IB- Defining Key Terms

The economy now is global,with internationalization of markets and products, goods and services.

Let us now look into some key terms that are frequently used in IB:

International business (IB) – refers to any form of commercial exchange of materials, goods, services or any other resources that involves transfer across national boundaries.

Internationalization – internationalization of business and organizations refers to their expansion beyond their home nation through establishing relationships, transaction linkages or operations in one or more other countries.

Globalization – is subject to many interpretations. For some, it represents a natural, inevitable and largely unproblematic move towards a ‘borderless world’ and the end of the independent nation state. However, others read it as the spread of western social, economic and cultural values. Intertwined with this process, we see the imperative of multinational enterprises (MNEs) to configure and develop their value chains at a global level in the aim of making the most of their own efficiency and effectiveness in order to maximize their shareholder value.

International business environment – the external context in which organizations operate across the world. It is characterised by increased complexity and by expanding and deepening ties between the different stakeholder groups within it. To gain an understanding of the contemporary international business environment, some knowledge of global political economy is necessary.

International business is dominated by large companies that operate across borders.(Usually we can classify company operations under three environments: Domestic, Foreign and International.)Any company that is international can be classified under two heads- Multinational(MNC) and Global.The former consists of organizations with multi country affiliates , each of which has its own business strategy based on perceived market differences .A global company is one which seeks to standardize its operations ( manufacturing, marketing, distribution etc)in all functional areas across borders, but responds to national market differences where necessary.e.g. Mc Donalds

A global firm utilizes the accesibility to markets across borders for new market opportunities and cheaper resources.It scans the environment for possible threat of competition or differential national laws and regulations.