Podcast
Questions and Answers
Which of the following is NOT a driver of market globalization?
Which of the following is NOT a driver of market globalization?
- Industrialization and modernization
- Advances in technology
- Worldwide reduction of barriers to trade
- Increase in environmental regulations (correct)
What is one consequence of market globalization on society?
What is one consequence of market globalization on society?
- Increased national sovereignty
- Contagion of financial crises (correct)
- Creation of localized job markets
- Stabilization of local cultures
Which dimension of market globalization refers to the emergence of economic alliances?
Which dimension of market globalization refers to the emergence of economic alliances?
- Globalization of production activities
- Integration and interdependence of national economies
- Globalization of services
- Rise of regional economic integration blocs (correct)
How do globalization drivers impact firms' strategies?
How do globalization drivers impact firms' strategies?
What is a firm-level consequence of market globalization?
What is a firm-level consequence of market globalization?
Which of the following best describes the impact of market globalization on employment?
Which of the following best describes the impact of market globalization on employment?
What challenge do firms face due to the internationalization of the market?
What challenge do firms face due to the internationalization of the market?
Which of the following is NOT a dimension of market globalization?
Which of the following is NOT a dimension of market globalization?
What drives the growth of exports compared to GDP?
What drives the growth of exports compared to GDP?
Which entities are primarily involved in initiating international business transactions?
Which entities are primarily involved in initiating international business transactions?
What is a characteristic of a multinational enterprise (MNE)?
What is a characteristic of a multinational enterprise (MNE)?
What economic trend is notable in advanced economies like the U.S. and Britain?
What economic trend is notable in advanced economies like the U.S. and Britain?
Which factor has contributed to the rapid integration of world economies?
Which factor has contributed to the rapid integration of world economies?
How does the cost of producing goods influence exporting according to the content?
How does the cost of producing goods influence exporting according to the content?
What is a possible implication of firms on mastering internationalization?
What is a possible implication of firms on mastering internationalization?
What is GDP a measure of?
What is GDP a measure of?
What is country risk primarily concerned with?
What is country risk primarily concerned with?
What factor can discourage firms from investing in a foreign country?
What factor can discourage firms from investing in a foreign country?
Which of the following is NOT a component of country risk?
Which of the following is NOT a component of country risk?
Which characteristic is associated with countries that experience substantial economic freedom?
Which characteristic is associated with countries that experience substantial economic freedom?
How might a firm's relationship with a foreign government be impacted by economic failures?
How might a firm's relationship with a foreign government be impacted by economic failures?
What common issue can arise from high inflation in a foreign country?
What common issue can arise from high inflation in a foreign country?
What legal aspect is crucial for international firms to understand?
What legal aspect is crucial for international firms to understand?
What might prompt governments to impose restrictions on foreign firms?
What might prompt governments to impose restrictions on foreign firms?
What approach do Japanese managers typically take when making decisions?
What approach do Japanese managers typically take when making decisions?
How does the approach to decision-making differ between Canadian managers and those from developing countries?
How does the approach to decision-making differ between Canadian managers and those from developing countries?
What is a commonly accepted practice in some African countries that differs from standards in countries like Sweden?
What is a commonly accepted practice in some African countries that differs from standards in countries like Sweden?
Which unethical practice is commonly found in China involving published works?
Which unethical practice is commonly found in China involving published works?
What is one reason many multinational firms overlook concerning their production conditions?
What is one reason many multinational firms overlook concerning their production conditions?
What is a political risk that businesses may face in international markets?
What is a political risk that businesses may face in international markets?
What has been a concerning practice in the fashion industry regarding safety?
What has been a concerning practice in the fashion industry regarding safety?
What is often a challenge faced by businesses in developing countries due to government policies?
What is often a challenge faced by businesses in developing countries due to government policies?
What is commercial risk primarily associated with?
What is commercial risk primarily associated with?
Which of the following countries has experienced notably high inflation?
Which of the following countries has experienced notably high inflation?
Why is managing international partners considered risky?
Why is managing international partners considered risky?
How does inflation complicate business planning?
How does inflation complicate business planning?
What can be a consequence of marketing inferior products internationally?
What can be a consequence of marketing inferior products internationally?
What challenge might managers face when selecting business partners internationally?
What challenge might managers face when selecting business partners internationally?
What is a possible effect of fluctuating currency exchange rates on international business?
What is a possible effect of fluctuating currency exchange rates on international business?
Which aspect of a firm's international strategy is often compromised due to general commercial risks?
Which aspect of a firm's international strategy is often compromised due to general commercial risks?
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Study Notes
The Drivers of Market Globalization
- Reduction of barriers to trade and investment
- Transition to market-based economies
- Industrialization, economic development, and modernization
- Integration of world financial markets
- Advances in technology
Dimensions of Market Globalization
- Integration and interdependence of national economies
- Rise of regional economic integration blocs
- Growth of global investment and financial flows
- Convergence of buyer lifestyles and preferences
- Globalization of production activities
- Globalization of services
Societal Consequences of Market Globalization
- Contagion: Rapid spread of financial or monetary crises from one country to another
- Loss of national sovereignty
- Offshoring and the flight of jobs
- Effect on the poor
- Effect on the natural environment
- Effect on national culture
Firm-Level Consequences of Market Globalization
- Countless new business opportunities for internationalizing firms
- New risks and intense rivalry from foreign competitors
- More demanding buyers who source from suppliers worldwide
- Greater emphasis on proactive internationalization
- Internationalization of firm’s value chain
Traditional and Online Internationalization Paths
- Traditional:
- Exporting
- Importing
- Foreign direct investment (FDI)
- Joint ventures
- Licensing
- Franchising
- Online:
- E-commerce
- Digital marketing
- Social media
The Four Risks of International Business
- Cross-cultural risk: Differences in language, religion, values, and customs
- Country risk (political risk): Government intervention, protectionism, and barriers to trade and investment
- Commercial risk: Potential loss or failure from poorly developed or executed business strategies, tactics, and procedures
- Currency risk: Fluctuations in exchange rates can affect various types of business deals
Managing Differences Between Domestic and International Business
- Cultural Differences:
- Business etiquette
- Decision-making styles
- Ethical practices
- Country Risk (Political Risk):
- Government intervention
- Bureaucracy, red tape, administrative delays, corruption
- Lack of legal safeguards for intellectual property rights
- Legislation unfavorable to foreign firms
- Economic failures and mismanagement
- Social and political unrest and instability
- Commercial Risk:
- Poorly developed or executed business strategies, tactics, and procedures
- Fluctuating exchange rates
- Selection of business partners
- Timing of market entry
- Pricing
- Product features
- Promotional themes
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