Questions and Answers
Stage 5 Joint Ventures involves a company in one country pooling resources with one or more companies in the same country.
False
Tariffs refer to special tax incentives that encourage the production of goods for domestic consumption.
False
Local Content Laws require that a certain percentage of finished goods must be made of parts produced in the importing country.
True
One of the challenges in international business includes differences in the cultural environment.
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Stage 6 Direct Foreign Investments allows companies to produce and market products only through partnerships with local firms.
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Environmental scanning includes only the internal environment of a business.
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A Multinational Company (MNC) has strategic control over production facilities in multiple countries.
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The internationalization process includes local assembly and packaging as stage 4.
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Global concentrations refer to entering international markets where competition is high and demand is low.
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PEST analysis is a factor considered within a business's internal environment.
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Study Notes
Environmental Scanning
- Monitors internal and external factors affecting business operations and decisions.
- Conducts surveys to evaluate relevance to organizational performance.
Elements of Environmental Scanning
- Internal Environment: Factors that are controllable, such as employee capabilities, resources, and stakeholders.
- External Environment: Factors that are uncontrollable, including PEST (Political, Economic, Social, and Technological) and NR (Natural Resources) analysis.
SWOT Analysis
- Strengths: Characteristics giving a business a competitive edge.
- Weaknesses: Limitations or deficiencies within the business.
- Opportunities: External chances to improve business performance.
- Threats: External factors affecting competitive performance.
International Business Environment
- Macro overview of global markets and institutions, focusing on the worldwide buying and selling of goods.
- Expansion presents complexity and costs; hence, a robust global strategy is essential.
Strategic Areas in International Business
- Global Concentrations: Enter markets with minimal competition and high demand.
- Global Synergies: Collaborate with experts and innovators for shared competencies.
- Global Strategic Motivations: Seek international venues for production.
Multinational Company (MNC)
- Operates strategic control over production or marketing in multiple countries.
Internationalization Process Stages
- Licensing: Authorization to produce and market in a specific territory.
- Exporting: Selling goods produced in one country for use or resale in another.
- Local Warehousing and Selling: Goods stored in the parent company's location.
- Local Assembly and Packaging: Shipping components for assembly rather than finished products.
- Joint Ventures: Collaborating with foreign firms to pool resources.
- Direct Foreign Investments: Operate through wholly owned subsidiaries in other countries.
International Management Environment
- Economic Domain: Diverse per capita income levels and economic growth across countries.
- Legal/Political Domain: Managers must understand various laws, including tariffs, quotas, and local content laws.
- Socio-Cultural Domain: Cultural differences impact management styles and business operations, covering communication, religious values, and education systems.
Challenges in International Business
- Variances in political and legal environments.
- Cultural differences influencing management practices.
- Economic diversities across regions.
- Language barriers affecting communication.
- Diverse marketing systems and practices.
- Trade restrictions impacting international trade relations.
- Challenges posed by geographical locations.
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Description
This quiz explores the critical components of environmental scanning in business, including internal and external factors that influence decisions. It also covers SWOT analysis and the complexities of the international business environment. Test your understanding of how these elements impact organizational performance and strategy.
