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Questions and Answers
What distinguishes a domestic corporation from an international corporation?
What distinguishes a domestic corporation from an international corporation?
Which of these is an advantage of a domestic corporation?
Which of these is an advantage of a domestic corporation?
What is typically a drawback of engaging in international business?
What is typically a drawback of engaging in international business?
How does international business typically affect a company's customer base?
How does international business typically affect a company's customer base?
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Which statement accurately describes the taxation differences between domestic and international businesses?
Which statement accurately describes the taxation differences between domestic and international businesses?
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What factor typically affects domestic businesses but not international businesses?
What factor typically affects domestic businesses but not international businesses?
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Which statement is false regarding the quality of products from domestic and international businesses?
Which statement is false regarding the quality of products from domestic and international businesses?
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What is NOT a component of international business activities?
What is NOT a component of international business activities?
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What is a key advantage of using licensing or franchising to enter an international market?
What is a key advantage of using licensing or franchising to enter an international market?
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One disadvantage of licensing and franchising is that licensees and franchisees can potentially become what?
One disadvantage of licensing and franchising is that licensees and franchisees can potentially become what?
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Why might companies choose to pursue a joint venture when entering new markets?
Why might companies choose to pursue a joint venture when entering new markets?
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What is a primary disadvantage of a joint venture?
What is a primary disadvantage of a joint venture?
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What is a significant advantage of strategic acquisitions?
What is a significant advantage of strategic acquisitions?
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Which of the following is a disadvantage commonly faced in strategic acquisitions?
Which of the following is a disadvantage commonly faced in strategic acquisitions?
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What is one of the main reasons for companies to engage in foreign direct investment?
What is one of the main reasons for companies to engage in foreign direct investment?
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Which of the following does NOT represent an advantage of foreign direct investment?
Which of the following does NOT represent an advantage of foreign direct investment?
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What can cause cultural clashes in joint ventures?
What can cause cultural clashes in joint ventures?
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A joint venture is particularly suitable in markets where:
A joint venture is particularly suitable in markets where:
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A drawback of licensing and franchising can be the potential for:
A drawback of licensing and franchising can be the potential for:
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What is a common misconception about strategic acquisitions?
What is a common misconception about strategic acquisitions?
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Which aspect is fundamental in determining the viability of foreign direct investment?
Which aspect is fundamental in determining the viability of foreign direct investment?
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What advantage does direct exporting provide for tech companies?
What advantage does direct exporting provide for tech companies?
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Which of the following best describes the process of licensing and franchising?
Which of the following best describes the process of licensing and franchising?
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Why should a business consider diversifying across products and markets?
Why should a business consider diversifying across products and markets?
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What is a disadvantage of direct exporting for offline products?
What is a disadvantage of direct exporting for offline products?
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How can companies challenge global competitors effectively?
How can companies challenge global competitors effectively?
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What mode of entry involves partnering with a local business to share risks?
What mode of entry involves partnering with a local business to share risks?
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What is a common challenge when implementing a direct exporting strategy for offline products?
What is a common challenge when implementing a direct exporting strategy for offline products?
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Which entry strategy allows a company to retain ownership of its intellectual property?
Which entry strategy allows a company to retain ownership of its intellectual property?
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Which entry mode is typically associated with the highest level of risk?
Which entry mode is typically associated with the highest level of risk?
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What is one of the key considerations when selecting a mode of entry for international markets?
What is one of the key considerations when selecting a mode of entry for international markets?
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How does direct exporting differ from using international agents?
How does direct exporting differ from using international agents?
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What influences a company’s decision to enter an international market?
What influences a company’s decision to enter an international market?
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What condition makes franchising an attractive option for international entry?
What condition makes franchising an attractive option for international entry?
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Why is testing products in international markets beneficial before larger investments?
Why is testing products in international markets beneficial before larger investments?
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Which factor is a significant barrier to international business that does not affect domestic business?
Which factor is a significant barrier to international business that does not affect domestic business?
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What is one advantage of domestic businesses over international businesses?
What is one advantage of domestic businesses over international businesses?
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When considering which market to enter internationally, what should be a crucial factor in decision-making?
When considering which market to enter internationally, what should be a crucial factor in decision-making?
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Which statement best describes the cyclical changes in domestic businesses compared to international businesses?
Which statement best describes the cyclical changes in domestic businesses compared to international businesses?
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Why might a company seek to expand into international markets?
Why might a company seek to expand into international markets?
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Which mode of entry into international business is likely to require the most significant investment from a company?
Which mode of entry into international business is likely to require the most significant investment from a company?
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What is a disadvantage of conducting international business research compared to domestic business research?
What is a disadvantage of conducting international business research compared to domestic business research?
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Which aspect of international business is often more complicated than in domestic business?
Which aspect of international business is often more complicated than in domestic business?
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What is a key reason that companies might experience sales differently in international markets?
What is a key reason that companies might experience sales differently in international markets?
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What type of businesses typically have more mobile factors of production?
What type of businesses typically have more mobile factors of production?
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Which challenge is unique to international businesses but not generally faced by domestic businesses?
Which challenge is unique to international businesses but not generally faced by domestic businesses?
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What is a common misconception about international business compared to domestic business?
What is a common misconception about international business compared to domestic business?
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What should be a fundamental consideration when preparing a marketing plan for an international market?
What should be a fundamental consideration when preparing a marketing plan for an international market?
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What is one potential outcome of poor market analysis in an international context?
What is one potential outcome of poor market analysis in an international context?
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What makes research in international business more challenging compared to domestic business?
What makes research in international business more challenging compared to domestic business?
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Study Notes
Domestic vs. International Business
- Domestic Business (Home Trade): A business operating solely within its home country, influenced only by domestic legal, cultural, and economic factors.
- International Business: Economic activity (e.g., investment, sales, logistics) spanning multiple countries. Companies involved are often called multinational or transactional companies.
Key Differences
- Geographic Scope: Domestic businesses operate within a single country, while international businesses operate across borders.
- Regulatory and Legal Environment: Domestic businesses face fewer regulatory hurdles (e.g., tariffs) compared to international businesses facing laws, quotas, and tariffs from various countries.
- Currency: Domestic businesses use their home country's currency, while international businesses often deal with multiple currencies.
- Customer Base: Domestic businesses tend to have a homogeneous customer base, while international businesses target various cultures.
- Market Size and Analysis: Easier to understand the domestic market, compared to the broader and diverse international market.
- Capital investment: Domestic market requires less capital investment compared to the international market.
- Risk: International business has higher political risks as compared to domestic market, because of variability in government regulations across countries.
Market Analysis
- International Markets: Require significant resources for market analysis to predict customer preferences and tailor marketing campaigns by country.
- Domestic Markets: Easier to forecast consumer preferences and competitor analysis due to familiarity with the market.
Cyclical Changes (Business Cycles)
- Domestic Business: More susceptible to the ups and downs of the domestic economy. Easier to predict domestic cycles and respond appropriately to both upswings and downturns.
- International Business: Less vulnerable to domestic business cycles, as operations span multiple countries, potentially mitigating the effects of economic fluctuations in one region.
International Business Expansion Strategies
- Modes of Entry: Different strategies cater to varying factors like investment capital, levels of risk, and expansion goals. Includes direct exporting, licensing, agents/distributors, joint ventures, strategic acquisitions, and foreign direct investment (FDI).
Reasons for International Expansion
- Profitability: Seek higher profitability in countries with higher consumer spending or purchasing power.
- Economies of Scale: Larger customer base across various countries can yield significant economies of scale in industries like tech.
- Diversification: Reduce reliance on a single domestic market through international ventures, mitigating risks from local economic fluctuations or unforeseen events.
- Competition: Challenge competitors on their home turf where already established.
- Serving Customers Abroad: Expand customer base to customers situated in other countries.
Modes of Entry
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Direct Exporting: Company directly exports goods to another country, either through its own sales force or through intermediaries; high cost for physically based product and easier strategy for digital products.
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Licensing/Franchising: Agreements where a company permits another party to use its trademarks, brand names, or intellectual property in exchange for royalties or fees; relatively low cost entry, low control compared to direct exporting.
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Joint Ventures: Partners collaborate to share resources, costs, and risks in a new market; suited for areas with limited foreign ownership.
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Strategic Acquisitions: Acquire existing businesses in a target international market which can offer existing infrastructure, and customer base.
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Foreign Direct Investment (FDI): Significant investment in foreign assets like companies, factories, or real estate; high risk and investment, can reduce costs through access to cheap labor or materials.
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Description
Explore the key differences between domestic and international business operations. This quiz outlines aspects such as geographic scope, regulatory environments, currency usage, and customer bases. Test your understanding of how businesses navigate domestic and global markets.
