Video Transcript: Lecture 1

Hello. My name is Matthew Earnhardt, and I will be guiding you through these  next few weeks on international business. So I'm excited to get into all this  content and really discuss international business from different perspectives.  We're going to be looking at 12 different companies, and kind of going around  their website and just kind of checking things out and seeing what we can find  about these businesses, and then applying those concepts to what we're talking  about, what we're learning. So I'm let's, let's jump into this first lesson. And if you have any questions, please reach out, and we would be more than happy to  answer them for you. So when we start, we need to think about, what does the  International Business mean? Is it? Is it simply a business that operates on a  global scale? Is it, is it large company like Amazon or Tata Corporation in India?  Or is it? Could it be something small, like if I had an eBay business and I  operated out of my house? Could I be an international business? And that's a  really interesting question. What is an international business? So one of the  other things we have to consider is, not only what does the term mean, but how  does it differ from other types of businesses? So let's go with a textbook  definition. And the textbook definition of international business is international  business is a business that is carried beyond national borders. It ranges from  everything from services like coaching or consulting to manufacturing products  like the computer I have right here. All of these are international businesses. As  part of international business, there are some other terms. A foreign business is  a business that's operating outside of its home market. An international  company is one that has its operations in multiple nations. So a good example  of that will be Toyota. Toyota is not a US based company, but certainly they have operations in the US and other places. So when we think about international  business, we need to think of some of these businesses, and how these types of business are just a larger scale of a domestic business. And one of the things  that we'll be talking about a lot is how complex these businesses are, and  they're very complex. They're extremely complex, and I think you'll see that as  we start talking about regulations and different things as we progress through  the material. But, you know, thinking about businesses just as a larger domestic  business, I mean, it does not really get the complete picture. And that's what I  just talked about with the complexity that exists. Remember that the foreign  marketplace and operating internationally, has different things. So we're going to talk about as a we're going to talk about different tax structures, we're going to  talk about different regulatory frameworks, we're going to talk about different  legal structures, we're going to talk about different political structures, and all  these things work together to to add complexity to an international business. So  one of the things you may be thinking and one of the questions that we're going  to try to answer with each other over these series of lectures is, why would  anybody want to do an international business if it's so complex and if it's so  difficult, why do people want to do it? And that's a really good question, and 

that's one that hopefully we'll answer, but but a simplistic answer, and one just to think about, just for the purposes of this, would be, think about the hometown  you live in. So right now, I am in a town that's that's on a lake, a large lake, a  great lake, if you will. And I'm sitting here in this great on in this small, little town  on a great lake. Well, if you add and I had breakfast this morning at this  wonderful little local place. Now that wonderful little local place, their customer  base is very small because it's tied to the local area, or people who who come  into this town to to eat and need a place to eat. But imagine if they made hot  sauce, and they sold that hot sauce nationally, just in the United States, then  that's a much larger market, right? That's a lot more people who will know about  this local little business. Well, what if that local little business then sold that hot  sauce to here and Canada? Well, then that would open it up to a whole other  customer. Base, and then they added Mexico, or they added South America, or  their hot sauce was very popular in Asia or in Europe or wherever, or in Africa.  Then you really, really open up your business, and you have a larger customer  base and a lot more people know about your product, and you're bringing in a lot more money. So sometimes it is worth that risk. It is worth going through all  those regulatory frameworks instability. And we're going to talk about over the  next few modules about how stability is something that corporations want and  what businesses want, and we will be talking about that, but, but think about,  you know, is the risk worth all that to open up your customer base? And  oftentimes the answer is yes, because you'll see there are large multinational  companies that exist, and we'll talk about those as well. So when we, when we  think about domestic, domestic businesses, we need to also remember that  they're not immune from international influence. So an international company  certainly is a threat to the domestic business. So, you know, I used a restaurant  this morning because my eggs were really good, but let's, let's use a candy  store. And this will relate to a business we'll talk about at the end. But let's use a  candy store. And if you own a candy store in your town, and it's, let's call it Lake  Michigan candies, and you own Lake Michigan candies, you still have to worry  about international companies and international influence that are a threat to  your candy store. So you know, Walmart sells candy and and there's certainly  international candy companies that are out there, and large candy companies  that are out there, and candy stores and all of those are a threat to your  business as well. So you have to worry about the international products that you import. You have to worry about the domestic products that you import. You You  have to, if you say, you may say, I'm only going to stock local candy products.  That may be great, but what about the supplies they use to make the candy? So there's a very famous candy store in the town I live in, and this candy store is a  local candy store, and they make their candy in house, but what they don't get  from local is the cocoa, which is used to make the chocolate that comes from an international market. So you have all these factors and all these influences that 

even if you're a small local candy store in the United States, you still have to  worry about, and that applies to wherever you're at. If you think about, if you live  in Africa, and you think about your local store right down the corner, you still  have foreign influence, and you get products internationally. And this is a very  connected world, and we're going to and that's going to become readily  apparent, and that's something we're going to discuss a lot over the next few  weeks. So let's, let's talk about the forces that that that are influencing in  international business. And you got to think about these as internal forces. And  you also got to think about these as external forces. So here's a couple  examples. So internal forces are things which are generally controllable by a  business. So if a business will take a Christmas off, and what will that mean?  That's an example of an internal force that a company will control. In fact, I read  an article a few years ago where where people in different countries, even  though they may not be Christians, they've adopted the Christian calendar, and  they take Christmas off, even though they're in a country with a very, very small  Christian population, because they support the United States. And people are off for Christmas, for Easter, for certain holidays, and they recognize that, so  they've started adopting that that calendar as well. So that's, it's fascinating, but  it's true that's an internal force that you can control. A good example in the  United States would be Chick fil A, right? So Chick fil A has made a conscious  business decision to stay closed on Sundays. And they're not the only one.  There's other there's other companies out there that certainly do that, but they  are closed on Sundays, or if you're in certain with certain parts of the world,  Saturdays, right? So they made the business decision to close now that's an  internal force that they can control and. That affects their revenue, that affects  everything else. Now, one could argue that they're losing a lot of Reagan  revenue by being closed on somebody's but somebody could also argue that  health and welfare, their employees, labor costs, those kind of things, are being  affected on the positive side. My point is, is that those are all internal forces that  they can control. So just as you think about internal forces, there's also all these  external forces. So I'm gonna, I'm gonna read them, because there's a lot, but  they can range from economic, financial, socio, cultural, labor, technological,  physical and legal. So we're going to learn what all those terms are. But as you  can see, those are a lot of external forces that are affecting a country. So you  know, if your candy shop offered chewing gum, and a nation changed their  chewing gum laws, like Singapore did a few years ago, and chewing gum then  becomes illegal. Well, that is going to affect your candy shop, and that's going to affect your business. So, you know, you got to think about all these external  factors which are putting pressure on your business. Another example that is  more recent is there's been a lot of talk about a global corporate tax. So globally, a company would have to pay a minimum corporate tax for their goods and  services. Well, that is a major component and a major external force that is 

going to affect a business and affect business models. So these are all things to  to think about. One question I often get asked is, when did international  businesses exist, like, how long have they been around? And are they more  complex today than they were back when they started, and I think that's a  legitimate a legitimate question and a legitimate statement. And if you attend a  local university, you're attending, you know here, and you walk around the  campus, or you look at a catalog, or you look at different places, and you go  different places, you will see that international business is all the rage at local  universities and studying things like international context and a global  environment and those kind of things, it's become critically important as the  world becomes more connected. And the thing to remember is, yes, our world is  way more connected. I could pick up my phone right now, use my whatsapp and talk to somebody, literally anywhere in the country. And that is just awesome that I could talk to, I mean, anywhere in the world. I could talk to anybody in the  world. I could call my friend in Nepal right now. I could call somebody in China  from sitting in a town in the United States. I could talk to anybody. And our world  is absolutely more connected. But remember that international businesses go  back hundreds of years, and if you think about it, the Ottoman the Ottoman  Empire had international trade between Europe, Africa and the Middle East.  International trade with China goes back 1800 years, if you're in United States  schools, we talked about the British and Dutch East India Trading companies  which open trade between colonial colonies and Europe. Ford Motor Company,  which makes really nice trucks. Ford Motor Company has been doing trading  internationally since the early 1900s and remember this, this company was  founded in the early 1900s and they were already trading internationally. And  they really and they and they realized the need to trade internationally. My point  is, is that international trade, even though it may seem like a new concept in the  coffee shops or at the universities or or, you know all around it's been around for a long, long time. It really has. It's been around for a long time. We just don't  think about it. We think about it now because of all the access we have across  globally, all the access we have, and certainly we have a long way to go with  access globally, and as our world becomes even more connected, and as more  people come online, and as as companies develop satellite internet, that's going to be global that, like many companies are working on, that's certainly going to  be a game changer, and things are going to get a lot more connected and a lot  more. Complex. So thinking about international business, we also need to as we kind of define the terms that we're going to be discussing, and we kind of  discuss some of the things that we're going to be talking about over the next  several, several weeks, or modules or days, or whatever, whatever method you  use to to complete these lectures. But as we as we look at this, there are  several drivers that are impacting international business. There are political  drivers, and we already talked about some of these, but, but if you think about it,

there's a lot of agreements out there. There's European Union, there's the  there's the old in the United States, we used to call NAFTA, now it's the US  CMA. There's the Trans Pacific strategic economic agreement, and there's  others that are reducing barriers and making it easier to trade between  countries. These agreements generally have a winner and a loser, but all benefit from increased trade across borders. In the United States, for example, trade,  international trade, means cheaper products in for those countries that produce  the products, that make the products, what it means for them is income, and it  means income from the United States, and it's just not the United States, but it  means jobs, it means a higher standard of living. And there's been a  conversation among certain nations recently about the concept of nationalism or protection, protectionism. And what this is, is it's incentivizing, incentivizing  businesses to keep jobs in the host nation, and politically, there's incentives for  doing so. So a good example of this is Whirlpool. Whirlpool makes appliance  products, and they make very good washers and dryers, for example, and  refrigerators. So Whirlpool invests over $7.4 billion across its eight US plants,  and accounts for 15,000 jobs, $7.4 billion across its eight plants. I mean, that's  significant. That's a significant boost to the region where Whirlpool products are  made. That means, that means good paying jobs, that means higher standard of living, that means all these things for that region. And again, since this is  international, that's a domestic example that actually does international  business, but that's a domestic example, across eight plants in the United  States. But expand that out to an international market, and you can see how  businesses do a lot of good and a lot of impact. And these political factors and  making it easier to trade between nations and allow for the movement of goods  and services make a major difference. So certainly, political drivers exist, and  additionally, technological drivers exist as well. And I just talked about, I mean,  it's so much easier to communicate. I can pick up my iPhone and I can call  anybody I want around the world right now. I mean, technologically, it has made  it easier to do business, to transfer goods, to do things. I can I can use my cash  app, or I can use Zelle, or whatever Zelle, and I can transfer money right now to  anybody in the United States or abroad. That's awesome to think about the level of goods and services and how fast it is to be able to buy something like if I  wanted to get a little British flags for a Mini Cooper and and have little British,  little British flags on there. I could do that, and I could do that quickly and easily.  The internet has made it easy to find products. It has made it easier, easy for an  educated consumer. If you think back 40 or 50 years, when you went and  bought a car, it was a completely different experience than it is now normally,  when you go in, you know what the trade in value of your car is? You can find it  on the internet ahead of time. You can go in, you can say, my car is worth  $10,000 this car is worth $22,000 I don't want to pay more than 21 I want you to  give me 10 for a trade in and I will give you $11,000 and and I'll put $11,000 

down, and I will walk out with my new car. The internet has really opened up the  world of the educated consumer, which makes it harder for businesses to  compete, right? They need to really differentiate themselves. They really need to make their products different. So if you think about that, also Amazon, for  example, and there's others across the world but Amazon is a good example.  Amazon allows you to buy almost anything at any time, anywhere, right? And it  makes it easy and go on my app and I can make a purchase right away. So  these are very, very key drivers of business. So technology is driving business.  It's driving the the the marketplace in different ways, and the Internet has really  opened up their marketplace in different ways. There's other drivers, such as  cost drivers, competitive drivers, market drivers. We're going to get into all what  those what all those are. But cost drivers may be sharing cost of research and  development. So for example, with COVID 19 and the COVID 19 vaccine,  Merrick, which is not a US based company, partnered with Johnson and  Johnson, they Merrick used facilities in the United States to fill the vials of the J  and J vaccine. This is one example of pharmaceutical companies, and they're a  great example of people using research and development across but they're not  the only example. There's tons of examples out there that you can think of in  your country and where you're watching this from of companies that have  partnered across and used research and development dollars to partner. There's reasons to do that. Countries offer tax breaks or tax holidays if certain  businesses do business in that country. Here's a staggering statistics. Over half  of US companies did not pay taxes. Over half of US companies did not pay  taxes because they shifted their income to places like Switzerland. So  remember that these incentives exist for those countries so they can pay their  employees, they can have this higher standard of living. They can do those  things. So they're going to do whatever they can to incentivize companies to do  business there, to operate there, to have headquarters there. That is their job.  That is their role. When talking about international business, one term you're  going to hear a lot is the term globalization. So let's, let's talk a little bit about  globalization. Let's talk about what globalization is, and let's talk about some of  the things that support globalization. And let's talk about some of the concerns  with globalization. So in thinking about globalization, most, most people think  about economic globalization, and that's the international integration and inter  dependency of goods, technology, information, capital, and all the things that  make that happen. That's what most people think about. So those are very good things. It's that everything is kind of tied together, right? And you've heard about  that we the world is, is flat, is, is a comment that's made. You know, everything  kind of works together. But there's also concerns with globalization. And some of those concerns are, you know, we kind of mentioned earlier, is nationalism and  nationalistic pride. So that's a concern with globalization. But you know, it has  social implications, and a lot of people say that it leads to social injustices. And 

I'm sure you have heard the term the haves and have nots, and a lot of people  will say, Well, you know, the haves are having more and the nots are not getting  as much. So that's a concern with globalization, and we can debate that at a  different time. One of the things to think about when we're thinking about the  uneven results is export led growth has failed to materialize. For example, Latin  America has tried, but they have not replicated Asia's success, regarding  regarding the globalization and and offering products, Latin America has tried  that and just has not had the same success as Asia. The other thing I just talked  about was the egg, the gap between rich and poor in the world based on  globalization. So, you know, global this is, this is a big word, but, but we'll use it,  globalization. Has deleterious effects on labor and labor standards. So you  know, one of the things that is a criticism is companies can move to other  nations with lower standards, and it's a race to the bottom. So there isn't an  incentive for a for a country to move their country out of poverty and offer higher  wages and those kind of things. Because if they do, then when a company is  going to say is, well, if it cost me $1.50 to to build this product in this country,  then I'll just move this country over here will only cost me $1.25 and then  eventually that, as that $1.25 increases, then that country will say, Oh, okay,  well, it's $1.25 now I'll go over here and 75 cents. So, so those are some of the  things that that are that a lot of people will talk about when they talk about the  problems with globalization. Some of those countries, and we just talked about  this, may feel that lower standards are necessary in order to enhance  competitiveness and improves prospects for investment in economic  development. So that's just what we just talked about, is some, some places will  say, well, there isn't an incentive for me to to raise my standards, because if I  do, I'm going to lose those, those companies, and then I'm going to be forced to  go back to the standard that I had before. So, you know, there's a counter  argument to that, that as you're doing that, then you're building infrastructure,  you're building things which then can pull you out, and then you can become self sustaining. But that is an argument against and a concern with globalization.  Let's see economic growth fostered by globalization may help generate and  distribute additional resources for protecting the environment. So, you know, so  one of the things that that people will say that's a pro for globalization, is that  you can protect the environment and do a lot of good, because as you're  operating globally, then, then you're finding better ways to do business, you're  finding efficiencies, you're finding ways to reduce costs, which have a benefit for the environment. So that's one of the advantages of it, free trade enhances  socioeconomic development. I think that we can all agree, as long as all  economists agree, that when you engage in free trade, that good things happen. When you have that flow of money between countries, you have goods and  products and goods and services moving back and forth. That's a good thing,  and that boosts an economy. Virtually everybody agrees on that. Data shows 

that a clear and definitive link between liberalization of trade and economic  growth, so the easier you make it for goods and services to flow, then more  economic growth is evident, and that makes sense, right again, if you make  

things easier and there's more money flowing, then good things are going to  happen. Countries that have rejected globalization are among the most  impoverished countries in the world. So we can certainly think of closed  systems. There's, there's a few in the world. There's a couple in Asia. There's a  couple in other places. There's one in South America, that are more closed  systems, and they are struggling, right? I mean, they're, they're having trouble  because they're very, very closed market. If they were to open it up if they were  allowed for free trade and allowed for more liberal policies that could result in  different things, certainly. And you know, one of the things that I want to say is  that, as we're going through these lectures, one of the things that I do not want  to do is let my biases show. I do not want to talk about whether I think that  globalization is a good thing or a bad thing. I want to kind of present both sides,  so whether a closed system is a positive thing or is a negative thing. I want to  leave that to you as the student, as the consumer, as an independent free  thinker, to decide what you think is best based on the material that's presented.  So So I just want to be very clear that as I present facts, I don't want to present  them as good or bad. I just want to present them and then what you determine  within your world view, your Christian worldview, what is good and what is  appropriate, what is not. Free trade promotes better and better jobs and more  jobs. So between 1990 and 2018, 40 million more non farm jobs were. Created  than destroyed in the US. So 40% more jobs, and that's because of free trade  policies. Openness of trade that may cause some sectors to be non competitive, and some jobs will be lost, but trade creates new jobs. So you can think about  this in terms of economic development, one of or environmental development  and technologies as well, is one of the as we push for greener and cleaner  technology for the earth, one of the things you'll hear people say is, well, that's  going to result in a lot of lost jobs. And then the counter argument for that is,  well, yes, that's true, but it creates X number more jobs and more opportunity  and different things. And you're going to hear that a lot. You're going to hear that  that discussion a lot, when it comes to globalization, and then when it comes to  environmental, when it comes to other areas as well. I use environmental just  because that happens to be a very prevalent thought and discussion right now,  robust discussion in the United States right now. So that's why I use that as an  example. So that is your introduction to international business. But I would be  remiss if we did not spend some time, and I may have alluded to this earlier,  we're going to spend some time looking at a website and exploring it together,  and looking at international companies and what makes them International, and  sometimes we're going to get very specific, and sometimes we're just going to  keep it general, so you can go look for yourself, but we're going To do that at the

end of each lecture. So for Module One, for lecture one, for this lecture, we are  going to look at a website called Universal Yums. And the reason I picked  Universal Yums was because it was a candy store, and I like candy, and we  were discussing candy earlier in the lecture. So I thought it would be a good a  good illustration here. So before I bring up this business, let's talk about them.  They send candy from all over the world to all over the world, and they send  snack boxes and highlight different countries from all over the world. So so so  you could have a business that that in South Korea and Universal Yums may  feature South Korean candy and may ship some of your your delicious treats to  people internationally, all over the world. Remember, earlier in the lecture, we  talked about how international business and how some international businesses  compete with or most international business compete with those local candy  shops. So even if you have a local candy shop, you will still be competing  internationally, and Universal Yums will be one of your competitors. So let me  switch the screen to Universal Yums, and then, just because I know you want to  see my face, I'm going to bring myself up in the corner. So this is Universal  Yums, and we talk about it, and we look at this, over 5 million snack boxes have  been shipped, so we talked about it, and what they do again is they're going to  provide you a different country every month, and the snacks and sweets from  that country, they're going to give you a book that's going to talk about it, and  then they're going to have a bunch of flavors. So what happens it's a  subscription based service, which, if you notice, a lot of people are going to  subscription based services, and I can give you an example outside of Universal Yums. So I am wearing, I don't know if you can see it, I'm wearing a fitness  band. And this fitness band is different from other fitness products in that this  one actually is subscription based. So it's a new model, and you'll see a lot of  people are moving toward that kind of model, that subscription based model. So  anyway, Universal Yums, which is at universalyums.com is a subscription based  service. You can do it as a gift for one month, three months, six months, or a  year, they will ship, and then you get it, and you can snack so you can hear. You can see here that they have very high approval rating. They have a lot of cool  stuff. You could get started. You can give it a you can give it a box. Obviously,  there's a lot of FAQ, but here's where I wanted to go, and here's what I wanted  you to see. So you have Monique and Eli and the Krazy Kat Hanner, and they  are the founders of Universal Yums in 2014 so they were working full time  corporate jobs, but they thought about, you know, going around the world and  traveling and and they started their company, and now they have this business.  So, so that's about them, and I just something else to show you, is when you  have a universal company, you need to have people that are willing to support  you. So you'll look here. They are looking for a marketing manager that can  operate internationally, an E commerce manager, a lead software engineer. And  then, and then you can go here to their their past boxes, and you can see that 

they have featured treats from Greece, from South Korea, which I mentioned,  from Turkey, from Spain, from Germany, from Ukraine, the Netherlands, they  had a holiday one Italy, etc. So this is an example of an international company,  but you may not always think of it as an international company. So Universal  Yums they are competing with your local your local candy shop. So that is it for  module one. And I'm just so excited that you took the time to to discuss it with  me, to listen to me, to think about some of the things I'm saying. I know you'll  have some activities and some other things to do, but hopefully you found this,  this kind of the framework that we're going to use to discuss things helpful as we move into lecture two, which is on international trade and investment. We'll be  talking about the volume of international trade, investing in international trade,  those kind of things. As we close out Lesson number one, I just want to take a  moment to close us in prayer. So So let it. Let's do that, Dear heavenly Father. I  want to thank you for this class. I want to thank you for the individuals that are  watching this lecture right now. I want to thank you for all the work that Christian  leaders is doing worldwide. Lord, the people that are watching this lecture, that  are taking these classes are doing so because they have a heart for you. Lord,  they want to have a global mindset. Lord, they want to have an international  perspective. They want to understand how businesses work in this connected  world that you have given us. So. Lord, I ask that as we close out this first  lesson, that you will bless this class. You will bless each individual person, that  you will give them strength, that you will give them focus, that you will give them  time to devote to these lectures, to these studies, and Lord, that you will help  them to be a strong voice for you and wherever they're at and whatever they're  doing, it is in your precious and holy name that we ask these things. Thank you  so much, Lord in Jesus name, amen. Thank you so much, everybody. We will  see you back for lesson two. Once again. My name is Matthew Earnhardt, and I  appreciate your time and attention.