International Business Introduction cont International trade as old as the nation state has evolved because nations are efficient at producing certain things International trade allows for specialization that can bring advantages to the players Absolute Advantage Comparative Advantage Countries have an absolute advantage when they can produce and sell a product at a lower cost than any other country Comparative advantage is specializing in what can be done best trading for the rest Globalization As trade barriers and supply chain costs decrease trade will become increasingly globalized The negatives of this shift include lost domestic jobs stiffer competition economic instabilities and exploitation Even with the negatives globalization promises to ultimately create jobs and wealth via lower prices new markets innovations productivity gains etc International Business Critical Recent Changes in Global Logistics Deregulation of the Ocean Liner Industry 1984 Opened international trans oceanic shipping to true market forces Increases in Intermodalism Convenience of containerization and intermodalism maximizes global efficiences Shipment Tracking Shipping can now be monitored and controlled in a variety of ways Trade Policies EU NAFTA APEC Asian Pacific Economic Cooperation have facilitated global transactions International Business Global Business Strategies Companies engaged in global logistics have many strategies available including Importing Purchase and shipment of goods from an overseas source Exporting Exporting the inverse of importing is selling your product in another country Can use global intermediaries indirect or not direct Licensing Allows a firm in one country to use manufacturing processing trademark etc provided by the licenser International Franchise Can purchase an overseas franchise as discussed International Business Global Business Strategies cont Contract Manufacturing Also known as outsourcing contract manufacturing provides foreign production of private label products Outsourcing can bring huge decreases in costs but it often comes through exploitation corruption and other unethical practices Joint Venture Similar to licensing but the licensing company becomes equity partners with the foreign enterprise Direct Ownership Complete ownership of a foreign subsidiary which offers the highest degree of control Countertrade Although uncommon trading is still performed without money International Business Uncontrollable International Marketplace Elements International business is more risky than domestic due to many uncontrollable elements including Social Cultural Norms Physical Geographic Structure Economic Financial Conditions Level of Technology Available Political legal Regulatory Systems Degree of Indigenous Competition Trade Protectionism Governments turn to trade protectionism particularly tariffs taxes and import quotas to restrict foreign goods and services This in turn protects domestic producers International agreements like GATT have been formed to negotiate agreements while organizations like the WTO attempt to mediate disputes International Business International Economic Communities In recent years many countries have entered into agreements that create an economic community that have little to no barriers to trade Some of the more notable communities include North American Free Trade Agreement NAFTA In 1993 NAFTA created the world s largest free trade zone which includes the US Canada and Mexico This area includes 360 million people with a combined economy of over 6 trillion Central American Free Trade Agreement CAFTA The US Costa Rica the Dominican Republic El Salvador Guatemala Honduras and Nicaragua formed this community in 2005 European Union EU 25 European countries ratified this community in 1993 even including a common currency More countries continue to join Information Systems and Technology Information Systems and Technology Introduction As discussed data is absolutely crucial to efficient business operations strategies etc Information systems have given many enterprises a distinct competitive edge especially in terms of customer service Information systems defined An interacting structure of people equipment procedures which together make relevant information available to management and other entities for the purposes of planning implementation and control Essentially a collection of humans information technologies IT and procedural elements that track business supply chain processes Information Systems and Technology Computer Categories All of us are familiar with a wide range of information technologies most of which are also used in supply chain management capacities Personal Level Devices There are a broad range of personal computing devices including desktops laptops notebooks tablets etc Workstation Thin Client A workstation or thin client is a stripped down terminal used to connect to larger server platforms As computing devices become more personal companies are now facing the difficulties associated with a bring your own device BYOD environments Information Systems and Technology Server Platforms All personal devices are connected to and literally served by much more sophisticated systems generally known as servers Server platforms are categorized by performance security and workload management capabilities Clustered Microcomputers Minicomputers Microcomputers can be clustered together to provide support to hundreds of users Larger systems with more power and capabilities but still generally small enough to be rack mounted may also be known as minicomputers Mainframes Supercomputers Mainframes and supercomputers can handle transactions with tens of thousands of users sharing terabytes of data regardless of the workload mix There is a large installed base of legacy mainframe systems Information Systems and Technology Software Basics Information technologies are worthless without software The two main types of software are operating systems and applications Operating Systems Operating systems control applications hardware devices multitasking etc There are three major operating system platforms Windows Mac OS and Unix Mac OS is strictly for personal devices and is unable to run server platforms The Linux version of Unix is able to run desktops notebooks tablets etc Unix versions control virtually all server platforms Windows while able to run application servers is completely unable to handle large workloads security and
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