Podcast
Questions and Answers
What is the primary effect of globalisation on countries?
What is the primary effect of globalisation on countries?
Which entry mode involves the most significant investment and risk for a company?
Which entry mode involves the most significant investment and risk for a company?
What does the Heckscher-Ohlin model suggest regarding trade patterns?
What does the Heckscher-Ohlin model suggest regarding trade patterns?
Which of the following represents a benefit of outsourcing as part of cost drivers in globalisation?
Which of the following represents a benefit of outsourcing as part of cost drivers in globalisation?
Signup and view all the answers
According to Adam Smith's absolute advantage theory, what should countries specialize in?
According to Adam Smith's absolute advantage theory, what should countries specialize in?
Signup and view all the answers
What is a characteristic feature of joint ventures?
What is a characteristic feature of joint ventures?
Signup and view all the answers
Which theory explains the evolution of trade patterns as products move from innovation to standardization?
Which theory explains the evolution of trade patterns as products move from innovation to standardization?
Signup and view all the answers
What drives consumer preferences to converge in international markets?
What drives consumer preferences to converge in international markets?
Signup and view all the answers
What is a key advantage of exporting as a mode of entry into international markets?
What is a key advantage of exporting as a mode of entry into international markets?
Signup and view all the answers
Which of the following describes a disadvantage of exporting?
Which of the following describes a disadvantage of exporting?
Signup and view all the answers
What differentiates franchising from licensing in internationalization?
What differentiates franchising from licensing in internationalization?
Signup and view all the answers
Which of the following best represents the theory of absolute advantage?
Which of the following best represents the theory of absolute advantage?
Signup and view all the answers
What is a characteristic commonly found in emerging markets?
What is a characteristic commonly found in emerging markets?
Signup and view all the answers
How does the Heckscher-Ohlin model explain international trade patterns?
How does the Heckscher-Ohlin model explain international trade patterns?
Signup and view all the answers
Which multinational corporation is an example of a global strategy implementation?
Which multinational corporation is an example of a global strategy implementation?
Signup and view all the answers
What major challenge do MNCs face in supply chain management across multiple countries?
What major challenge do MNCs face in supply chain management across multiple countries?
Signup and view all the answers
Which aspect is NOT a focus of the Product Life Cycle theory?
Which aspect is NOT a focus of the Product Life Cycle theory?
Signup and view all the answers
What is a typical risk associated with investing in emerging markets?
What is a typical risk associated with investing in emerging markets?
Signup and view all the answers
What characterizes emerging markets?
What characterizes emerging markets?
Signup and view all the answers
How do multinational corporations (MNCs) typically adapt their strategies?
How do multinational corporations (MNCs) typically adapt their strategies?
Signup and view all the answers
What type of legal system is based on precedents and judicial rulings?
What type of legal system is based on precedents and judicial rulings?
Signup and view all the answers
What is a common reason for government intervention in trade?
What is a common reason for government intervention in trade?
Signup and view all the answers
Which of the following best illustrates Hofstede’s cultural dimension of individualism versus collectivism?
Which of the following best illustrates Hofstede’s cultural dimension of individualism versus collectivism?
Signup and view all the answers
What is a significant challenge faced by multinational corporations in foreign markets?
What is a significant challenge faced by multinational corporations in foreign markets?
Signup and view all the answers
Which practice is primarily associated with Corporate Social Responsibility (CSR)?
Which practice is primarily associated with Corporate Social Responsibility (CSR)?
Signup and view all the answers
What is a potential negative impact of globalization?
What is a potential negative impact of globalization?
Signup and view all the answers
What is the role of the International Monetary Fund (IMF)?
What is the role of the International Monetary Fund (IMF)?
Signup and view all the answers
What is a primary goal of supply chain management for multinational corporations?
What is a primary goal of supply chain management for multinational corporations?
Signup and view all the answers
What describes the attitude of high power distance cultures?
What describes the attitude of high power distance cultures?
Signup and view all the answers
What is one of the risks that firms face when operating in emerging markets?
What is one of the risks that firms face when operating in emerging markets?
Signup and view all the answers
What is an example of economic liberalization?
What is an example of economic liberalization?
Signup and view all the answers
What is a key driver of globalization?
What is a key driver of globalization?
Signup and view all the answers
Study Notes
International Business & Globalization
- International business involves cross-border exchange of goods, services, and resources, influenced by globalization.
- Globalization integrates world markets through technological advancements (communication, transportation), economic liberalization (reduced trade barriers), market drivers (converging consumer preferences), and cost drivers (economies of scale, outsourcing).
- Positive impacts of globalization: increased market access, innovation, and economic growth.
- Negative impacts of globalization: environmental degradation, income disparity.
- Globalization progresses through stages, from global market participation to integration via supply chains and eventual interdependence.
Alternative Routes to Internationalization
- Firms internationalize via various entry modes.
- Exporting (direct or indirect) allows access to foreign markets with less investment.
- Licensing grants foreign firms use of proprietary technology or processes.
- Franchising transfers a complete business model.
- Joint ventures share ownership and risks.
- Wholly owned subsidiaries provide full control but require significant resources.
- Entry mode choices depend on market size, risk tolerance, and resources.
- Small firms often start with indirect exporting and then progress to joint ventures or subsidiaries.
Theories of International Trade
- Trade theories explain why countries trade internationally.
- Absolute advantage theory (Adam Smith): Countries specialize in goods they produce most efficiently.
- Comparative advantage theory (David Ricardo): Countries benefit from specializing in goods with lower opportunity costs.
- Heckscher-Ohlin model: Trade patterns based on a country's factor endowments (labor, capital).
- Product life cycle theory: Illustrates trade evolution from innovation to standardization.
- New trade theories highlight economies of scale and monopolistic competition.
Overview of Emerging Markets
- Emerging markets are economies transitioning towards industrialization and modernization.
- Characteristics include rapid GDP growth, a burgeoning middle class, and government influence on the economy.
- Emerging markets offer expansion opportunities and resource access, but also risks like political instability and regulatory challenges.
- Examples of BRIC economies (Brazil, Russia, India, China) highlight this dynamism.
- Firms operating in emerging markets face challenges such as infrastructural deficits and regulatory fluctuations.
MNCs and Their Strategies
- Multinational Corporations (MNCs) operate internationally and adapt strategies.
- Global strategy: standardized products for cost efficiency.
- Transnational strategy: balances global integration with local responsiveness.
- Multi-domestic strategy: customized products for local markets.
- MNCs face challenges: cultural differences, complex supply chains, and political risks.
Political and Legal Foundations
- Political and legal environments impact international business operations.
- Political systems range from democratic to totalitarian.
- Legal systems include common law, civil law, and religious law.
- Political risks include expropriation, trade barriers, and nationalization, impacting firm operations.
- Firms assess market stability and regulatory frameworks to mitigate these risks.
Government Intervention
- Governments intervene in trade to protect domestic industries, ensure national security, and stimulate economic growth.
- Methods include tariffs, quotas, and subsidies.
- Examples include agricultural subsidies in the U.S.
- Intervention can lead to trade inefficiencies and disputes.
Cultural Environment of IB
- Cultural differences heavily influence international business.
- Hofstede's cultural dimensions (individualism/collectivism, power distance) inform strategies.
- Companies like McDonald's adapt to local cultural preferences.
- Cultural sensitivity is crucial for successful cross-cultural negotiations and partnerships.
Ethics, CSR, and Sustainability
- Ethical principles guide international business decisions.
- Corporate Social Responsibility (CSR): Companies' economic, legal, and ethical obligations to society.
- Sustainability prioritizes meeting present needs without compromising future generations.
- Examples include Unilever's sustainability initiatives.
International Monetary and Financial Environment
- International monetary systems include fixed and floating exchange rate regimes.
- Fixed rates are pegged to another currency, while floating rates fluctuate.
- Institutions like the IMF and World Bank provide financial stability and development assistance.
- Financial risks (currency fluctuations, interest rate changes) challenge firms.
- Firms use hedging strategies to mitigate these risks.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge on international business and the effects of globalization. This quiz covers key concepts such as market integration, entry modes, and the impacts of globalization on economies and societies. Understand both the positive and negative dimensions of global trade and business strategies.
