BISNIS INTERNASIONAL: APA ITUAJI DEDI MULAWARMAN - Pengantar Kuliah Bisnis Internasional Minggu 223 Pebruari 2015

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BISNIS INTERNASIONAL ITU…

Berorientasi pada kinerja aktivitas TRADE dan INVESTMENT perusahaan lintas batas negara

Firms organize, source, manufacture, market, and conduct other value-adding activities on an international scale. They seek foreign customers and engage in collaborative relationships with foreign business partners.

While international business is performed mainly by individual firms, governments and international agencies also undertake international business activities. Firms and nations exchange many physical and intellectual assets, including products, services, capital, technology, know-how, and labor.

PERTUMBUHAN & GLOBALIOSASI

The growth of international business activity coincides with the broader phenomenon of globalization of markets. The globalization of markets refers to the ongoing economic integration and growing interdependency of countries worldwide.

While internationalization of the firm refers to the tendency of companies to systematically increase the international dimension of their business activities, globalization refers to a macro trend of intense economic interconnectedness between countries.

Globalization is associated with the internationalization of countless firms and dramatic growth in the volume and variety of cross-border transactions in goods, services, and capital flows. It has led to widespread diffusion of products, technology, and knowledge worldwide.

GLOBALISASI PASAR

The globalization of markets is evident in several related trends. First is the unprecedented growth of international trade. In 1960, cross-border trade was modest—about $100 billion per year. Today, it accounts for a substantial proportion of the world economy, amounting to some $13 trillion annually—that is, $13,000,000,000,000! Second, trade between nations is accompanied by substantial flows of capital, technology, and knowledge. Third is the development of highly sophisticated global financial systems and mechanisms that facilitate the cross-border flow of products, money, technology, and knowledge. Fourth, globalization has brought about a greater degree of collabo- ration among nations through multilateral regulatory agencies such as the World Trade Organization (WTO; www.wto.org) and the International Monetary Fund (IMF; www.imf.org).

TRADE & INVESTMENT

The most conventional international business transactions are:

International Trade

International Investment.

INTERNATIONAL TRADE

Refers to an exchange of products and services across national borders. Trade involves both products (merchandise) and services (intangibles). Exchange can be through exporting, an entry strategy involving the sale of products or services to customers located abroad, from a base in the home country or a third country.

Exchange can also take the form of importing or global sourcing—the procurement of products or services from suppliers located abroad for consumption in the home country or a third country. While exporting represents the outbound flow of products and services, importing is an inbound activity.

Both finished products and intermediate goods, such as raw materials and components, are subject to importing and exporting.

INTERNATIONAL INVESTMENT

Refers to the transfer of assets to another country or the acquisition of assets in that country. These assets include capital, technology, managerial talent, and manufacturing infrastructure. Economists refer to such assets as factors of production. Trade implies that products and services cross national borders. By contrast, investment implies the firm itself crosses borders to secure ownership of assets located abroad.

The two essential types of cross-border investment are:

international portfolio investment (IPI)

foreign direct investment (FDI)

IPI & FDI

International portfolio investment (IPI) refers to the passive ownership of foreign securities such as stocks and bonds for the purpose of generating financial returns. It does not entail active management or control over these assets. The foreign investor has a relatively short-term interest in the ownership of these assets.

Foreign direct investment (FDI) is an internationalization strategy in which the firm establishes a physical presence abroad through acquisition of produc- tive assets such as capital, technology, labor, land, plant, and equipment. It is a foreign- market entry strategy that gives investors partial or full ownership of a productive enterprise typically dedicated to manufacturing, marketing, or management activities. Investing such resources abroad is generally for the long term and involves extensive planning.

WHO PARTICIPATES?

Individual Firms (MNC’s - SME’s - NGO’s)

Government Firms

International Agencies (WB-IMF-WTO, etc)

14

140

14

4

1

5

15

15

139

2

1

2 26

1

1210

40 12

1

1

17

1

2

9

1

6

3714 68

86

2

12Canada

United States

Mexico

Brazil

Russia

Europe

China Japan

Taiwan

Indonesia

Australia

SouthKorea

India

Exhibit 1.7 Geographic Distribution of the Headquarters of the World's 500 Largest MNEsSOURCE: From Fortune, © 2008 Time Inc. All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution, or retransmission of the Material without express written permission is prohibited.

How Does International Business Differ from Domestic Business? 11

dimension of culture. In addition to facilitating communication, language is a windowon people’s value systems and living conditions. For example, Inuit (Eskimo) languageshave various words for snow, while the South American Aztecs used the same basicword stem for snow, ice, and cold. When translating from one language to another, it isoften difficult to find words that convey the same meanings. For example, a one-wordequivalent to aftertaste does not exist in many languages. Such challenges impede effec-tive communication and cause misunderstandings. Miscommunication due to culturaldifferences gives rise to inappropriate business strategies and ineffective relations withcustomers. Cross-cultural risk most often occurs in encounters in foreign countries.However, the risk also can occur domestically, as when management meets with cus-tomers or business associates who visit company headquarters from abroad.

Country risk (also known as political risk) refers to the potentially adverse effects oncompany operations and profitability caused by developments in the political, legal, andeconomic environment in a foreign country. Country risk includes the possibility of for-eign government intervention in firms’ business activities. For example, governmentsmay restrict access to markets, impose bureaucratic procedures on business transactions,and limit the amount of income that firms can bring home from foreign operations. Thedegree of government intervention in commercial activities varies from country tocountry. For example, Singapore and Ireland are characterized by substantial economicfreedom—that is, a fairly liberal economic environment. By contrast, the Chinese andRussian governments regularly intervene in business affairs.6 Country risk also includeslaws and regulations that potentially hinder company operations and performance. Crit-ical legal dimensions include property rights, intellectual property protection, product li-ability, and taxation policies. Nations also experience potentially harmful economicconditions, often due to high inflation, national debt, and unbalanced international trade.Indeed, the global financial crisis plunged many nations into a deep recession in 2009.

Currency risk (also known as financial risk) refers to the risk of adverse fluctuationsin exchange rates. Fluctuation is common for exchange rates—the value of one currency

Country risk Exposureto potential loss or adverseeffects on companyoperations and profitabilitycaused by developments ina country’s political and/orlegal environments.

Currency risk Potentialharm that arises from changesin the price of one currencyrelative to another.

CommercialRisk

CountryRisk

Cross-CulturalRisk

Currency(Financial) Risk

Risks inInternational

Business

• Cultural differences• Negotiation patterns• Decision-making styles• Ethical practices

• Weak partner• Operational problems• Timing of entry• Competitive intensity• Poor execution of strategy

• Currency exposure• Asset valuation• Foreign taxation• Inflationary and transfer pricing

• Harmful or unstable political system• Laws and regulations unfavorable to foreign firms• Inadequate or underdeveloped legal system• Bureaucracy and red tape• Corruption and other ethical blunders• Government intervention, protectionism, and barriers to trade and investment• Mismanagement or failure of the national economy

Exhibit 1.6 The FourRisks of InternationalBusiness

1. Cross Cultural RiskCultural differencesNegotiation PartnersDecision Making StylesEthical Practices

2. Country RiskHarmful or unstable political SystemLaws and RegulationInadequate or underdeveloped legal systemCorruption and other ethical blundersGovernment intervention, protection,

and barriers to trade and investmentMismanagement or failure of the national economy

3. Country (Financial) RiskCurrency expossureAsset ValuationForeign TaxationInflationary and Transfer Pricing

4. Commercial RiskWeak PartnerOperational ProblemsTiming of entryCompetitive intensityPoor Execution of strategy

4 RISK OF INTERNATIONAL

BUSINESS

WHY DO FIRMS INTERNATIONALIZE?

Seek opportunities for growth through market diversification.

Earn higher margins and profits.

Gain new ideas about products, services, and business methods.

Better serve key customers that have relocated abroad.

Be closer to supply sources, benefit from global sourcing advantages, or gain flexibility in product sourcing.

Gain access to lower-cost or better-value factors of production.

Develop economies of scale in sourcing, production, marketing, and R&D

Confront international competitors more effectively or thwart the growth of competition in the home market.

Invest in a potentially rewarding relationship with a foreign partner.

WHY DO FIRMS INTERNATIONALIZE?

At the broadest level, companies internationalize to enhance competitive advantage and to seek growth and profit opportunities.

WHY DO FIRMS INTERNATIONALIZE?

FORTUNE 2012 LIST TOP 10 COMPANIES PER 31 MARET 2012

Fortune Global 500 1

Fortune Global 500The Fortune Global 500, also known as Global 500, is an annual ranking of the top 500 corporations worldwide as

measured by revenue. The list is compiled and published annually by Fortune magazine.

Until 1989 it listed only non-US industrial corporations under the title "International 500", while the Fortune 500

contained and still contains exclusively US corporations. In 1990, US companies were added to compile a truly

global list of top industrial corporations as ranked by sales. Since 1995, the list has had its current form, listing also

top financial corporations and service providers by revenue.

From 2001 to 2011, there has been significant change in the geographical distribution of the companies in the Global

500 rankings. The number of North American based companies have reduced from 215 in 2001 to 146 in 2011,

whereas the contribution of Asian based companies have increased rapidly from 116 in 2001 to 172 in 2011. The

share of European based companies have increased marginally from 158 to 161 over the decade.[1]

ControversyIt has been reported that several inconsistencies exist in Fortune's ranking of cities with "the most Fortune 500

headquarters." On June 3, 2011, the Atlanta Business Chronicle stated examples of Fortune including regional

headquarters for some cities, not including regional headquarters for other cities, and in some cases, not including

headquarters that are physically located inside a city limit.[2]

Fortune 2012 listThe rankings, which have been released by the magazine at its website, appear in the July 23, 2012, issue of the

magazine.

The following is the list of top 10 companies, as published on 9 July 2012. It is based on the companies' fiscal year

ended on or before 31 March 2012.[3]

Rank Company Country Industry 2011 revenue in USD

1 Royal Dutch Shell  Netherlands† Petroleum $484.4 billion

2 ExxonMobil  United States Petroleum $452.9 billion

3 Walmart  United States Retail $446.9 billion

4 BP  United Kingdom Petroleum $386.4 billion

5 Sinopec  China Petroleum $375.2 billion

6 China National Petroleum Corporation  China Petroleum $352.3 billion

7 State Grid Corporation of China  China Power $259.1 billion

8 Chevron  United States Petroleum $245.6 billion

9 ConocoPhillips  United States Petroleum $237.2 billion

10 Toyota  Japan Automobiles $235.3 billion

† While Fortune lists Shell as a Dutch company, the company itself asserts that it is both Dutch and British.[4]

TOP 10 PROFITABLE COMPANIES PER 31 MARET 2012

Fortune Global 500 2

Breakdown by countryThis is the list of the top 17 countries, with the most Global 500 companies.[5]

Rank Country Companies

1  United States 132

2  China 73

3  Japan 68

4  France 32

 Germany 32

6  United Kingdom 26

7  Switzerland 15

8  South Korea 13

9  Netherlands 12

10  Canada 11

11  Italy 9

 Australia 9

13  Brazil 8

 India 8

 Spain 8

16  Russia 7

17  Taiwan 6

148 companies are located in the European Union.

ProfitabilityThis is the list of top 10 most profitable corporations in the world as published on 9 July 2012. It is based on thecompanies' fiscal year ended on or before 31 March 2012.[6]

Rank Company Country 2011 profit in USD

1 Gazprom  Russia $44.4 billion

2 ExxonMobil  United States $41.6 billion

3 Industrial and Commercial Bank of China  China $41.6 billion

4 Royal Dutch Shell  Netherlands† $30.9 billion

5 Chevron  United States $26.9 billion

6 China Construction Bank  China $26.1 billion

7 Apple  United States $25.9 billion

8 BP  United Kingdom $25.7 billion

9 BHP Billiton  Australia †† $23.6 billion

10 Microsoft  United States $23.2 billion

† While Fortune lists Shell as a Dutch company, the company itself asserts that it is both Dutch and British.[4] †† While Fortune lists BHP Billiton as an Australian company, the company is a Dual Listed Company (DLC)

TOP 10 CORPORATE EMPLOYERS PER 31 MARET 2012

Fortune Global 500 3

comprising BHP Billiton Limited and BHP Billiton Plc. BHP Billiton was created through the DLC merger of BHPLimited (now BHP Billiton Limited) and Billiton Plc (now BHP Billiton Plc), which was concluded on 29 June2001. The headquarters of BHP Billiton Limited, and the global headquarters of the combined BHP Billiton Group,are located in Melbourne, Australia. BHP Billiton Plc is located in London, United Kingdom. Both companies haveidentical Boards of Directors and are run by a single management team. Shareholders in each company haveequivalent economic and voting rights in both companies. Hence, it has been referred to as an Anglo-Australiancompany in many places. [7]

Employee strengthThis is the list of top 10 corporate employers in the world as published on 9 July 2012. It is based on the companies'fiscal year ended on or before 31 March 2012.[8]

Rank Company Country 2011 Number of Employees

1 Walmart  United States 2,200,000

2 China National Petroleum Corporation  China 1,668,072

3 State Grid Corporation of China  China 1,583,000

4 Sinopec  China 1,021,979

5 Hon Hai Precision Industry  Taiwan 961,000

6 China Post Group  China 889,307

7 U.S. Postal Service  United States 601,601

8 Volkswagen  Germany 501,956

9 China Telecommunications  China 491,447

10 Aviation Industry Corp. of China  China 480,147

Fortune 2011 list- Breakdown by city and metropolitan areaThis is a breakdown by cities and metropolitan areas as determined by Fortune in the 2011 list.[9] Metropolitan areaswith at least three Global 500 companies are listed. The 2011 list does not include a list of cities sorted by Fortune500 companies. The list is instead counted from the country listings.

Rank City Country Number ofGlobal 500

companies (City)

Global 500revenues

$ millions (City)

Number ofGlobal 500

companies (Metro)

Global 500revenues

$ millions (Metro)

1 Tokyo  Japan 47 $2,268,640 49 $2,430,053

2 Beijing  China 41 $2,222,366 41 $2,222,366

3 Paris  France 23 $1,285,432 31 $1,952,812

4 London  United Kingdom 18 $1,170,270 22 $1,366,389[10]

5 New York  United States 18 $955,291 27 $1,535,321[11]

6 Seoul  South Korea 12 $640,586 13 $660,149

7 Osaka  Japan 8 $376,607 10 $422,112

8 Toronto  Canada 7 $197,294 9 $241,303[12]

9 Houston  United States 6 $377,702 6 $377,702

9 Moscow  Russia 6 $348,084 6 $348,084

Fortune Global 500 3

comprising BHP Billiton Limited and BHP Billiton Plc. BHP Billiton was created through the DLC merger of BHPLimited (now BHP Billiton Limited) and Billiton Plc (now BHP Billiton Plc), which was concluded on 29 June2001. The headquarters of BHP Billiton Limited, and the global headquarters of the combined BHP Billiton Group,are located in Melbourne, Australia. BHP Billiton Plc is located in London, United Kingdom. Both companies haveidentical Boards of Directors and are run by a single management team. Shareholders in each company haveequivalent economic and voting rights in both companies. Hence, it has been referred to as an Anglo-Australiancompany in many places. [7]

Employee strengthThis is the list of top 10 corporate employers in the world as published on 9 July 2012. It is based on the companies'fiscal year ended on or before 31 March 2012.[8]

Rank Company Country 2011 Number of Employees

1 Walmart  United States 2,200,000

2 China National Petroleum Corporation  China 1,668,072

3 State Grid Corporation of China  China 1,583,000

4 Sinopec  China 1,021,979

5 Hon Hai Precision Industry  Taiwan 961,000

6 China Post Group  China 889,307

7 U.S. Postal Service  United States 601,601

8 Volkswagen  Germany 501,956

9 China Telecommunications  China 491,447

10 Aviation Industry Corp. of China  China 480,147

Fortune 2011 list- Breakdown by city and metropolitan areaThis is a breakdown by cities and metropolitan areas as determined by Fortune in the 2011 list.[9] Metropolitan areaswith at least three Global 500 companies are listed. The 2011 list does not include a list of cities sorted by Fortune500 companies. The list is instead counted from the country listings.

Rank City Country Number ofGlobal 500

companies (City)

Global 500revenues

$ millions (City)

Number ofGlobal 500

companies (Metro)

Global 500revenues

$ millions (Metro)

1 Tokyo  Japan 47 $2,268,640 49 $2,430,053

2 Beijing  China 41 $2,222,366 41 $2,222,366

3 Paris  France 23 $1,285,432 31 $1,952,812

4 London  United Kingdom 18 $1,170,270 22 $1,366,389[10]

5 New York  United States 18 $955,291 27 $1,535,321[11]

6 Seoul  South Korea 12 $640,586 13 $660,149

7 Osaka  Japan 8 $376,607 10 $422,112

8 Toronto  Canada 7 $197,294 9 $241,303[12]

9 Houston  United States 6 $377,702 6 $377,702

9 Moscow  Russia 6 $348,084 6 $348,084

Fortune Global 500 4

9 Madrid  Spain 6 $323,345 6 $323,345

9 Zurich  Switzerland 6 $221,818 10 $438,811

9 Mumbai  India 6 $207,156 6 $207,156

14 Amsterdam  Netherlands 5 $261,933 12 $885,156[13]

14 Shanghai  China 5 $165,751 5 $165,751

16 Munich  Germany 4 $386,355 4 $386,355

16 Rome  Italy 4 $283,454 4 $283,454

16 Atlanta  United States 4 $184,416 4 $184,416

16 Essen (Rhine-Ruhr)  Germany 4 $173,644 12 $680,567[14]

16 Brussels  Belgium 4 $144,833 5 $181,130

16 Hong Kong  HKG 4 $141,495 7 $252,227[15]

16 Frankfurt  Germany 4 $140,929 6 $191,255

16 São Paulo  Brazil 4 $135,406 4 $135,406

24 Stuttgart  Germany 3 $213,108 3 $213,108

24 Mexico City  Mexico 3 $169,776 3 $169,776

24 Milan  Italy 3 $109,943 3 $109,943

24 Philadelphia  United States 3 $94,643 5 $205,330

24 Taipei  Taiwan 3 $90,537 7 $260,966

Notes[1] "A New Perspective on the Corporate World" (http:/ / money. cnn. com/ magazines/ fortune/ global500/ 2012/ global-company-growth/

?iid=smlrr). CNN Money, Fortune Magzine. . Retrieved 9 July 2012.[2] "Some cities rankings are overstated" (http:/ / www. bizjournals. com/ atlanta/ print-edition/ 2011/ 06/ 03/ fortune-500-list-overstates-atlantas.

html?page=all). Atlanta Business Chronicle. . Retrieved 28 October 2012.[3] "Global 500" (http:/ / money. cnn. com/ magazines/ fortune/ global500/ 2012/ full_list/ ). Fortune. . Retrieved July 9, 2012.[4] "Shell at a glance" (http:/ / www. shell. com/ home/ content/ aboutshell/ at_a_glance/ ). Royal Dutch Shell. . Retrieved 27 September 2011.[5] "Global 500 2012: Countries - Australia" (http:/ / money. cnn. com/ magazines/ fortune/ global500/ 2012/ countries/ Australia. html).

Fortune. . Retrieved July 9, 2012. Number of companies data taken from the "Pick a country" box.[6] "Top companies: Most profitable" (http:/ / money. cnn. com/ magazines/ fortune/ global500/ 2012/ performers/ companies/ profits/ ). .

Retrieved July 9, 2012.[7] "BHP" (http:/ / www. bhpbilliton. com/ home/ aboutus/ ourcompany/ Pages/ ourStructure. aspx). BHP Billiton. . Retrieved 10 July 2012.[8] "Top companies: Biggest employers" (http:/ / money. cnn. com/ magazines/ fortune/ global500/ 2012/ performers/ companies/ biggest/ ). .

Retrieved July 9, 2012.[9] "Global 500 2010" (http:/ / money. cnn. com/ magazines/ fortune/ global500/ 2010/ ). Fortune. . Retrieved July 10, 2010.[10][10] London refers to Greater London.[11][11] New York includes Bridgeport as part of New York-Newark-Bridgeport New York-New Jersey-Connecticut-Pennsylvania Combined

Statistical Area (CSA).[12][12] Toronto includes Waterloo as part of Greater Golden Horseshoe.[13][13] Amsterdam refers to Randstad.[14][14] Rhine-Ruhr refers to Rhine-Ruhr area.[15][15] Hong Kong includes Shenzhen and Guangzhou as part of Pearl River Delta

BREAKDOWN BY CITY AND METROPOLITAN AREA Metropolitan areas with at least three Global 500 Companies are Listed (Based on Fortune 2011 List)

Alhamdulillah