International Business Course Overview

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Questions and Answers

What is a primary disadvantage of direct exporting?

Lower costs

Limited market knowledge

Higher profit margins

Greater operational responsibility (correct)

Which of the following is considered an economic and financial risk in country risk indicators?

Corruption

Terrorism

Political instability

Currency devaluation (correct)

In the context of customs functions, which of the following is NOT a key function?

Trade control

Compliance

Market research (correct)

Tax collection

What is a characteristic of piggyback exporting?

It allows one company to use another's established export system. Signup and view all the answers

Which calculation is required for clearing goods for free circulation?

Customs value calculation and applicable tariffs Signup and view all the answers

What is a potential issue with country risk analysis?

Selective downgrades during crises Signup and view all the answers

Which of the following is an advantage of indirect exporting?

Lower costs Signup and view all the answers

What does the customs value (CV) calculation include?

Price, transport costs, and insurance Signup and view all the answers

What is a primary characteristic of Greenfield FDI?

Establishing new facilities. Signup and view all the answers

Which step is NOT part of the acquisition process in Brownfield FDI?

Create a foreign subsidiary. Signup and view all the answers

In the context of Joint Ventures, what is the significance of establishing clear goals?

To align expectations and reduce risks. Signup and view all the answers

Which stage does NOT belong to the development of Joint Ventures?

Integration. Signup and view all the answers

What is a visible aspect of culture according to the multifaceted concept of culture?

Customs. Signup and view all the answers

What does Hofstede's dimension 'Power Distance' refer to?

The acceptance of unequal power distribution within a society. Signup and view all the answers

Which of the following exemplifies an out-group in cultural identity?

A group perceived as different due to cultural disparities. Signup and view all the answers

What is the focus of the 'Indulgence vs. Restraint' dimension in intercultural management?

The degree of freedom to enjoy life versus societal restrictions. Signup and view all the answers

What percentage of the overall evaluation is the final exam worth?

50% Signup and view all the answers

Which of the following is NOT a reason for internationalization?

Cost Saving Signup and view all the answers

What is a primary advantage of Greenfield investments?

Full control over operations Signup and view all the answers

What does the acronym 'OLI' in the OLI Paradigm stand for?

Ownership, Location, Internalization Signup and view all the answers

Which type of FDI involves acquiring existing businesses?

Brownfield Investments Signup and view all the answers

What is a disadvantage associated with Joint Ventures (JVs)?

Potential for conflicts and power struggles Signup and view all the answers

Which challenge of internationalization refers to extra costs incurred due to unfamiliar markets?

Liability of Foreignness (LOF) Signup and view all the answers

How many units are included in the course structure?

15 units Signup and view all the answers

Which factor is NOT commonly considered in FDI selection?

Past financial performance Signup and view all the answers

What example illustrates a Joint Venture that turned into an acquisition?

Toyota and PSA partnership Signup and view all the answers

Which of the following is an example of a Global Value Chain (GVC)?

Decathlon's B'Twin bicycle production across multiple countries Signup and view all the answers

Which of the following is a consequence of Inward FDI for host countries?

Higher competition for local businesses Signup and view all the answers

What aspect does collective evaluation primarily cover?

Teamwork and group presentations Signup and view all the answers

What is a common role of investment promotion agencies?

To facilitate foreign investment and exports Signup and view all the answers

Which statement accurately describes an ownership advantage in the OLI paradigm?

Competitive advantages such as technology and brand. Signup and view all the answers

What is a disadvantage of Brownfield investments?

Cultural and organizational integration challenges Signup and view all the answers

What role does the Efficiency Manager play in the presentation process?

Collects and organizes all presentations on a USB key Signup and view all the answers

What advantage does international licensing provide to companies?

Low-cost entry mode Signup and view all the answers

Which of the following is a disadvantage of international franchising?

Control loss over brand and operations Signup and view all the answers

Which model describes subsidiaries operating independently in a decentralized manner?

Multinational Model Signup and view all the answers

What is the primary purpose of management contracts in a cross-border context?

To allow foreign firms to manage local assets for fees Signup and view all the answers

What type of arrangement involves designing, building, and delivering fully operational facilities?

Turnkey projects Signup and view all the answers

Which control mechanism involves setting performance targets and using key performance indicators?

Output Control Signup and view all the answers

Which legal aspect is crucial to avoid conflicts in cross-border contractual arrangements?

Clear specifications of scope and obligations Signup and view all the answers

What is the primary role of headquarters in a multinational corporation?

Create value by identifying opportunities Signup and view all the answers

In which communication style is information conveyed in a direct and explicit manner?

Low Context Communication Signup and view all the answers

What is an example of a disadvantage of manufacturing contracts?

Dependence on third-party performance Signup and view all the answers

Which model integrates a network that balances global efficiency with local responsiveness?

Transnational Model Signup and view all the answers

Which factor should businesses consider when choosing a type of cross-border contractual arrangement?

Industry specifics and business objectives Signup and view all the answers

What type of ethnocentrism involves viewing one’s own culture as superior?

Ethnocentrism Signup and view all the answers

Which aspect of time orientation describes a linear perception of time?

Monochronic Time Orientation Signup and view all the answers

What is a non-monetary incentive that could motivate employees?

Recognition Signup and view all the answers

Study Notes

Session 1: Introduction and Course Organization

Course Objectives: Understand the international business environment, explore job opportunities, and develop teamwork, communication, and research skills.
Course Structure: 15 units, 2 hours per unit, combining theory and practical application.
Evaluation:
- 40% Collective Evaluation: IB project (oral presentation in Unit 13 or 14).
- 60% Individual Evaluation: Class participation (10%) and final exam (50%). The final exam comprises multiple-choice questions (MCQs) and open-ended questions.
Course Rules: Attendance and punctuality are mandatory, with limited use of electronic devices.
Project Guidance: Projects are teamwork-oriented, focusing on course themes. A first presentation (Unit 7) provides formative feedback, and a final presentation (Unit 13 or 14) is evaluated.

Session 2: How and Why Do Companies Internationalize?

Reasons for Internationalization:
- Market Seeking: Expanding into less saturated, more profitable markets.
- Asset Seeking: Access to valuable resources (technology, labor, raw materials).
- Efficiency Seeking: Optimizing costs by spreading operations globally.
Global Value Chains (GVCs): Activities involved in bringing a product from conception to market.

Session 3: Entry Modes and Internationalization Paths

Entry Modes:
- Exporting: Direct (company handles exports directly) or indirect (using intermediaries).
- Contractual Arrangements: Licensing (granting rights to use intellectual property) and franchising (allowing use of a brand and business model)
- Foreign Direct Investment (FDI): Greenfield (building new operations from scratch) or brownfield (acquiring existing facilities), joint ventures.
Progressive vs. Rapid Internationalization: Progressive (slower, knowledge-driven expansion) or rapid (faster, riskier, reliant on innovation and digital technologies, often a "born global" company)

Session 4: Managing Risks in the International Environment

Evaluating Opportunities and Threats: Local content regulations in China's automotive industry, and critical success factors (CSFs) affecting foreign business operations (like Danone's acquisition of Opavia in the Czech Republic) are examples.
Analyzing Country Risk: Identifying potential negative events impacting foreign business operations is crucial. Sources of information include governments, central banks, international institutions (such as IMF and World Bank), and credit-rating agencies (Moody's, Fitch, and Standard & Poor's).
Country Risk Indicators: Economic risks (currency devaluation, banking crises), socio-political risks (corruption, instability, terrorism), and geopolitical adjustments should be considered in risk analysis.
Credit Rating Agencies: Provide assessments of country or company creditworthiness (AAA to CCC).

Session 5: Introducing the Export-Import Business

Forms of Exporting: Direct (company handles exports) and indirect (using intermediaries).
Export/Import Operations: Includes piggyback exporting (one company leveraging another's export system).
International Shipping Process: Steps from seller to buyer.
Customs, Duties, and Procedures: Customs functions (trade control, security, compliance, and tax collection), EU Customs Union rules, and procedures for clearing goods (free circulation and home use).

Session 6: Managing International Logistics - The Incoterms

Definition of Incoterms: International Commercial Terms that standardize responsibilities between buyers and sellers in global trade.
Categories of Incoterms 2020: (Group E, F, C, and D) EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAP, DPU, DDP.
Using Incoterms: Incoterms, destination, and version information needs to be specified.

Session 7: IB Project - First Presentation

Presentation Goals: Receive constructive feedback.
Presentation Structure: Presents the company, question, methodology, and initial findings.
Presentation Tips: Focus on timing, fluency, visual aids, and referencing.

Session 8: Cross-Border Contractual Arrangements

Definition: Agreements between companies in different countries, often involving intangible assets (IP, services, etc.).
Types of Contracts: International licensing, franchising, manufacturing contracts, service outsourcing, management contracts, and turnkey projects.

Session 9: Forms of Foreign Direct Investment (FDI)

Definition of FDI: Investment by a company into another country's business operations, typically involving ownership and control of value-added activities.
Types of FDI: Greenfield investments (start new facilities), brownfield investments (acquire existing businesses), and joint ventures (collaboration between two or more firms).

Session 10: Successfully Managing Foreign Direct Investments (FDI)

Policy Makers and Local Institutions Facing FDI: Outward FDI (local companies' international investments) and Inward FDI (foreign investments).
Types of FDI Management: Greenfield FDI, Brownfield FDI, Joint Ventures.

Session 11: Intercultural Management in a Globalized World

Culture as a Multifaceted Concept: Shared values, beliefs, behaviors, and symbols.
Intercultural Models: Examining Hofstede's dimensions and Hall's cultural dimensions

Session 12: Headquarters-Subsidiary Relations

Types of Relationships: Multinational, international, global, and transnational models.
Roles of Headquarters (HQs): Entrepreneurial and administrative roles.
Mechanisms of Control: Behavioral, output, and social control.

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Description

This quiz covers the fundamentals of the International Business course, including course objectives, structure, evaluation methods, and rules. It also explores the reasons companies choose to internationalize, setting the foundation for deeper understanding of global business dynamics.