International Business

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International Business

• Aim To give a brief introduction to
  international business, including a historical
  overview and the international institutional
  context.

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A brief overview

• Definition
• Historical Developments
• International Organisations

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ExamplesBuying raw material in one
country-shipping it to another for
processing.WHY? exporting/importing WHY?
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Examplesbuilding m/f plant in a foreign
countryWHY?Borrowing money from a source in
one country to finance operations in anotherWHY?
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Parties involved in transactions- private
individuals- individual companies/groups of
companies- government agencies
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DefinitionInternational Business is a field
of study and practice that encompasses public and
private business activity affecting the persons
or institutions of more than one national state,
territory or colony. (R D Robinson, 1978)
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Historical Developments3000 BC Evidence of
extensive trade between nationsLate
1400/ Discovery and exploration of the New
1500s World 1500-1850 The Commercial
Era1850-1914 The Explorative Era
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Historical Developments (cont.)1914-1945 The
Concessionary Era1945-1970 The National
Erafrom 1970 - Resurgence of Europe and
Japan - Emergence of global companies -
Increasing complexity
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Future- Communication and information
revolution - Environment- Global Social
Responsibility - Changing Political Systems-
Uncertainty
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International Organisations

• Global governance
• Use of international institutions
• - to manage global activities
• - to act as arbiter in global disputes
• - to solve global problems
• Recent examples?

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International Organisations (cont.)

• Growing demand for global governance
• Why?
• What are the major international organisations?

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International Organisations (cont.)

• The United Nations (UN)
• International Monetary Fund (IMF)
• The World Bank
• The World Trade Organisation (WTO)
• The Organisation for Economic Co-operation and
  Development (OECD

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The United Nations (UN)

• established in 1945
• Aim to develop international co-operation in
  the economic, social and cultural sphere
• mostly of indirect relevance to international
  business
• increase in membership from 50 to 180
• Umbrella organisation for numerous agencies

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UN Agencies

• UNESCO (United Nations Educational, Scientific
  and Cultural Organisation)
• UNHCR (United Nations High Commissioner for
  Refugees)
• WHO (World Health Organisation)
• Economic agencies
• World Bank
• International Monetary Fund (IMF)

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The World BankThe International Bank for
Reconstruction and Development (IBRD)

• established in 1946 to re-build post-war
  economies
• guaranteeing loans (lower interest rates!)
• changed focus to providing loans for countries
  unable to borrow from the private sector
• main function now to assist developing countries
  to develop policies for sustainable growth
• Significant overlap with IMF activities
• www.ibrd.org

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The International Monetary Fund (IMF)

• started operations in 1947 (as part of the
  Bretton Woods agreement)
• Aim to facilitate international system of
  fixed exchange rates
• system collapsed in early 1970s
• floating exchange rates by 1976
• changed role to international monetary
  supervision

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The International Monetary Fund (IMF) (cont.)

• negotiates and provides rescue packages for
  countries with monetary problems
• member states contribute to IMF reserves
  according to the size of their economies
• criticised for imposing severe anti-deflationary
  policies to loan packages
• www.imf.org

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The World Trade Organisation (WTO)

• based in Geneva (Switzerland)
• origins in 1947
• replaced General Agreement on Tariffs and Trade
  (GATT) as from 1/01/1995
• most important charter governing world trade
• Members include all industrialised nations, over
  70 developing countries and East European states

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The World Trade Organisation (WTO) (cont.)

• Operating principles
• Non-discrimination
• Reciprocity
• Liberalisation
• Resolution of disputes via consultation
• Problem areas
• -wording of original 1947 agreement vague
• WTO itself cannot impose sanctions

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The Organisation for Economic Co-operation and
Development (OECD)

• Established in 1961
• Aims Planning, co-ordination and deepening
  of economic co-operation and development
• forum for govt. representatives of the worlds
  industrialised democracies
• 30 members representing more the two-thirds of
  world production
• huge statistical database

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Summary

• International Business
• Definition
• Historical Developments
• International Organisations

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I had one fundamental question about
economics Why do some places prosper and thrive
while others just suck ? P. J. ORourke, Eat
the Rich