Questions and Answers
What is the primary characteristic of Stage 6 Direct Foreign Investments?
Which of the following is NOT a legal or political constraint that managers must consider in international business?
What challenge in international business is most likely to arise from differing languages?
Which factor directly influences the selection of a management style in international business?
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What do subsidies primarily encourage in international business?
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What is the primary focus of environmental scanning?
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Which element is considered part of the internal environment in environmental scanning?
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Which stage of the internationalization process involves businesses being authorized to produce and market a product in a specified territory?
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What does the term 'Global Strategic Motivations' refer to in international business?
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What is a characteristic of a Multinational Company (MNC)?
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Study Notes
Environmental Scanning
- Definition: Process of monitoring both internal and external business environments.
- Purpose: Evaluates relevance to business operations and decision-making.
Elements of Environmental Scanning
- Internal Environment: Factors controllable by the business, including employee capabilities, resources, and stakeholder relationships.
- External Environment: Factors beyond control, such as PEST (Political, Economic, Social, Technological) and NR (Natural Resource) analyses.
SWOT Analysis
- Strengths: Characteristics providing a competitive edge.
- Weaknesses: Limitations or deficiencies within the business.
- Opportunities: External chances to improve performance.
- Threats: External factors that impact competitiveness.
International Business Environment
- Macro overview of global markets and institutions that facilitate international trade.
- Importance of a global strategy to minimize costs and risks associated with international expansion.
Strategic Areas in International Business
- Global Concentrations: Focus on markets with high demand and minimal competition.
- Global Synergies: Collaboration among companies with developed competencies and innovations.
- Global Strategic Motivations: Seeking international opportunities for production.
Multinational Company (MNC)
- Definition: A business that maintains strategic control over production or marketing in multiple countries.
Internationalization Process Stages
- Licensing: Authorization for production and marketing in a specific territory.
- Exporting: Selling domestically produced goods for use or resale in other countries.
- Local Warehousing: Shipping goods to the parent company’s storage facilities.
- Local Assembly and Packaging: Shipping components to assembly facilities for local production.
- Joint Ventures: Resource pooling with foreign companies for production and marketing, also known as strategic alliances.
- Direct Foreign Investments: Establishing wholly owned subsidiaries in foreign markets.
Domains of International Management Environment
- Economic Domain: Variation in per capita income, growth rates, and development levels globally.
-
Legal/Political Domain: Importance of understanding various legal aspects, including:
- Tariffs: Taxes on imported products.
- Quotas: Legal limitations on quantities of goods.
- Administrative Measures: Regulations like health laws and customs inspections.
- Exchange Control: Restrictions on currency exchange.
- Local Content Laws: Mandating a percentage of local production in goods.
- Subsidies: Tax incentives to promote export goods over domestic consumption.
- Commodity Agreements: Stabilizing prices of food or raw materials.
Socio-Cultural Domain
- Influence of social and cultural differences on management styles, including aspects of:
- Communication methods.
- Religious beliefs and values.
- Policies affecting holidays and work breaks.
- Education levels.
Challenges in International Business
- Differences in political and legal environments.
- Cultural variations impacting business practices.
- Variability in economic conditions across countries.
- Language barriers complicating communication.
- Disparities in marketing systems.
- Trade restrictions legally imposed on businesses.
- Geographic factors affecting logistics and operations.
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Description
This quiz focuses on Module 2 of the business curriculum, which covers the internal and external environmental factors that influence firms. It emphasizes the importance of environmental scanning in evaluating relevance to business operations and decision-making. Test your knowledge on the strengths, weaknesses, opportunities, and threats that businesses face in their environment.
