Internationale omgeving – deel 1
Session 1 – stability and change in the international economic
environment; understanding the importance of rules and
international institutions for stability and reliability of economic
activities
A firm is a resource transformation system, embedded in it’s environment
• Porter’s value chain
o Margin = the value created for the
costumers apart from the costs
o Horizontal: supporting activities
→ important for the firm but less for the
product itself
o Vertical: primary activities
→ how the product comes to life
• The firm is embedded in relations
o Supply side
o Demand side
• The firm is embedded in different environments
o Costumers o Demographic forces
o Government o Cultural forces
o Distributors o Political forces
o Unions o Environmental forces
o Competitors o Economic forces
o Suppliers o Technological forces
• Different reasons to internationalize
o Market-seeking
→ exploring an discovering new market opportunities
→ following costumers
o Resource-seeking
→ exploiting factor-driven location advantages
→ exploiting demand-driven location advantages
o Using global network
→ global experience
→ economies of scale in production, logistics, marketing, purchase, sourcing, technology
→ mobility of production
→ lowering risks
→ product differentiation
1
Shanti Langers
,• Advantages of internationalization: Dunning’s OLI
o Ownership/ motive → why?
→ nature
→ size of technological, managerial, financial and marketing advantages that domestic firms
don’t have
o Location → where?
→ locations-specific advantages abroad
o Internalization → how?
→ advantages of internal coordination and control
→ advantages of combination with other assets of the firm
• The globalization of the markets
o Globalization leads to the emergence of global markets for standardized consumer products
→ consumers’ tastes and preferences are coming together in a global norm
→ the global corporation sells the dame tings in de same way everywhere
o Strategy = exploiting economies of scale
→ falling trade barriers
→ technology leads to standardization (not customization)
→ firm offer the same product worldwide
• Globalization = the movement tot a more integrated and mutually dependent global economy
o Of products (resource-seeking)
o Of markets (market-seeking)
• Dimensions of globalization
o International economy: international markets and productions systems
o International politics: end of nation-state
o International culture: a world without borders
• World trade has increased in the previous decades
o Barriers have reduces
o Production has changed
• General increase of global welfare
Conflict exist despite/because the success of globalization and it’s negative effects
on business
• Trade tensions between China and USA → rise of tariffs → broader systemic rivalry → increased
uncertainty → wider implications (protectionist/nationalist policy in America)
• Brexit on the table → uncertainty increases → disappointing economic performance in the UK →
hard hit for UK trade services with the EU
• Economic impact of COVID
o Airlines going bankrupt
o Supply chains disturbed
o Globalization paused/ deglobalization
2
Shanti Langers
,• Economic impact of Russia’s war
o Record high of Turkish exports
o Western companies are getting out of Russia
• Conclusion: external shocks cause uncertainty, and hinder trade and investments
• International interconnectedness of business, international trade and trade connections are
relevant in different nations
• (external) events can cause disruptions on the normal functioning of firms
Rules and multilateralism is a way to handle different interests
• Institutional regulations to coordinate relations between nations
o Multilateralism: relations between nations based on general codes of conduct1 or strategic
needs that can avoid a specific situation
▪ Rule based system
▪ Regulatory framework
▪ Reliable
▪ Advantages: stabilizes, creates predictability
▪ 1920: league of nations (result of world war II)
▪ Today: the UN, the world bank, the IMF, WTO, EU
o Bilateralism: relations between 2 nations based on specific grounds or situational needs
o Unilateralism: relations between nations based on denying national independence of the
involved states
• Uncertainty and shocks are detrimental for the economy and people → attempts to reduce these
effects via establishment of a multilateral system/rules and coordination → important, but difficult
to achieve when nations have different interests and priorities
Session 2 – the international business environment
• Session 1: different national interest/priorities are a source of conflicts → county differences
• Differences in countries result is challenges for companies
o They might cause international conflict (temporary)
o They are a source of management complexity for internationally operating companies
(continuous) → government policies + relations with employees, customers and suppliers
What is a multinational enterprise
• Multinational enterprise = MNE = any business that had productive activities in two or more
countries
• The number of non-US MNE has risen since 1960
• The number of mini-MNE has risen since 1960
• Special forms
o Born globals: internationalized in less than 3 years
o Emerging market MNE’s: MNE that started their business in a developing nation
1
Principles to specify appropriate behavior without taking particular interests of parties into account
3
Shanti Langers
, • Internationalizing gets easier and les risky over time (globalization)
How is a multinational enterprise exposed to country differences?
Culture
• Culture = the collective programming of the mind which distinguishes the members of one group or
category of people from another
o Patterns of thoughts, feelings, behaviors, symbols, …
o Giving meaning to actions and behaviors
o Providing interpretations of situations
o Binding members together
o Defining/separating one group from other groups
o Publicly shared and accepted by a given group at a given time
o Beliefs and practices that are taken for granted
• Hofstede’s cultural dimensions
→ you can do sample mapping to see a certain link between characteristics; when there is generally
a large power distance in a country; there will also usually be more collectivism
• Understanding cultural differences is important for slogans, marketing campaigns, jokes, …
→ many examples of market exits associated with cultural issues (starbucks)
• Determinant of culture
o Education
o Religion
o Social structure
o Language
o Economic philosophy
o Political philosophy
4
Shanti Langers
Session 1 – stability and change in the international economic
environment; understanding the importance of rules and
international institutions for stability and reliability of economic
activities
A firm is a resource transformation system, embedded in it’s environment
• Porter’s value chain
o Margin = the value created for the
costumers apart from the costs
o Horizontal: supporting activities
→ important for the firm but less for the
product itself
o Vertical: primary activities
→ how the product comes to life
• The firm is embedded in relations
o Supply side
o Demand side
• The firm is embedded in different environments
o Costumers o Demographic forces
o Government o Cultural forces
o Distributors o Political forces
o Unions o Environmental forces
o Competitors o Economic forces
o Suppliers o Technological forces
• Different reasons to internationalize
o Market-seeking
→ exploring an discovering new market opportunities
→ following costumers
o Resource-seeking
→ exploiting factor-driven location advantages
→ exploiting demand-driven location advantages
o Using global network
→ global experience
→ economies of scale in production, logistics, marketing, purchase, sourcing, technology
→ mobility of production
→ lowering risks
→ product differentiation
1
Shanti Langers
,• Advantages of internationalization: Dunning’s OLI
o Ownership/ motive → why?
→ nature
→ size of technological, managerial, financial and marketing advantages that domestic firms
don’t have
o Location → where?
→ locations-specific advantages abroad
o Internalization → how?
→ advantages of internal coordination and control
→ advantages of combination with other assets of the firm
• The globalization of the markets
o Globalization leads to the emergence of global markets for standardized consumer products
→ consumers’ tastes and preferences are coming together in a global norm
→ the global corporation sells the dame tings in de same way everywhere
o Strategy = exploiting economies of scale
→ falling trade barriers
→ technology leads to standardization (not customization)
→ firm offer the same product worldwide
• Globalization = the movement tot a more integrated and mutually dependent global economy
o Of products (resource-seeking)
o Of markets (market-seeking)
• Dimensions of globalization
o International economy: international markets and productions systems
o International politics: end of nation-state
o International culture: a world without borders
• World trade has increased in the previous decades
o Barriers have reduces
o Production has changed
• General increase of global welfare
Conflict exist despite/because the success of globalization and it’s negative effects
on business
• Trade tensions between China and USA → rise of tariffs → broader systemic rivalry → increased
uncertainty → wider implications (protectionist/nationalist policy in America)
• Brexit on the table → uncertainty increases → disappointing economic performance in the UK →
hard hit for UK trade services with the EU
• Economic impact of COVID
o Airlines going bankrupt
o Supply chains disturbed
o Globalization paused/ deglobalization
2
Shanti Langers
,• Economic impact of Russia’s war
o Record high of Turkish exports
o Western companies are getting out of Russia
• Conclusion: external shocks cause uncertainty, and hinder trade and investments
• International interconnectedness of business, international trade and trade connections are
relevant in different nations
• (external) events can cause disruptions on the normal functioning of firms
Rules and multilateralism is a way to handle different interests
• Institutional regulations to coordinate relations between nations
o Multilateralism: relations between nations based on general codes of conduct1 or strategic
needs that can avoid a specific situation
▪ Rule based system
▪ Regulatory framework
▪ Reliable
▪ Advantages: stabilizes, creates predictability
▪ 1920: league of nations (result of world war II)
▪ Today: the UN, the world bank, the IMF, WTO, EU
o Bilateralism: relations between 2 nations based on specific grounds or situational needs
o Unilateralism: relations between nations based on denying national independence of the
involved states
• Uncertainty and shocks are detrimental for the economy and people → attempts to reduce these
effects via establishment of a multilateral system/rules and coordination → important, but difficult
to achieve when nations have different interests and priorities
Session 2 – the international business environment
• Session 1: different national interest/priorities are a source of conflicts → county differences
• Differences in countries result is challenges for companies
o They might cause international conflict (temporary)
o They are a source of management complexity for internationally operating companies
(continuous) → government policies + relations with employees, customers and suppliers
What is a multinational enterprise
• Multinational enterprise = MNE = any business that had productive activities in two or more
countries
• The number of non-US MNE has risen since 1960
• The number of mini-MNE has risen since 1960
• Special forms
o Born globals: internationalized in less than 3 years
o Emerging market MNE’s: MNE that started their business in a developing nation
1
Principles to specify appropriate behavior without taking particular interests of parties into account
3
Shanti Langers
, • Internationalizing gets easier and les risky over time (globalization)
How is a multinational enterprise exposed to country differences?
Culture
• Culture = the collective programming of the mind which distinguishes the members of one group or
category of people from another
o Patterns of thoughts, feelings, behaviors, symbols, …
o Giving meaning to actions and behaviors
o Providing interpretations of situations
o Binding members together
o Defining/separating one group from other groups
o Publicly shared and accepted by a given group at a given time
o Beliefs and practices that are taken for granted
• Hofstede’s cultural dimensions
→ you can do sample mapping to see a certain link between characteristics; when there is generally
a large power distance in a country; there will also usually be more collectivism
• Understanding cultural differences is important for slogans, marketing campaigns, jokes, …
→ many examples of market exits associated with cultural issues (starbucks)
• Determinant of culture
o Education
o Religion
o Social structure
o Language
o Economic philosophy
o Political philosophy
4
Shanti Langers
