The Global Business Environment
The Global Business Environment
International Strategy Formulation
Why Globalize?
expand sales
when domestic markets are saturated, should go
overseas to increase sales and profits
acquire resources
resources may be more readily available and less
costly in other countries
diversify sources of sales and supplies
different business cycles between countries
may avoid impact of price swings or shortages
avoid tariffs
The Changing Global Environment
In the past, managers have viewed the global sector as
closed
Each country or market was assumed to be isolated from
others
Firms did not consider global competition, exports
Today’s business environment is very different
Managers need to view it as an open market
Organizations buy and sell around the world
Managers need to learn to compete globally
Global organizations
organizations that operate and compete in more than one
country
are free to establish foreign subsidiaries to become strong
world competitors
Barriers to Free Trade
Free Trade
Barriers
Tariffs
Economic
Communities
Export
Restraints
Buy National
Campaigns
Quotas
Local Ownership
Requirements
Distance
Cultural
Differences
Barriers to International Trade
Trade Controls - governmental influences usually
aimed at reducing the competitiveness of imported
products or services
Tariffs: taxes levied on goods shipped
internationally
Subsidies: direct payments to domestic producers
Quotas: legal restrictions on the import of goods
Free trade doctrine - predicts that if each country
agrees to specialize in the production of goods that it
can produce most efficiently, it will
make the best use of global resources
result in lower prices