Questions and Answers
What is international business commonly defined as?
The exchange of goods, services, or something of value between businesses or organizations across national borders
What type of international business involves allowing a foreign company to use a company's intellectual property in exchange for royalties?
Licensing
What type of international business involves partnering with a foreign company to undertake a specific project or business activity?
Joint Ventures
What international trade theory states that a country specializes in producing goods for which it has a lower opportunity cost?
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What type of international business strategy involves adapting products and business models to local markets?
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What international business organization promotes free trade and resolves trade disputes?
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Study Notes
International Business: Key Concepts
Definition
International business refers to the exchange of goods, services, or something of value between businesses or organizations across national borders.
Types of International Business
- Importing: purchasing goods or services from another country
- Exporting: selling goods or services to another country
- Licensing: allowing a foreign company to use a company's intellectual property in exchange for royalties
- Franchising: allowing a foreign company to use a company's business model and brand in exchange for fees
- Joint Ventures: partnering with a foreign company to undertake a specific project or business activity
- Foreign Direct Investment (FDI): investing in a foreign company or establishing a subsidiary in another country
International Business Environment
- Cultural Environment: cultural differences and nuances that affect business operations
- Economic Environment: economic conditions, trade policies, and government regulations that affect business
- Political Environment: political stability, government policies, and legal frameworks that affect business
- Technological Environment: advancements and innovations that affect business operations and competitiveness
International Trade Theories
- Absolute Advantage: a country specializes in producing goods for which it has a lower opportunity cost
- Comparative Advantage: a country specializes in producing goods for which it has a lower opportunity cost relative to other countries
- Gains from Trade: countries benefit from trade by increasing efficiency and productivity
International Business Strategies
- Multidomestic Strategy: adapting products and business models to local markets
- Global Strategy: using a standardized product and business model worldwide
- Transnational Strategy: a combination of multidomestic and global strategies, balancing local adaptation and global efficiency
International Business Challenges
- Cultural and Language Barriers
- Currency and Exchange Rate Fluctuations
- Logistical and Supply Chain Challenges
- Political and Economic Risks
- Compliance with International Laws and Regulations
International Business Organizations
- World Trade Organization (WTO): promotes free trade and resolves trade disputes
- International Monetary Fund (IMF): promotes global economic stability and provides financial assistance
- United Nations Conference on Trade and Development (UNCTAD): promotes international trade and development
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