Podcast
Questions and Answers
What is one advantage of conducting international business?
What is one advantage of conducting international business?
- Guaranteed market saturation
- Increased access to diverse markets (correct)
- Elimination of local competition
- Reduction of operational hurdles
Which factor is crucial when evaluating the political economy of a country for international expansion?
Which factor is crucial when evaluating the political economy of a country for international expansion?
- The number of existing local competitors
- Legal protections for foreign businesses (correct)
- The influence of local customs
- The country's geographical size
What must organizations consider when deciding on product standardization versus customization for international markets?
What must organizations consider when deciding on product standardization versus customization for international markets?
- Local preferences and cultural differences (correct)
- Manufacturing capabilities in the home country
- The availability of shipping resources
- Global economic trends
What is a possible risk associated with global market expansion?
What is a possible risk associated with global market expansion?
Why might globalization of markets continue to expand despite a rise in nationalism?
Why might globalization of markets continue to expand despite a rise in nationalism?
Which aspect is a factor necessary for determining whether a country is advantageous for business operations?
Which aspect is a factor necessary for determining whether a country is advantageous for business operations?
What strategic option does an organization face after deciding to expand internationally?
What strategic option does an organization face after deciding to expand internationally?
What is a significant challenge when competing globally compared to a domestic focus?
What is a significant challenge when competing globally compared to a domestic focus?
What is the primary consideration for an organization when choosing its entry strategy for global expansion?
What is the primary consideration for an organization when choosing its entry strategy for global expansion?
Which factor does NOT contribute to the rapid globalization of markets?
Which factor does NOT contribute to the rapid globalization of markets?
What was one of the significant contributions of early explorers like Marco Polo to international trade?
What was one of the significant contributions of early explorers like Marco Polo to international trade?
How has technology impacted global business operations?
How has technology impacted global business operations?
What is a notable characteristic of multinational enterprises (MNEs) in the context of globalization?
What is a notable characteristic of multinational enterprises (MNEs) in the context of globalization?
What role do tariffs play in international trade?
What role do tariffs play in international trade?
What describes the 'Born Global' business model?
What describes the 'Born Global' business model?
What evidence indicates that globalization is becoming more intertwined with modern commerce?
What evidence indicates that globalization is becoming more intertwined with modern commerce?
What is a significant factor in evaluating a country's business climate related to legal protections?
What is a significant factor in evaluating a country's business climate related to legal protections?
Which of the following best describes the concept of 'Culture' in the context of international business?
Which of the following best describes the concept of 'Culture' in the context of international business?
Why might entering the restaurant business serving beef in certain regions of India be problematic?
Why might entering the restaurant business serving beef in certain regions of India be problematic?
How does culture influence business transactions in many Asian countries?
How does culture influence business transactions in many Asian countries?
Which of the following challenges can arise from language differences in international business?
Which of the following challenges can arise from language differences in international business?
What does the term 'Political Economy' refer to in the context of business evaluations?
What does the term 'Political Economy' refer to in the context of business evaluations?
What should businesses be cautious about when assuming cultural homogeneity in a country?
What should businesses be cautious about when assuming cultural homogeneity in a country?
What aspect of culture can affect a foreign business's relationships with local entities?
What aspect of culture can affect a foreign business's relationships with local entities?
What is one reason businesses choose to manufacture products in foreign countries?
What is one reason businesses choose to manufacture products in foreign countries?
What does Netflix's international success highlight about globalization?
What does Netflix's international success highlight about globalization?
Which challenge does Netflix face in expanding internationally?
Which challenge does Netflix face in expanding internationally?
What was notable about Netflix's revenue in the second quarter of 2018?
What was notable about Netflix's revenue in the second quarter of 2018?
What misconception did potential international subscribers of Netflix often have?
What misconception did potential international subscribers of Netflix often have?
What does the term 'first-mover advantage' imply in the context of streaming services?
What does the term 'first-mover advantage' imply in the context of streaming services?
What primary strategy did Netflix utilize to overcome challenges in foreign markets?
What primary strategy did Netflix utilize to overcome challenges in foreign markets?
Which of the following reflects a significant aspect of Netflix’s globalization strategy?
Which of the following reflects a significant aspect of Netflix’s globalization strategy?
What is one primary role of the World Trade Organization (WTO)?
What is one primary role of the World Trade Organization (WTO)?
Why might a high inflation rate negatively impact a business's profitability?
Why might a high inflation rate negatively impact a business's profitability?
Which factor would likely make a country more attractive for foreign business investment?
Which factor would likely make a country more attractive for foreign business investment?
How do global institutions support international business?
How do global institutions support international business?
What impact do unfavorable tax policies have on foreign businesses?
What impact do unfavorable tax policies have on foreign businesses?
What is a significant risk if a country’s legal system does not offer protections for foreign businesses?
What is a significant risk if a country’s legal system does not offer protections for foreign businesses?
What might a government-controlled exchange rate indicate about a country’s economy?
What might a government-controlled exchange rate indicate about a country’s economy?
In terms of market access, what could be a consequence of large portions of the population living below the poverty line?
In terms of market access, what could be a consequence of large portions of the population living below the poverty line?
Which strategy involves modifying products or services to align with local customer preferences?
Which strategy involves modifying products or services to align with local customer preferences?
What is the main purpose of assessing the political economy of a country for international business?
What is the main purpose of assessing the political economy of a country for international business?
What does the combination strategy entail when conducting international business?
What does the combination strategy entail when conducting international business?
Which of the following is NOT a consideration when deciding on product modifications for international markets?
Which of the following is NOT a consideration when deciding on product modifications for international markets?
What is a characteristic of global standard products in international markets?
What is a characteristic of global standard products in international markets?
Which scenario exemplifies the need for local customization when doing international business?
Which scenario exemplifies the need for local customization when doing international business?
In international business, what could be a potential outcome of failing to understand cultural differences?
In international business, what could be a potential outcome of failing to understand cultural differences?
What factor primarily dictates whether to modify products/services for a local market?
What factor primarily dictates whether to modify products/services for a local market?
What is a primary factor influencing an organization's decision to pursue international business?
What is a primary factor influencing an organization's decision to pursue international business?
Which of the following strategies may organizations consider when expanding their operations globally?
Which of the following strategies may organizations consider when expanding their operations globally?
What role does the current trend of globalization play in relation to international market competition?
What role does the current trend of globalization play in relation to international market competition?
Which is a significant challenge a company may face when operating under a different country’s political economy?
Which is a significant challenge a company may face when operating under a different country’s political economy?
Which factor is least likely to affect an organization's decision to enter a foreign market?
Which factor is least likely to affect an organization's decision to enter a foreign market?
What may influence a firm’s choice between customizing products for local markets versus standardizing them?
What may influence a firm’s choice between customizing products for local markets versus standardizing them?
What key reason might organizations cite for expanding their business internationally?
What key reason might organizations cite for expanding their business internationally?
Which factor may hinder an organization’s ability to adapt to a new market when conducting international business?
Which factor may hinder an organization’s ability to adapt to a new market when conducting international business?
What is a primary reason for a business to choose a Global Standard strategy?
What is a primary reason for a business to choose a Global Standard strategy?
Which scenario best supports the need for a Local Customization strategy?
Which scenario best supports the need for a Local Customization strategy?
Why might a Combination Strategy be preferred by a business?
Why might a Combination Strategy be preferred by a business?
What is one challenge associated with adopting a Local Customization strategy?
What is one challenge associated with adopting a Local Customization strategy?
In what situation would a business most likely choose to export its products?
In what situation would a business most likely choose to export its products?
What is a potential drawback of having unique products in a Local Customization strategy?
What is a potential drawback of having unique products in a Local Customization strategy?
What best illustrates the concept of economies of scale in the context of a Global Standard strategy?
What best illustrates the concept of economies of scale in the context of a Global Standard strategy?
What is one impact of advances in manufacturing technology on Local Customization strategies?
What is one impact of advances in manufacturing technology on Local Customization strategies?
What is one potential drawback of reducing trade barriers for certain industries within a country?
What is one potential drawback of reducing trade barriers for certain industries within a country?
How have technological advancements specifically impacted global business operations?
How have technological advancements specifically impacted global business operations?
Why has the share of knowledge in conducting global business increased among organizations?
Why has the share of knowledge in conducting global business increased among organizations?
What factor most significantly contributes to the ease of conducting international business today?
What factor most significantly contributes to the ease of conducting international business today?
What role did early explorers like Marco Polo play in the context of international trade?
What role did early explorers like Marco Polo play in the context of international trade?
What is an implication of a country's economy having a government-controlled exchange rate?
What is an implication of a country's economy having a government-controlled exchange rate?
Which statement best describes the current trend of globalization?
Which statement best describes the current trend of globalization?
What is a significant potential risk associated with a global approach to business?
What is a significant potential risk associated with a global approach to business?
Which entry strategy involves creating a formal arrangement between businesses specifically for operations in a single country?
Which entry strategy involves creating a formal arrangement between businesses specifically for operations in a single country?
What key factor affects a business's choice of entry strategy when expanding internationally?
What key factor affects a business's choice of entry strategy when expanding internationally?
In which scenario would utilizing a strategic alliance be most appropriate?
In which scenario would utilizing a strategic alliance be most appropriate?
Which option primarily emphasizes complete autonomy in establishing a business entity in a foreign market?
Which option primarily emphasizes complete autonomy in establishing a business entity in a foreign market?
What critical business decision involves assessing whether to alter products for a foreign market?
What critical business decision involves assessing whether to alter products for a foreign market?
Which element is NOT typically considered when assessing potential business partners for franchising or joint ventures?
Which element is NOT typically considered when assessing potential business partners for franchising or joint ventures?
Which entry strategy is likely to involve the highest level of commitment in a foreign market?
Which entry strategy is likely to involve the highest level of commitment in a foreign market?
What is a significant factor in determining the effectiveness of a product customization strategy in a foreign market?
What is a significant factor in determining the effectiveness of a product customization strategy in a foreign market?
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Study Notes
International Expansion and Global Business
- Organizations seek to expand their business through international expansion and trade.
- Globalization is a trend toward a more integrated and interdependent global economy.
- Factors driving globalization:
- Declining trade barriers: tariffs are being reduced or eliminated.
- Technology enablement: advances in air travel, communication, and the internet facilitate global business.
- Rise of Multinational Enterprises (MNEs): successful global businesses share knowledge and expertise.
- Formation of Global Institutions: organizations like the World Trade Organization (WTO) and the World Bank provide governance and support for international trade.
Political Economy and Culture
- Evaluating the Political Economy of a country is crucial before entering a new market.
- Key factors to consider:
- Political Conditions: stability, corruption, and the government's attitude towards foreign businesses.
- Economic Conditions: economic stability, wealth, inflation, and exchange rate control.
- Legal System: protection of contracts, assets, and intellectual property.
- Culture plays a significant role in international business.
- Different countries have multiple cultures, requiring businesses to be mindful of local norms and practices.
- Cultural differences may influence acceptable business practices and relationship development.
- Language is a critical component of culture.
Global Expansion Strategies
- Businesses choose foreign manufacturing for advantages such as lower costs, proximity to markets, access to resources, and expertise.
- Global expansion strategies include:
- Exporting: selling products or services to customers in other countries.
- Joint Ventures: collaborating with local companies in a new market.
Netflix Case Study
- Netflix has achieved significant global growth, reaching operations in over 190 countries.
- In 2018, international streaming revenues surpassed domestic streaming revenues for the first time.
- Netflix faces unique challenges:
- Securing content deals region by region.
- Navigating diverse national regulatory restrictions.
- Catering to local preferences and language needs.
- Overcoming competition from established streaming services.
- Netflix has successfully expanded despite challenges, exceeding the number of subscribers of other streaming services combined.
Globalization Trends
- Globalization is the trend towards a more integrated and interdependent global economy.
- Several factors are driving globalization:
- Declining Trade Barriers: Tariffs are being reduced or eliminated.
- Technology Enablement: Technological advancements in air travel, communications, and internet access make global business easier.
- Rise of Multinational Enterprises (MNEs): Increase in the number of organizations successfully conducting business on a global scale.
Evaluating a Country for Business
- Assessing the attractiveness of doing business in a country by evaluating the Political Economy of that country is an important step for preparing to conduct business internationally.
- Successful interactions with individuals and businesses within a country require an understanding and appreciation of the cultural differences, including language, that exist in that country.
Strategic Decisions for International Business
- Two primary strategic decisions for international business:
- Determine whether to modify products or services to better conform with local preferences.
- Determine the entry strategy that will be used for conducting business in a country.
Product/Service Customization Strategies
- Businesses conducting business in international markets must decide whether to:
- Global Standard: Sell the same products and services in every country.
- Local Customization: Modify products and services to meet unique local customer requirements.
- Combination Strategy: Customize products for some countries and sell global standard products everywhere else.
Reasons for Choosing Specific Product/Service Customization Strategies
- Global Standard:
- Optimizes costs by not having to produce multiple variations of products.
- Realizes economies of scale in production (costs per unit go down as volumes produced increase).
- Local Customization:
- Essential when customer preferences vary greatly in each country.
- Can increase demand and acceptance.
- More expensive due to different variations of products.
- Combination Strategy:
- Optimizes sales while controlling costs.
- Used when some countries are not large enough or have unique preferences that warrant customization.
Entry Strategies for International Business
- Options for how to enter a country's market:
- Export: Ship products from another country for sale through a distributor or retailer, or sell directly to customers.
- License: Sell the rights to a third party to make and/or sell products or services.
- Franchise: Authorize a business partner to use trademarks/patents and brands and provide business guidance.
- Joint Venture: Set up a formal arrangement to collaborate with a business partner in a specific country.
- Strategic Alliance: Establish a less formal arrangement for two businesses to cooperate on a business opportunity.
- Do It Yourself: Establish a new business entity in the target country or acquire majority ownership of an existing business.
Factors to Consider When Choosing an Entry Strategy
- Management preferences for control.
- Availability of suitable business partners.
- Legal requirements, restrictions, and protections.
- Nature of the products/services.
- Availability of desirable acquisition targets.
- Time required and challenges involved in starting a business from inception in a country.
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