CHAPTER 1
The Challenging World of International Business
Learning Objectives
LO1 Understand what international business is and why it is important.
LO2 Comprehend why and how international business differs from domestic business.
LO3 Appreciate that international business has a long and important history in the world’s
development.
LO4 Appreciate the dramatic internationalization of markets.
LO5 Understand the five kinds of drivers, all based on change, that are leading firms to
internationalize their operations.
LO6 Recognize the key arguments for and against the globalization of business.
LO7 Explain the reasons for entering foreign markets.
LO8 Recognize that globalization of an international firm occurs over at least seven
dimensions and that a company can be partially global in some dimensions and completely
global in others.
NOTE:
International business statistics, data, and facts about countries, regions, governments, and
companies can change rapidly and dramatically. We recommend that you update this
information regularly.
As an adopter of this text, McGraw-Hill offers you a complementary online resource each
month, the International Business Newsletter. The IB Newsletter gives you an array of timely
and relevant articles, videos, country profiles, teaching suggestions, and data resources to
add breadth, depth, and richness to the ever-changing topic of international business.
iGlobe is also a way to keep your courses current. In partnership with PBS, iGlobe is a
free video service for McGraw-Hill adopters that allows you to download breaking news
videos onto your desktop to show in class or online. Updated monthly, these streaming
videos are complete with teaching notes and discussion questions. Key concepts for each
video are identified to save you time! Visit www.mhhe.com/geringerM, or talk to your
McGraw-Hill sales representative for more information about iGlobe or the IB Newsletter.
,Overview
Global competition continues to increase at a rapid pace. The huge increase in imports due
to the reduction in trade barriers, coupled with increased foreign investment, means that all
firms face competitors from any place in the world. This increasing internationalization of
business requires managers to have a global business perspective gained through
experience and education.
,International business differs from domestic business in that it involves three
environments–domestic, foreign, and international–instead of one. Although the kinds of
forces are the same in the domestic and foreign environments, their values often differ, and
changes in the values of the foreign forces can be at times more difficult to assess.
International businesspeople must know enough about the differences in the environmental
forces of the markets in which they operate to be able to decide if a concept or a technique
(1) can be transferred to another country as is, (2) must be adapted to local conditions, or
(3) cannot be used elsewhere.
Suggestions and Comments
Students find the definitions in this chapter helpful. Stress that building, understanding,
and correctly using the terms associated with international business helps them move
toward understanding and being able to articulate IB's complexity.
Students tend to be aware marginally of their consumer-level dependence on international
business. To arouse their early interest in the importance of this course, we use one or more
of the student involvement exercises listed in the following section.
Student Involvement Exercises
1. One professor starts the course by asking students this question: “If I snapped my
finger (snap your finger) and every piece of clothing we are wearing today that was
NOT manufactured in the U.S. disappeared, how we would be dressed?” The obvious
answer is “naked.” Then move into a discussion of our dependence on foreign
manufactured goods as a segue into your orientation for this course.
2. Hold up a common object such as a lead pencil. Where do the materials come from?
Rubber comes from the Far East, the copper and tin from which the brass ferrule
is made may come from Chile and Malaysia respectively, etc.
3. Ask if anyone in class is influenced by international business. The response is often
negative, except for foreign students. This can open up a discussion to show our
dependence on imports (Smart Phones, iPads, PCs, Blu-ray, Flat Screen HDTVs,
cars, etc.), outsourcing, and foreign direct investment. For example, foreign
ownership of grocery chains in the U.S. has grown significantly in the last five
years (Trader Joe’s, Stop&Shop, Aldi, Food Lion, Hannaford).
4. Research other American brands and businesses that are owned by foreign
companies. They might be surprised who really owns what in the U.S. and how
brand identification and ownership may be different.
Course Project
You can start the class off on an international business project here or wait until the class
has started so students have an understanding of IB. Here is a summary of the project:
, International Business Project
Objective: To create a foreign market entry business plan for taking an American consumer
product into a foreign country.
**********
The Challenging World of International Business
Learning Objectives
LO1 Understand what international business is and why it is important.
LO2 Comprehend why and how international business differs from domestic business.
LO3 Appreciate that international business has a long and important history in the world’s
development.
LO4 Appreciate the dramatic internationalization of markets.
LO5 Understand the five kinds of drivers, all based on change, that are leading firms to
internationalize their operations.
LO6 Recognize the key arguments for and against the globalization of business.
LO7 Explain the reasons for entering foreign markets.
LO8 Recognize that globalization of an international firm occurs over at least seven
dimensions and that a company can be partially global in some dimensions and completely
global in others.
NOTE:
International business statistics, data, and facts about countries, regions, governments, and
companies can change rapidly and dramatically. We recommend that you update this
information regularly.
As an adopter of this text, McGraw-Hill offers you a complementary online resource each
month, the International Business Newsletter. The IB Newsletter gives you an array of timely
and relevant articles, videos, country profiles, teaching suggestions, and data resources to
add breadth, depth, and richness to the ever-changing topic of international business.
iGlobe is also a way to keep your courses current. In partnership with PBS, iGlobe is a
free video service for McGraw-Hill adopters that allows you to download breaking news
videos onto your desktop to show in class or online. Updated monthly, these streaming
videos are complete with teaching notes and discussion questions. Key concepts for each
video are identified to save you time! Visit www.mhhe.com/geringerM, or talk to your
McGraw-Hill sales representative for more information about iGlobe or the IB Newsletter.
,Overview
Global competition continues to increase at a rapid pace. The huge increase in imports due
to the reduction in trade barriers, coupled with increased foreign investment, means that all
firms face competitors from any place in the world. This increasing internationalization of
business requires managers to have a global business perspective gained through
experience and education.
,International business differs from domestic business in that it involves three
environments–domestic, foreign, and international–instead of one. Although the kinds of
forces are the same in the domestic and foreign environments, their values often differ, and
changes in the values of the foreign forces can be at times more difficult to assess.
International businesspeople must know enough about the differences in the environmental
forces of the markets in which they operate to be able to decide if a concept or a technique
(1) can be transferred to another country as is, (2) must be adapted to local conditions, or
(3) cannot be used elsewhere.
Suggestions and Comments
Students find the definitions in this chapter helpful. Stress that building, understanding,
and correctly using the terms associated with international business helps them move
toward understanding and being able to articulate IB's complexity.
Students tend to be aware marginally of their consumer-level dependence on international
business. To arouse their early interest in the importance of this course, we use one or more
of the student involvement exercises listed in the following section.
Student Involvement Exercises
1. One professor starts the course by asking students this question: “If I snapped my
finger (snap your finger) and every piece of clothing we are wearing today that was
NOT manufactured in the U.S. disappeared, how we would be dressed?” The obvious
answer is “naked.” Then move into a discussion of our dependence on foreign
manufactured goods as a segue into your orientation for this course.
2. Hold up a common object such as a lead pencil. Where do the materials come from?
Rubber comes from the Far East, the copper and tin from which the brass ferrule
is made may come from Chile and Malaysia respectively, etc.
3. Ask if anyone in class is influenced by international business. The response is often
negative, except for foreign students. This can open up a discussion to show our
dependence on imports (Smart Phones, iPads, PCs, Blu-ray, Flat Screen HDTVs,
cars, etc.), outsourcing, and foreign direct investment. For example, foreign
ownership of grocery chains in the U.S. has grown significantly in the last five
years (Trader Joe’s, Stop&Shop, Aldi, Food Lion, Hannaford).
4. Research other American brands and businesses that are owned by foreign
companies. They might be surprised who really owns what in the U.S. and how
brand identification and ownership may be different.
Course Project
You can start the class off on an international business project here or wait until the class
has started so students have an understanding of IB. Here is a summary of the project:
, International Business Project
Objective: To create a foreign market entry business plan for taking an American consumer
product into a foreign country.
**********
