International

Business &
Trade Session 1
 “
It is not the strongest or the most
intelligent who will survive, but those
who can best manage change.”
Leon C. Megginson

2
Session Agenda 1. Course Introduction
2. Personal Introductions
3. Administrative Matters
a. Groupings

b. Class Representation

4. Break Out Workshop

5. Lecture 1

3
International Business
What does it mean to you?

4
How do you
think
globalization
impacted this?

5
Or this?

6
How about
this?

7
And this?

8
Finally, this?

9
 This course will give students an understanding of the international business
Course environment and the business practices required to compete successfully in
global markets. Within the context of globalization, this course will focus on the
Introduction ASEAN Economic Community (AEC), as well as the rise of China as an economic
giant in world and/or global trade. Apart from Asia & the Pacific countries, this
course will also touch on the other trade, investment and business partners of
the Philippines such as the European Union (EU), and NAFTA member countries.

The course aims to give students decision-making skills associated with the
different market entry strategies and functions of international business.
Students will be exposed to actual experiences through case studies and group
projects based on actual global business scenarios.

This course will be conducted according to both individual and team-learning

formats

10
Learning
Outcomes LO1
Acquire in-depth
LO2
Apply the above concepts
LO3
Differentiate the
knowledge of the that are common to real similarities and differences
various concepts, world scenarios and in their among peoples of the
frameworks and respective workplaces world and how they affect
practices in international business behavior and
business and management
management
.

LO4 LO6
LO5
Articulate how various Understand thoroughly the
Familiarize themselves with
legal, political, economic, implications of the
the practice of business in
and cultural systems affect unfolding current world and
other parts of the world
business attitudes and global economic, political
including the ASEAN, US,
behavior and technological events for
China, and Europe
the practice of international
business.
11
 International
Roadmap Market Entry
Strategies &
International
Foundations of Business The Organization Regional
Global Business Strategies of Global Business Strategies

1 3 5 7

2 4 6

Global Business Control of Global Functional

Environment Business Strategies

12
Grading REQUIREMENTS FINAL GRADE
Composition • Reading/Homework/Class Activities and 15%
Participation/Attendance
• Discussion Forum, Recitation,
20%
Behavior, Attitude, Peer
Evaluation
• Project Assignment/Tasks/Case Studies
20%

• Quizzes
15%

• Midterm Exam & Final Project

30%

TOTAL 100%
13
 ▪ Gutierrez, B. P. B., Lizares, R. M., & Rodriguez, R. A. (Eds). (2021). Cases and
Main Readings in International Business. UP Business Research Foundation, Inc.
▪ Collinson, S. et al. (2019). International Business. Pearson.
References ▪ Hill, C. International Business: Competing in the Global Marketplace.
(2019). McGraw-Hill Higher Education (e-book)
▪ Hofstede, G. (1991). Culture and Organizations: Software of the Mind.
McGraw-Hill
▪ Wheelan, T.L. et al. Strategy Management and Business Policy:
Globalization, Innovation and Sustainability. (2018). Pearson Education Ltd.
▪ Gaspar et al. (2017) Introduction to Global Business. (2nd ed.) Australia:
Cengage Learning.
▪ Hodgetts, Richard M.; Luthans, Fred; (2015 & later editions). International
Management: Culture, Strategy and Behavior, 5th Ed.; McGraw-Hill Irwin;
▪ Deresky,: Helen, (2016 & later editions). International Management:
Managing Across Borders and Cultures. 5th Edition, Pearson/Prentice Hall;
▪ Cavusgil, S.T.; Knight, G.; Riesenberger, J.; (2010 & later editions), International
Business: Strategy Management, and the New Realities, Pearson/Prentice
Hall.

14
 • Attendance will be checked twice in each session: at the start, and after the break. (So yes, there will be a
mid-session break for 15 minutes.) The university policy on attendance will be enforced with regards to
the maximum allowable absences.
Classroom • Eating is not allowed during the entire session. You may bring water in your tumblers anytime. I will allow
Policies coffee after the mid-session break.

• I do not like disruptive behavior in class. If you talk louder than me or the presenting classmate, if you
horseplay, or if you take a call in the classroom, I will ask you to leave the classroom, and you will be
marked absent for that session. However, you may talk discreetly, for as long as it is not disruptive.
• You are not allowed to freely leave the classroom as you please. If you wish to leave the classroom (i.e.
CR, etc.), kindly raise your hand, point to door, and wait for my nod or verbal approval. I will traffic
movement to a maximum of two (2) persons leaving the classroom at a given time. You have a maximum
of 15 minutes to return, or I will mark you absent (unless this is due to health and safety reasons).

• Cheating and plagiarism is prohibited. The University policy on this matter will be enforced.

• You are not allowed to open your laptops or other electronic devices during lectures. You may open them
during activities. All lecture materials will be uploaded in Canvas.

• Always bring a pen and one sheet of paper during our class sessions.
• I will give you respect, and I will demand respect from you.

• Late submissions will not be allowed or tolerated, unless caused by a medical issue, supported by a
medical certificate.

• Group work is group work, and I will not allow change of groupings, or individual work.
15
Personal
Introductions
Let’s get to know one
another.

16
Hello!
Nice to meet you
▪ Denver Bingski D. Daradar (Sir D.)
▪ BS Commerce, Major in Computer Information Systems
Management

▪ MBA, with concentrations in Marketing and Finance

▪ DBA (candidate), Dissertation pending on Leadership

▪ 2021 Fetzer Scholar, Academy of Management, Management
Spirituality and Religion Group

▪ Work Experience:
- Citibank (Technical Services Group Intern – Y2K Compliance)
- DTF Consulting Network (Management Consultant and
Customer Relationship Manager)
Meera Enterprises Inc. (Operations Manager)
Bank of Commerce (Marketing and Corporate
Communications Head)
IBM Solutions Delivery (Software Education Engagement
Manager)
Weber Shandwick, Manila Office (Director for Operations;
Director for Corporate Affairs)
Dominguez Marketing Communications (Account Director)
DBMC (Managing Consultant)

17
How about you?

High school?
Favorite artist?
Favorite non-Filipino dish?
Favorite non-Filipino fashion
brand?

18
Administrative We need to decide on the following
Matters

Class Representative Groupings

For emergency communications. For group tasks, case presentations, and
final paper/presentations.

5 members per group.

19
Workshop For your first workshop, discuss your thoughts and agree on a final team
answer for the following questions:
1. What could be the possible reasons to motivate businesses to go global?
2. What are the possible challenges or risks that businesses face when going
global?
3. Do you think going global has an economic trickle down effect?

Benefits Risks Trickle Down

20
International What is International Business?
Business
International Business is the study of
transactions taking place across national
borders for the purpose of satisfying the needs
of individuals and organizations.

21
International What are these individual and organizational needs?
Business
Individuals: Organizations:
• Customers: Imported • Government: Tax
products and services revenues
• Employees: Jobs and • Suppliers: New and/or
career opportunities growing clients
• Individual investors: • Peer companies: Potential
Investment business partners
opportunities, • Investing and Financing
increase in share Firms: Investment
price, dividends opportunities, returns,
credit, interest income 22
International What is International Trade?
Trade
International Trade is the exchange of goods
and services across international borders.

23
International What are the forms of international trade?
Trade
IMPORTS: EXPORTS:
Goods and services Goods and services
produced in one country produced by a firm in one
and bought in by country and then sent to
another country. another country.

24
The MNE What is an MNE?

A Multinational Enterprise (MNE) is a multi-plant

firm that controls and coordinates operations in
at least two countries; or a firm that engages in
value-added international business activities,
that has affiliates in more than one country, and
whose operations and activities in different
locations are actively coordinated by one or
more headquarters organizations.

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MNEs Are all MNEs huge organizations?

Global Behemoths: Global SMEs:

• IBM • Cobalt Light Systems
• Huawei • Acro Aircraft Seating
• Apple • Mind Gym
• Google • SafeGuard World
• SMIC International
• Fly Ace Corporation

26
Economic What is Economic Globalization?
Globalization
Economic Globalization is the growing
interdependence of locations and economic
actors across countries and regions.

27
Outcomes of What are the outcomes and consequences of globalization?
Globalization
Increasing interdependence of locations
• Cross-border migration
• Blending of cultures
• More homogenous consumption patterns
• Global value chains connect local clusters
• Standardization of various kinds
• Cooperation in supranational institutions.
Increasing
interdependence
of people across
Increasing interdependence of firms
the globe
• More joint ventures, strategic alliances,
and M&A
• Growing cross-border competition for
markets, resources, and expertise
• Shared agenda set by governance
institutions

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Inter- What do we mean by Interdependence?
dependence
Interdependence is the mutual reliance
between groups of actors: individuals, firms,
countries, or regions.

29
FDI What is FDI?

Foreign Direct Investments (FDI) are equity

funds invested in other nations. It is different
from portfolio (financial) investment in that FDI
is undertaken by MNEs which exercise control
of their foreign affiliates.

30
 “
Thank you very much!

31
International
Business &
Trade Session 2
 If you are not thinking
international,
you are not thinking business
management

Importance of “MAINSTREAM MANAGEMENT”

International GOAL: PROFIT SHAREHOLDER
Business “MULTISTREAM MANAGEMENT”
GOAL: OUTCOMES STAKEHOLDERS

2
 • Business is becoming a unified, global field
• Companies that think globally have a
competitive edge

• Domestic markets are saturated for many

A companies
Borderless • Consumers can no longer tell from which
World country they are buying

3
 • International management is management of
The business operations conducted in more than
International one country
Business
• Fundamental tasks do not change
Environment
• Basic management functions are the same -
domestic or international

• Greater difficulties and risks when performing

on an international scale
4
 Home Sources Foreign Sources
PUSH Factors INPUTS PULL Factors
The • Cost disadvantages Materials, labor, • Cost advantages
• Need for risk-diversification technology, expertise • Scale economics
Dynamics of
Globalization
Technological Factors
Political Economy Factors • Rising importance, risks,
• Financial liberalization costs of innovation
• Supranational • Shorter product lifecycles
institutions The • Need for complementary
• Economic integration Internationalizing assets
• Liberalization of Firm • New enabling technologies:
economic systems ICTs, transport systems,
• Shifting political materials, lower
ideologies coordinating costs

Home Market Foreign Market

PUSH Factors PULL Factors
OUTPUTS
• Maturing markets • Market convergence
Products, services,
• Foreign competitors • Emerging markets
technology, brands
• Reduced government
barriers to entry 5
 INTERNATIONAL PESTLE

Economic Legal-Political
•Economic
• Political risk
development
• Infrastructure •Government
•Resource and takeovers
product markets • Tariffs, quotas, taxes
Organization
•Per capita
•Terrorism, political
Income
instability
• Exchange rates
•Economic • Laws, regulations
conditions Sociocultural
• Socio values, beliefs
• Language
• Religion (objects, taboos, holidays)
• Kinship patterns

International • Formal education, literary

• Time orientation

Environment
Factors
6
Economic ✓ Economic development
Environment ✓ Infrastructure
Factors ✓ Resource and product markets
Exchange rates
✓ Inflation
✓ Interest rates
✓ Economic growth

7
Economic • Countries categorized as “developing” or
Development “developed”
• Criterion used to classify is per capita income
• Developing countries have low per capita
incomes
• LDCs located in Asia, Africa, and South America
• Developed are North America, Europe, & Japan
• Driving global growth in Asia, Eastern Europe, &
Latin America

8
 • Airports,
• Highways,
A country’s physical
facilities that support • Railroads
economic activities
• Energy-producing facilities
Infrastructure • Communication facilities

9
Resource When operating in another country...
and ▪ Managers must evaluate market demand
▪ To develop plants, resource markets
Product
must be available – raw materials and
Markets
labor
10
Exchange • Rate at which one country’s currency is
exchanged for another country’s
Rates
• Has become a major concern for companies
doing business internationally

• Changes in the exchange rate can have

major implications for profitability of
international operations

11
 Political Risk– due to events or actions by host
governments
• Loss of assets
The Legal- • Loss of earning power
Political • Loss of managerial control
• Government takeovers
Environment • Acts of violence
12
 Events such as riots, revolutions, civil war or
Political government upheavals that affect the
Instability operations of an international company

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 • Government laws and regulations differ
from country to country

• Make doing business a true challenge for

international firms

Laws and • Internet has increased impact of foreign

Regulations laws on multinational companies – expands
potential for doing business on global basis

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 Culture – shared
knowledge, beliefs,
values, common modes
• Intangible
of behavior, and ways of • Pervasive
thinking among • Difficult for outsider to learn
members of a society

Sociocultural Managers need to understand differences in

social values to comprehend local cultures and
Environment deal with them effectively

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 1. Customers: Gain access to new customers, leading to
Why Go increased revenues, profits, and long-term growths – especially
Global? attractive when home markets are mature.
2. Cost: Achieve lower costs and enhance the firm’s
competitiveness, maximizing on economies of scale or learning
curve effects if the scope is beyond the domestic markets.
3. Competence: Further exploit core competencies into a
position of competitive advantage in foreign markets.
4. Resources: Gain access to resources and capabilities located
in foreign markets such as distribution networks, low-cost
labor, natural resources, or specialized technical knowledge.
5. Risk: Spread business risk across a wider market base, thus
economic slumps in one country will not ruin a company if they
are doing well in other economies.
24
 Assignment:
International
Each group will be assigned an international
Trade
institution or trade agreement to report on.
Agreements Report should contain a description, brief
history, purpose and major contributions to
business, economics, and trade.

• Sir D: GATT
• Group 1: WTO
• Group 2: EU
• Group 3P NAFTA
• Group 4: ASEAN / AEC

17
 “
Thank you very much!

18
International
Business

Session-3
 Not al formal institutions are national or subnational.
Institutions and Globalization and the subsequent growth of international
Supranational business have prompted the need to establish global
and regional agreements to monitor and regulate
Agreements economic activities.

• General Agreement on Tariffs and Trade (GATT)

• World Trade Organization (WTO)
• European Union (EU)
• North American Free Trade Agreement (NAFTA)
• Association of Southeast Asian Nations (ASEAN)
• ASEAN Economic Community (AEC)
 Assignment:
International
Each group will be assigned an international
Trade
institution or trade agreement to report on.
Agreements Report should contain a description, brief
history, purpose and major contributions to
business, economics, and trade.

• Sir D: GATT
• Group 1: WTO
• Group 2: EU
• Group 3P NAFTA
• Group 4: ASEAN / AEC
 General Agreement on Tariffs and Trade (GATT)
International
Trade A major trade agreement that was established to
Alliances negotiate trade concessions among member
countries, and since superseded by the WTO.

• Signed by 23 nations in 1947.

• Ensured nondiscrimination, clear procedures, negotiation of
disputes, and participation of lesser developed countries in
international trade
• By the 1980s there was a trend towards protectionism.
• Today, 147 member countries abide by the rules
• Primary tools WTO uses on tariff concessions, countries agree
to limit level of tariffs on imports from other WTO members
• Most favored nation clause
 World Trade Organization (WTO)
International
Trade An international organization that deals with the rules
Alliances of trade among member countries; on of its most
important functions is to act as a dispute-settlement
mechanism.

• Established January 1, 1995.

• Goal, is to guide and sometimes urge the nations of the world
toward free trade and open markets
• Enforces implementation of GATT
• Has legal authority to arbitrate disputes on 400 trade issues
• Partly responsible for backlash against global trade
European A treaty-based institutional framework that manages
economic and political cooperation among its 28
Union member states (prior to Brexit).

• Formed in 1957 to improve economic and social conditions (Treaty

of Rome), and eventually formally called the EU in 1995.
• Initiative Europe ’92 called for creation of open markets for
Europe’s 340 million consumers
• Biggest expansion in 2004 – 10 new members from southern and
eastern Europe
• Observers feared EU would become a trade barrier
• EU’s monetary revolution, introduction of the Euro
• Member countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech
Republic, Denmark, Estonia, France, Finland, Germany, Greece,
Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherland, Poland, Portugal, Romania, Slovakia, Slovenia, Spain,
Sweden, UK.
North A regional free trade agreement among Canada,
the United States, and Mexico.
American
● Went into effect on January 1, 1994
Free Trade ● Merged the United States, Canada, and Mexico with
Agreement more that 421 million consumers
● Breaks down tariffs and trade restrictions on most
agriculture and manufactured products
● August 12, 1992, agreements in number of key
areas include: agriculture, autos, transport, &
intellectual property
● Trade among the three countries to date is over $1
trillion already.
ASEAN An economic union founded in 1967. This
economic bloc focuses not on reducing trade
barriers among members but, rather, on
promoting exports to other nations.
● Went into effect on January 1, 1994
● Includes Brunei Darussalam, Cambodia, Indonesia,
Lao PDR, Malaysia, Myanmar, Philippines,
Singapore, Thailand, and Vietnam.
● Have been generally successful in promoting trade with
Japan and the EU.
ASEAN “The AEC is the realisation of the region’s end goal of
economic integration. It envisions ASEAN as a single
Economic market and production base, a highly competitive
Community region, with equitable economic development, and
fully integrated into the global economy.

Once AEC is realised, ASEAN will be characterized by

free movement of goods, services, and investments as
well as freer flow of capital and skills. With harmonised
trade and investment laws, ASEAN, as a rules-based
organisation will be strengthened and become more
interesting as a single investment destination.”

https://investasean.asean.org/
Determinants
of National
Competitive
Advantage:

Using Porter’s
Diamond
Model
 a) The quantity, skills, and cost of the personnel
Factor b) The abundance, quality, accessibility, and cost fo
Conditions the nation’s physical resources such as land,
water, mineral deposits, timber, hydroelectric
power sources, and fishing grounds
c) The nation’s stock of knowledge resources,
including scientific, technical, and market
knowledge that effect the quantity and quality of
goods and services
d) The amount and cost of capital resources that are
available to finance industry
e) The type, quality, and user cost of the
infrastructure, including the nation’s transportation
system, communications system, healthcare
system, and other factors that directly affect the
quality of life in the country.
 a) The composition of demand in the home market as
Demand reflected by the various niches that exist, buyer
Conditions sophistication, and how well the needs of buyers in
the home market precede those of buyers in other
markets.
b) The size and growth rate of the home demand.
c) The ways in which domestic demand is
internationalized and pulls a nation’s products and
services abroad.
 a) The presence of internationally competitive
Related and supplier industries that create advantages in
Supporting downstream industries through efficient, early, or
rapid access to cost-effective inputs
Industries b) Internationally competitive related industries that
can coordinate and share activities in the value
chain when competing or those that involve
complementary products.
 a) The ways in which firms are managed and choose
Firm to compete.
Strategy, b) The goals that companies seek to attain as well as
the motivations of their employees and managers.
Structure, c) The amount of domestic rivalry and the creation
and Rivalry and persistence of competitive advantage in the
respective industry.
 Chance events can nullify the advantages of some
The Role of competitors and bring about a shift in overall
Chance competitive position because of developments such
as:

a) New inventions
b) Political decisions by foreign governments
c) Wars
d) Significant shifts in world financial markets or
exchange rates
e) Discontinuities in input costs such as oil shocks
f) Surges in world or regional demand
g) Major technological breakthroughs
 Government can influence all four of the major
The Role of determinants through:
Government
a) Subsidies
b) Education policies
c) Regulation or deregulation of capital markets
d) Establishment of local product standards and
regulations
e) Purchase of goods and services
f) Tax laws
g) Antitrust regulations
 1. The model was constructed based on the statistical
Critique of analysis of aggregate data on export shares of ten
the National countries: Denmark, Italy, Japan, Singapore, South
Korea, Sweden, Switzerland, the UK, and the US.
Diamond Additionally, historical data of four industries were
Model analyzed: German printing press, US patient
monitoring equipment, Italian ceramic tiles and
Japanese robotics.

2. Government is important in influencing home

nation’s competitive advantage (e.g. the use of
tariffs).

3. Although chance is a critical influencing factor, it is

extremely difficult to predict and prepare for (e.g.
pandemic)
 4. In terms of international business studies, the
Critique of model must be applied in terms of company
the National specific-considerations, and not in terms of national
advantages (Porter himself said “Firms, not
Diamond nations, compete in international markets).
Model
5. In support of his model, Porter delineates four
distinct stages of national competitiveness
development.

NOTE: Placement of countries is critical. Also,

while the logic appears that countries move from one
stage or another, it is possible that a country has
industries and firms in every stage.
 ADVANCE

Critique of Factor-Driven Investment-Driven

the National (Singapore) (South Korea)

Diamond Successful industries draw Companies invest in modern,

advantage solely from the factors of efficient facilities and technology,
Model production. Price is basis of
competition.
and work to improve investments
through modification.

DECLINE

Wealth-Driven Innovation-Driven
(German, UK, US) (Japan, Italy, Sweden)

Firms begin to lose their competitive Firms work to create new technology
advantage, rivalry ebbs, and the and methods through internal
motivation to invest declines. innovation and with the assistance of
suppliers and firms in related
industries.
 6. Porter contends that only outward FDI is valuable
Critique of in creating competitive advantage, and inboutd FDI
the National is never a solution to a country’s competitive
problems. But this is questionable and challenged.
Diamond
Model 7. Porter treats reliance on natural resources as
insufficient to create worldwide competitive stature.
But this has been disproven.

8. Porter model does not adequalty address the role

of the MNE – the multinational enterprise.
 BONUS Individual Assignment:
International Research on the Double Diamond of Rugman and
Trade D’Cruz (1993). In a three-page individual paper,
Agreements provide the following:

1. Introduction to the model

2. Illustration of the model
3. Definition of the elements of the model
4. Discussion on how the model works
5. Benefits/Value and Critique/Disadvantages of the Model.
6. Conclude with your own opinion/assessment.

Provide a reference list with at least 5 references,

following the APA 7th edition style system.
International
Business

Session-4
Introduction to
• Concerned with entry mode choices in single markets
the Uppsala based on transaction cost analysis.
Model
• Lacking foreign market knowledge is a key concept, which
increases risk exposure.

• Company response to risk through either limited resource

commitments or high control levels.

• The Uppsala Model introduced by Jan-Johansson and Jan-

Erik Ahlen in 1977 a path of increasing commitment from
no regular export activities through export by agents and
licensing agreements to the more commitment intensive
establishment of sales subsidiaries, joint ventures and
overseas production units.
 Strategies for
Entering
International
High
Markets

Foreign direct
investments

Foreign Operations
Ownership of Acquisition

Joint Venture

Franchising
Licensing

Exporting
Low Low Cost to Enter Foreign Operations High
 Strategies for
Entering
International
High
Markets

Foreign direct
investments

Foreign Operations
Ownership of Acquisition

Joint Venture

Franchising
Licensing

Exporting
Low Low Market Knowledge High
BORN GLOBAL FIRMS

Scott Shane
Ramunas Casas & Vilma Dambrauskaite
Svante Andersson, Mike Danilovic & Hanjun Huang
Overview
 ▪ Income (-)
▪ Capital gains
▪ Property taxes
(+)
Economic

▪ Economic growth
▪ Societal wealth

▪ Low inflation rates (+)

▪ Stable economic
conditions

(+)
▪ Freedom
Opportunity
(+)
Political

▪ Strong rule of law

▪ Property rights
Exploitation
▪ Decentralization of (+)
power

▪ Social desirability of (+)

entrepreneurship
The Effect of the
Socio-cultural

▪ Entrepreneurial (+) Institutional Environment

role models
on Opportunity Exploitation
▪ Specific cultural (+)
beliefs (Shane, S., 2003)
Born Global Companies
✓ Innovation performance?

✓ Competition not by price?

✓ Operating in market niches that require “high

tech” and specific knowledge?
“… rapid and extensive
internationalization is seen ✓ Founders and/or managers are entrepreneurs
as the principal feature of who are not afraid of taking risks and who are
the Born Global innovative and proactive?
Companies.” (Casas &
✓ Has a global vision and presentation of the firm as
Dambrauskaite, 2011)
on big marketplace from inception?

✓ Faced difficulties in getting financial resources

due to small size and the high degree of risk,
where risk decreases as company matured?

(Casas & Dambrauskaite, citing various sources, 2011)

Environmental Influences in
Lithuania (the West)
Impact of External Business Environment Factors
On Internationalization of Lithuanian Born Global Companies
Casas, R. & Dambrauskaite, V., 2011

What are the business environmental

Survey questionnaire Corporate database
factors that influence firm formation of
Lithuanian Born Global Companies?

QUANTITATIVE APPROACH
RESEARCH OBJECTIVES: 1. Email invitation to
participate
1. Which external business environment factors
2. Call to confirm receipt of
do not affect the emergence of Lithuanian
Born Global companies? email and confirm
2. Which external business environment factors interest to participate (3-
actually promote the internationalization of 4 days after)
3. Email reminder to
Lithuanian Born Global companies?
participate (two weeks
3. Which among external business environment
after)
factors that encourage the emergence of
Lithuanian Born Global companies are actually
present or absent in the (current) Lithuanian
Collection & Analysis
business environment?
(Casas & Dambrauskaite, citing various sources, 2011)
Impact of External Business Environment Factors
On Internationalization of Lithuanian Born Global Companies
Casas, R. & Dambrauskaite, V., 2011

1. Physical
Resources:
Financial capital
resources and
Infrastructure

2. Human Resources:
Knowledge
(Casasresources
& Dambrauskaite, 2011)
Impact of External Business Environment Factors
On Internationalization of Lithuanian Born Global Companies
Casas, R. & Dambrauskaite, V., 2011

Number of firms Industry

3 (6%)
3 (6%)

RESULTS
12 (24%)

9 (18%) 23 (46%)

38 (76%)

12 (24%)

MSME Very Large Manufacturing Services Other Construciton Commerce

(Casas & Dambrauskaite, 2011)
Impact of External Business Environment Factors
On Internationalization of Lithuanian Born Global Companies
Casas, R. & Dambrauskaite, V., 2011

RESEARCH OBJECTIVES:
1. Which external business environment factors
10 (20%) said that knowledge
do not affect the emergence of Lithuanian
resources had no impact.
Born Global companies?

RESULTS
2. Which external business environment factors All factors identified promote
actually promote the internationalization of the emergence of Lithuanian
Lithuanian Born Global companies? Born Global companies.
3. Which among external business environment
factors that encourage the emergence of • 7 are characteristic of
Lithuanian Born Global companies are actually Lithuania
present or absent in the (current) Lithuanian • 6 are not characteristic of
business environment? Lithuania

(Casas & Dambrauskaite, 2011)

Impact of External Business Environment Factors
On Internationalization of Lithuanian Born Global Companies
Casas, R. & Dambrauskaite, V., 2011

CHARACTERISTIC EXTERNAL BUSINESS NON-CHARACTERISTIC EXTERNAL BUSINESS

ENVIRONMENT FACTORS IN LITHUANIA ENVIRONMENT FACTORS

RESULTS
1. Infrastructure 1. Industry clusters
2. Lack or absence of local demand 2. Low level of corruption in the country
3. Citizens have good language skills and can 3. Existence of “professional” consumers in the
learn new languages industry of the country.
4. Good political relations with other countries. 4. Existence of early demand in the industry of
5. Participation in international organizations, the country.
political and economic unions that help reduce 5. Low level of bureaucracy in the country.
trade barriers. 6. Provision of financial supports to SMEs in the
6. Open economy (i.e. low trade barriers) country and their ability to use it (funds, tax
7. Intense competition in the country’s industry. incentives, loan guarantees and insurance)

(Casas & Dambrauskaite, 2011)

Impact of External Business Environment Factors
On Internationalization of Lithuanian Born Global Companies
Casas, R. & Dambrauskaite, V., 2011

1. All external business environment factors 1. Make present the six (6) absent factors to
identified during the theoretical analysis based on further enhance a favorable external business
Porter’s National Diamond model, as promoting environment for firm formation, especially

Recommendations
CONCLUSIONS
the emergence of Born Global companies, are Lithuanian Born Global firms.
external business environment factors
promoting the emergence of Lithuanian Born 2. Stabilize the existing (7) factors that already
Global companies. exist in Lithuania’s external business
environment.
2. Seven (7) of the business factors promote the
internationalization of the Lithuanian Born Global 3. Further explore the environment of Lithuanian
firms, and are present in Lithuania. Born Global firms.

3. Six (6) of the business factors do not exist in the 4. Government can use the study to further
Lithuanian business environment, and thus do not explore means to create the favorable
affect the internationalization of the Born Global environment.
firms. (Casas & Dambrauskaite, 2011)
Environmental Influences in
China (the East)
Success Factors in Western and Chinese
Born Global Companies
Anderrson, S., Danilovic, M., & Huang, H. 2015.

RESEARCH AIMS: RESEARCH METHDOLOGY:

1. Investigate the differences between Western 1. Secondary research leading to an

RESEARCH
SECONDARY
literature and literature from emerging understanding of the similarities Born Global
markets, when it comes to internalization firms outside the West vs. those in the West,
process of Born Global firms. when it comes to efforts to internationalize
their business.
2. Discuss the various success factors, which
underlie Born Global’s internationalization 2. Exploratory research of literature to determine
process, particularly focusing on Born Global extent of differences in their
firms in emerging markets, specifically China. internationalization process, delineating
between firm-specific and environment-specific
factors.

(Andersson et al, 2015)

Success Factors in Western and Chinese
Born Global Companies
Anderrson, S., Danilovic, M., & Huang, H. 2015.
SUCCESS FACTORS Western Lit. Chinese Lit.

(Andersson et al, 2015)

• Entrepreneur’s International Vision  

findings
• Entrepreneur’s International Experience  
• Entrepreneur’s Working Experience  
• Entrepreneur’s Education  
• Entrepreneur’s Ability  
• Entrepreneurial Cognition  
• International Network  
• Local Network  
• Financial Condition  
• Innovation Culture  X
• Unique Resource  
• Product or Service  X
• Competitive or Market Entry Strategy  X
• Industry Condition  
• Geographic Location  
• Government Policies  
Success Factors in Western and Chinese
Born Global Companies
Anderrson, S., Danilovic, M., & Huang, H. 2015.

REGARDING CHINA:
1. No Strategic

RESULTS
Perspective

2. No Innovation
culture and
Product/Service
factors.

(Andersson et al, 2015)

Success Factors in Western and Chinese
Born Global Companies
Anderrson, S., Danilovic, M., & Huang, H. 2015.

1. Literature on Born Global firms are mostly from the West, and
reflects theory formulated under a different context. Chinese
research must be conducted within a different context, lest

OBSERVATIONS
unclear or wrong conclusions be drawn.

2. If, according to Western literature, innovation is key to the

Born Global firms, then it would appear that for China it would
be a major weakness. Yet, there is a totally different context
for China where government plays a major role in planning
the economy and thus influencing innovation.

3. The GUANXI network is an important cultural factor in China,

and is not fully studied in relation to Born Global firms from
China.

(Andersson et al, 2015)

External Environmental H2: Moderating Variable: The authors described guanxi as “a form of
relationship exchange that reflects the basis idea of network capitalism –
Factors Affecting Born a system of reciprocity, trust, and interdependencies that creates value
through the effective use of social capital” (Zhou, Wu, & Luo, 2007),
Global Firm Formation (citing Redding, 1990; Boisot and Child, 1996).

(in China) Social Networks

(Shane, 2003; Andersson et al, 2015;
Kaur & Sandhu, 2013)
(i.e. Guanxi etc.)

Industry Conditions (Andersson,

H2 H2
Danilovic, & Huang, 2015)
New Asian
Opportunity
Industry Structure (Kaur & Sandhu, 2013) Born Global Firm
H1 Exploitation H1 Formation
Absent or Lacking Market Demand (Kaur
H1: Mediating Variable: Firm formation is a Dependent Variables: “A Born Global Firm
& Sandhu, 2013) result of an individual’s intent to exploit is: a new firm that makes at least one
opportunities (Shane, 2003) international sale to any new market within
Government Policies (Andersson, two years of formation” (Bader & Mazzarol,
Danilovic, & Huang, 2015) 2009).

Innovations in ICT and production A Framework Explaining the Effects of Social Networks and
processes (Kaur & Sandhu, 2013) External Environmental Factors on Opportunity Exploitation and
Geographic Location (Andersson, the Formation of New Born Global Firms in South East Asia.
Danilovic, & Huang, 2015) Daradar, 2017
Group Each Group shall conduct online research to find out the
name of one company each that entered the
Activity international scene using:

1. Exporting
2. Licensing
3. Franchising
4. Joint Ventures
5. Fully Owned Subsidiary
6. Born Global

Provide a 1 to 2 sentence justification with a legitimate

reference citation to support your claim.
You have 30 minutes for this, after which each group
will have 5 minutes each to present their output.
International Group Assignment:
Business &
Trade Next Meeting:

1. September 11: Lecture on International

Strategies (Face to Face or Synchronous)

2. September 18: First Quiz (All topics so far –

multiple choice and essay, asynchronous)

3. September 25: Case Presentations (all

groups, face to face)
International
Business &
Trade
Session-5
 Opportunities and Outcomes of International Strategy

3Cs 2 Rs

1. Customers
2. Costs (reduce)
3. Competence
(leverage)
4. Resources (draw
closer)
5. Risk (reduction)
Identifying International Opportunities

• International Strategy
– A strategy through which the firm sells its goods or
services outside its domestic market.
• Incentives to use international strategy
– New market expansion extends product life cycle
– Gain access to materials and resources
– Integration of operations on a global scale
– Better use of rapidly developing technologies
– International markets yield potential new
opportunities
Classic Rationale for International Diversification: Extend a Product’s
Life Cycle

Firm introduces Product demand Foreign

innovation in develops and firm competition
domestic market exports products begins production

Production is standardized
Firm begins
and relocated to low cost
production abroad
countries
 International Strategy Benefits

• Increased Market Size

– Domestic market may lack the size to support efficient
scale manufacturing facilities.
• Economies of Scale (or Learning)
– Expanding size or scope of markets helps to achieve
economies of scale in manufacturing as well as
marketing, R&D or distribution.
– Can spread costs over a larger sales base
– Can increase profit per unit
International Strategy Benefits (cont’d)

• Location Advantages
– Low cost markets aid in developing competitive
advantage by providing access to:
• raw materials
• transportation
• lower costs for labor
• key customers
• energy
Incentives and Basic Benefits of International Strategy
 Selecting an International
Corporate-Level Strategy

• The type of corporate strategy selected will have an

impact on the selection and implementation of the
business-level strategies.
– Some strategies provide individual country units with
the flexibility to choose their own strategies.
– Other strategies dictate business-level strategies from
the home office and coordinate resource sharing
across units.
International Corporate-Level Strategy

• Focuses on the scope of operations

– Product diversification
– Geographic diversification
• Required when the firm operates in:
– multiple industries
– multiple countries or regions
• Headquarters unit guides the strategy,
– but business or country-level managers can have
substantial strategic input.
 • How to compete and win in the foreign markets.
• Deals with issues on cost, differentiation, and
adaptation or modification
• There are three types of international strategy:

1. Global Strategy
2. Transnational Strategy
International 3. Multidomestic Strategy
Strategies
International Corporate-Level Strategy
 Multidomestic Strategy

• Strategy and operating decisions are decentralized to

strategic business units (SBU) in each country.
• Products and services are tailored to local markets.
• Business units in one country are independent of
each other.
• Assumes markets differ by country or regions.
• Focus on competition in each market.
• Prominent strategy among European firms due to
broad variety of cultures and markets in Europe.
Think Local, Act Local
 • “Think Local, Act Local”
• A firm using a multi-domestic strategy does not
focus on cost or efficiency but emphasizes
responsiveness to local requirements within each
of its markets..

Multidomestic
Strategy
 • Outback Steakhouse
• Netflix
Multidomestic • Heinz
Strategy
 Global Strategy

• Products are standardized across national markets.

• Business-level strategic decisions are centralized in the
home office.
• Strategic business units (SBUs) are assumed to be
interdependent.
• Emphasizes economies of scale.
• Often lacks responsiveness to local markets.
• Requires resource sharing and coordination across
borders (hard to manage).

Think Global, Act Global

 • “Think Global, Act Global”
• Sacrifices market responsiveness to local
requirements and demands, and prefers
emphasizing lower costs and better efficiency.
• complete opposite of a multi-domestic strategy.
• Some minor modifications to products and
services may be made in various markets, but a
Global global strategy stresses the need to gain low costs
Strategy and economies of scale by offering essentially the
same products or services in each market.
 • Microsoft
• IBM
Global • Proctor & Gamble
Strategy • Intel
• Lenovo
 Transnational Strategy

• Seeks to achieve both global efficiency and local

responsiveness.
• Difficult to achieve because of simultaneous
requirements for:
– strong central control and coordination to achieve efficiency.
– decentralization to achieve local market responsiveness.
– pursuit of organizational learning to achieve competitive
advantage.
 • “Think Global, Act Local”
• Seeks a middle ground between a multi-domestic
strategy and a global strategy.
• Such a firm tries to balance the desire for lower
costs and efficiency with the need to adjust to
local preferences within various countries.
Transnational
Strategy
 • KFC
• McDonald’s
Transnational
Strategy