International management
The goal of this course is to equip students with the knowledge and skills necessary to successfully
manage businesses in a global environment. The course provides an overview of key challenges
specific to companies and ventures operating in international context and introduces theoretical
frameworks and practical tools for decision-making in a global setting.
1. Introduction
1.1 Key Concepts
International Management is the process of planning, organizing, directing, and controlling across
borders to achieve organizational goals. It’s about:
• Navigating complexities of operating in multiple countries
• Integrating global perspectives into business strategies
• Managing diverse and geographically dispersed organizations
Cross-border Activities:
- Exports/imports, international suppliers/customers.
- Employees abroad.
- Outsourcing.
- Foreign direct investments: subsidiaries, factories, stores abroad.
- Licensing, franchising, alliances, JVs, M&A.
A multinational company is a company that operates in its home country, as well as in other
countries around the world. It maintains a central oNice located in one country, which coordinates the
management of all its other oNices, such as administrative branches or factories.
® “Multinational” often implies large MNCs, this course: multinational = international (any size)
A Born Global Company, or international new venture, is a business organization that, from
inception, seeks to derive significant competitive advantage from the use of resources and the sale of
outputs in multiple countries.
® Firms that internationalize from inception, not gradually.
® DiNerence: traditional firms expand step by step.
Example: tech startups scaling fast to global markets.
,1.2 Why internationalize?
There are multiple reasons for Internationalization:
1. Market expansion:
o Reach new customers
o Enter faster-growing or higher- spending regions
o Extend product lifecycle
o Achieve economies of scale (spread fixed costs)
o Follow global customers (B2B) into their new geographies to keep a relation with them
Ex. Coca-Cola, only 17% of sales in US!
2. Cheaper resources
o Lower input costs due to price
diNerences
o Proximity to raw materials and
energy sources
o Manufacturing and supplier
clusters
o Tax/tariN arbitrage. (US!)
® Labor cost diNerences are a
significant driver of
internationalization as they account
for 20–70% of sales depending on the
industry and there is a large variation
of labour cost around the world.
3. Better recourses:
o Specialized talent (AI talent in US, biotech).
o Access to R&D hubs, labs, universities, innovative ecosystems (ex. Silicon valley)
o High-quality intermediate inputs (ex. Semiconductors)
4. Competitive advantage
o Pre-empt rivals ® secure distribution/partners
o Build global legitimacy
o Upgrade value chain (design here, make there, sell everywhere)
o Leverage brand/data. (ex. Italian brand prestige on international market)
5. Managing regulations: Avoid unfavourable rules at home.
6. Risk diversification:
o Spread exposure across markets, suppliers, and policies.
o Portfolio learning: failures in one market inform others (test in small merkets)
1.3 Drivers of and barriers to internationalization
Drivers (Globalization forces):
- Lower trade/investment barriers. (specialize, comparative advantage)
- Converging consumer tastes.
- Lower transport and communication costs,…
,Barriers:
- National market diNerences (“distance”): Exports
from a country are concentrated in geographically
close partners à distance still shapes trade flows
strongly, despite globalization.
- Counter-globalization processes (tariNs,
regulations).
- TariNs/trade barriers → higher costs, lower
margins, price increases.
- Standards/conformity → product redesign, extra testing.
- Data/digital rules → higher IT costs, fragmented platforms.
- Investment screening/ownership caps → limit entry modes (e.g., mandatory JVs).
- Customs frictions → paperwork, delays, stock-out risks. (diNerent in every country)
- Liability of foreignness: extra costs due to being foreign because of cultural unfamiliarity,
credibility issues, resource disadvantage, …
1.4 Role of international managers
Main tasks:
- Stay informed about regulations, develop local expertise.
- Market research & global planning. (emerging markets, look into the future)
- Cross-cultural training and adaptation.
- Global sourcing & risk management.
- Coordinate international teams, manage budgets, deal with currency risks.
- Tech integration.
- Ensure sustainability & CSR implementation.
MNEs vs. Startups:
• MNEs: complex, hierarchical, resource-rich, risk diversification, incremental innovation.
• Startups: flat structure, resource-limited, need radical innovation, use flexible/low-cost entry
modes (alliances/exporting), survival-focused.
, 2. Globalization
2.1 What is Globalization
Globalization refers to the growing economic interdependence of countries through increasing cross-
border trade in goods and services, capital flows, and rapid diNusion of technology. There are two
main dimensions:
1. Globalization of markets = the merging of distinct national markets into a global marketplace.
® Consequences: access to larger markets, more intense global competition
Ex. Starbucks global presence
2. Globalization of production = Sourcing from multiple countries to benefit from cost and
quality diNerences.
® Goals: reduce costs, improve quality, build reputation.
Ex. Boeing’s global supply chain, the geography of iPhone components
2.2 Drivers of Globalization
There are 3 main drivers of globalization:
1. Falling Barriers to Trade and Investment
International trade = export and import of goods or services between countries.
Foreign direct investment (FDI): a firm invests resources in business activities outside its
home country (e.g., M&A, JVs).
Goal of international trade: produce where comparative advantage leads to lowest
opportunity cost.
® Costs/barriers not reflecting the cost of resources spent on production of goods
(e.g., tariNs) limit the extent to which this goal can be achieved.
® Barriers (historically): tariNs, quotas, import licenses, technical standards, and non-
tariN restrictions.
® TariNs have dropped dramatically since 1913 (e.g., US: from 44% to 3.2%).
To ensure trust, prevent unfair advantages and harmonize trade rules global institutions like
WTO, IMF, World Bank, UN, G20 and regional agreements and unions (EU, NAFTA) were set up.
• These international organizations negotiate conditions with multiple countries
(replacing bilateral agreements):
o Multilateral agreements ensure the existence of alternatives
o Simplify the challenges of exporters/importers buying and selling in multiple
countries (e.g., same customs form).
2. Technological Change
• Communication tech: internet, satellites, fiber optics à global connectivity.
• Transport tech: jet aircraft, superfreighters, containerization à lower costs, faster
delivery.
Result: shrinking time and distance barriers; firms can coordinate global operations easily.
The goal of this course is to equip students with the knowledge and skills necessary to successfully
manage businesses in a global environment. The course provides an overview of key challenges
specific to companies and ventures operating in international context and introduces theoretical
frameworks and practical tools for decision-making in a global setting.
1. Introduction
1.1 Key Concepts
International Management is the process of planning, organizing, directing, and controlling across
borders to achieve organizational goals. It’s about:
• Navigating complexities of operating in multiple countries
• Integrating global perspectives into business strategies
• Managing diverse and geographically dispersed organizations
Cross-border Activities:
- Exports/imports, international suppliers/customers.
- Employees abroad.
- Outsourcing.
- Foreign direct investments: subsidiaries, factories, stores abroad.
- Licensing, franchising, alliances, JVs, M&A.
A multinational company is a company that operates in its home country, as well as in other
countries around the world. It maintains a central oNice located in one country, which coordinates the
management of all its other oNices, such as administrative branches or factories.
® “Multinational” often implies large MNCs, this course: multinational = international (any size)
A Born Global Company, or international new venture, is a business organization that, from
inception, seeks to derive significant competitive advantage from the use of resources and the sale of
outputs in multiple countries.
® Firms that internationalize from inception, not gradually.
® DiNerence: traditional firms expand step by step.
Example: tech startups scaling fast to global markets.
,1.2 Why internationalize?
There are multiple reasons for Internationalization:
1. Market expansion:
o Reach new customers
o Enter faster-growing or higher- spending regions
o Extend product lifecycle
o Achieve economies of scale (spread fixed costs)
o Follow global customers (B2B) into their new geographies to keep a relation with them
Ex. Coca-Cola, only 17% of sales in US!
2. Cheaper resources
o Lower input costs due to price
diNerences
o Proximity to raw materials and
energy sources
o Manufacturing and supplier
clusters
o Tax/tariN arbitrage. (US!)
® Labor cost diNerences are a
significant driver of
internationalization as they account
for 20–70% of sales depending on the
industry and there is a large variation
of labour cost around the world.
3. Better recourses:
o Specialized talent (AI talent in US, biotech).
o Access to R&D hubs, labs, universities, innovative ecosystems (ex. Silicon valley)
o High-quality intermediate inputs (ex. Semiconductors)
4. Competitive advantage
o Pre-empt rivals ® secure distribution/partners
o Build global legitimacy
o Upgrade value chain (design here, make there, sell everywhere)
o Leverage brand/data. (ex. Italian brand prestige on international market)
5. Managing regulations: Avoid unfavourable rules at home.
6. Risk diversification:
o Spread exposure across markets, suppliers, and policies.
o Portfolio learning: failures in one market inform others (test in small merkets)
1.3 Drivers of and barriers to internationalization
Drivers (Globalization forces):
- Lower trade/investment barriers. (specialize, comparative advantage)
- Converging consumer tastes.
- Lower transport and communication costs,…
,Barriers:
- National market diNerences (“distance”): Exports
from a country are concentrated in geographically
close partners à distance still shapes trade flows
strongly, despite globalization.
- Counter-globalization processes (tariNs,
regulations).
- TariNs/trade barriers → higher costs, lower
margins, price increases.
- Standards/conformity → product redesign, extra testing.
- Data/digital rules → higher IT costs, fragmented platforms.
- Investment screening/ownership caps → limit entry modes (e.g., mandatory JVs).
- Customs frictions → paperwork, delays, stock-out risks. (diNerent in every country)
- Liability of foreignness: extra costs due to being foreign because of cultural unfamiliarity,
credibility issues, resource disadvantage, …
1.4 Role of international managers
Main tasks:
- Stay informed about regulations, develop local expertise.
- Market research & global planning. (emerging markets, look into the future)
- Cross-cultural training and adaptation.
- Global sourcing & risk management.
- Coordinate international teams, manage budgets, deal with currency risks.
- Tech integration.
- Ensure sustainability & CSR implementation.
MNEs vs. Startups:
• MNEs: complex, hierarchical, resource-rich, risk diversification, incremental innovation.
• Startups: flat structure, resource-limited, need radical innovation, use flexible/low-cost entry
modes (alliances/exporting), survival-focused.
, 2. Globalization
2.1 What is Globalization
Globalization refers to the growing economic interdependence of countries through increasing cross-
border trade in goods and services, capital flows, and rapid diNusion of technology. There are two
main dimensions:
1. Globalization of markets = the merging of distinct national markets into a global marketplace.
® Consequences: access to larger markets, more intense global competition
Ex. Starbucks global presence
2. Globalization of production = Sourcing from multiple countries to benefit from cost and
quality diNerences.
® Goals: reduce costs, improve quality, build reputation.
Ex. Boeing’s global supply chain, the geography of iPhone components
2.2 Drivers of Globalization
There are 3 main drivers of globalization:
1. Falling Barriers to Trade and Investment
International trade = export and import of goods or services between countries.
Foreign direct investment (FDI): a firm invests resources in business activities outside its
home country (e.g., M&A, JVs).
Goal of international trade: produce where comparative advantage leads to lowest
opportunity cost.
® Costs/barriers not reflecting the cost of resources spent on production of goods
(e.g., tariNs) limit the extent to which this goal can be achieved.
® Barriers (historically): tariNs, quotas, import licenses, technical standards, and non-
tariN restrictions.
® TariNs have dropped dramatically since 1913 (e.g., US: from 44% to 3.2%).
To ensure trust, prevent unfair advantages and harmonize trade rules global institutions like
WTO, IMF, World Bank, UN, G20 and regional agreements and unions (EU, NAFTA) were set up.
• These international organizations negotiate conditions with multiple countries
(replacing bilateral agreements):
o Multilateral agreements ensure the existence of alternatives
o Simplify the challenges of exporters/importers buying and selling in multiple
countries (e.g., same customs form).
2. Technological Change
• Communication tech: internet, satellites, fiber optics à global connectivity.
• Transport tech: jet aircraft, superfreighters, containerization à lower costs, faster
delivery.
Result: shrinking time and distance barriers; firms can coordinate global operations easily.
