

Lack

 Seek

growth (efficiency) and distribution of benefits (equity)

appropriately distorted to achieve objectives differential barriers and incentives to foreign business

Markets

Provide

 Free

trade and stable or fixed exchange rates;

same considerations for inter/intra national trade and investments

Theory

of specialisation and division of labour (comparative advantage);

general explanation of benefits of division of labour for domestic & international

Other

theories applied; explains production and income generation

 Adapted

for us in IB to characterise and analyse business govt negotiation

policy making and behaviour

Focuses

on bargaining resources and stakes of participant

economic and commercial conclusions

Focuses

on collection of assets, interests and abilities of bargaining parties

economic, political and social issues

 Resources

of businesses

technology, funds, skills, foreign markets, employment opportunities & trade relations with home govt

Resources

of host govts

access to market, natural resources, low cost labour, funding opportunities

 Stakes

of businesses

availability of markets, sources of supplies, importance of successful negotiation and interrelatedness of host country to businesss global interests

Stakes

of host govts

vailability of business opportunities, importance of business and negotiation to host govt and relevance to countrys overall interests.

 Strategic

alliance with business for desired resource technology, local ownership or foreign distribution network / contracting agreement for acquiring desired resource

Purchase

 Diversification

and Multiple Locations of

activities

reduce control of host govt

Joint

venture with local businesses

lobbying govt for favourable policies

Strategic

alliance with other businesses

raise govts stakes in bargain

 Offer

more benefits to host country during initial negotiations

host govt in business venture (GLCs) mutual interests key concerns of host govt profit remittances, financing, imports or training

Involve

Meet

 Government

concerns with TNC negotiations, trade offs and resolutions

of exports and imports

Patterns Gains

from trade

Reasons

and directions of FDI and contractual relations

 Strategies

and operations in international production effects of govt intervention

cultural aspects

Cross

Differential

barriers and incentives imposed by govts to determine distribution of benefits.

 Difference

among Governments as to their goals in dealing with TNC/INC initiatives and operations

Assessment and management of conflicting rules of the game, i.e difference in lega, regulatory and institutional enviroments in the two or more countries country risk that arises from different treatment of business activities by home and host countries Exchange risks

 Synthesis

with culture differences for IB Phenomena? Brian Toyne and Douglas Nigh

Introduce a new paradigm that believe would enrich IB inquiry by shifting attention away from the firm as the central unit of analysis to a more comprehensive multilevel, hierarchical view of the international business process.

http://www.jstor.org/pss/155414

 International

product cycle

The international product cycle removes the classical assumption that factors and products are immobile internationally.

 Synthesis

Conflict with Hamel? Product can sustain longer now with globalization McKinsey Quarterly quoted Gary Hamel,

Company must become as purposefully and creatively experimental in thinking about their management systems and processes as they already are in thinking about R&D or new-product development. http://www.interknowledgetech.com/Innovative%20 Management.pdf

 Imperfect

competition success factors

Proprietary technology Multi-country access to factors of production and to consumers additional scale economies in production distribution, purchasing etc.

 Production,

distribution and consumption of materials, components, factors and some products and services occur entirely within the units of the firm

Economics of vertical and horizontal integration Emphasis on the advantage to the individual firm of keeping decisions internal Dynamic nature of competition

 Transactions
Reduce

are carried out internally

cost of transaction in larger markets, with improved, unfettered communications and transportation. from internalization: does not considers the functioning of all the firms internal activities such as managing people and use of a monopoly position

Difference

 Firm

specific competitive advantages that enable individual firms to outcompete

with the FSA and CSA article The international competitiveness of asian firms? Or porters diamond model

Synthesis

 Combination

of location theory, competitive advantages and the concept of internalization

all the market-related factors

Covers

Product, firm, industry and economy

But

interactions between Governments and companies and among Governments are left aside

 Finance

theory, arbitrage national financial conditions

currencies create unique difference for INCs and directly involve governmental decisions

National

International

firms must pass through the foreign-exchange barrier

 Existence

of governmental policies differentiates a theory of international business from domestic business

are satisfied with gains generated by an IB activity in open markets, they impose no barriers and, hence no theory of international business is necessary

Governments

 More

synthesis?