International Business Module I

Study Notes

Module I: Introduction to International Business

International business encompasses the activities of companies engaging in cross-border transactions.
The international business environment is complex, affected by various factors like political, economic, and cultural differences.
Classical trade theories include Absolute Cost Advantage (one country can produce more of a good with the same resources), Comparative Cost Advantage (specialisation based on lower opportunity costs), and Modern theories (factors like economies of scale and product differentiation).
Michael Porter's model explains national competitive advantage through factors like factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry.
Globalization involves increasing interconnectedness, driven by factors like technological advancements and reduced trade barriers.
Dimensions of globalization include economic, social, political, and environmental interconnectedness.
Stages of globalization include early, mid, and advanced stages, each with distinct characteristics.
Contemporary issues in international business include globalisation vs. nationalism, trade protectionism, and environmental sustainability.

Module II: International Business Environment

Tariff and non-tariff barriers restrict international trade.
GATT (General Agreement on Tariffs and Trade) and WTO (World Trade Organization) promote free trade through agreements and dispute resolution.
Key WTO ministerial conferences have shaped global trade policies.
The WTO dispute settlement mechanism addresses trade disagreements between countries.
Regional integrations (e.g., EU, NAFTA) involve different levels of economic integration, with arguments for (economic growth, increased competition, political stability) and against (trade diversion, loss of sovereignty) presented.

Module III: Modes of International Entry

Businesses use various entry modes for international operations including Franchising, Exporting, Licensing, International Agents, International Distributors, Cross-Border Mergers & Acquisitions, Strategic Alliances, Joint Ventures, Overseas Manufacture and International Sales Subsidiaries, Outsourcing, FDI (Foreign Direct Investment), and FII (Foreign Institutional Investment).

Module IV: International Financial Management

International financial management involves managing financial transactions in a global context.
International Monetary Systems influence exchange rates.
Exchange rate systems (floating and fixed) impact international transactions.
Financial markets and instruments are crucial in international trade.
Export and import finance involves entities like ECGC (Export Credit Guarantee Corporation of India) and EXIM Bank.
Methods of payment in international trade include Letters of Credit, Banker's Acceptances, and Drafts.

Module V: Forex Exposure

Country risk analysis involves assessing political, social, and economic risks of foreign countries.
Types of foreign exchange exposure (accounting, operating, and transaction) need careful management.
Interest rate exposure also poses risks in international finance.

Module VI: Foreign Trade Procedure

Foreign trade policy (e.g., 2015-20) influences import/export activities.
Documentation frameworks guide export/import processes.
Export contracts, including Incoterms (International Commercial Terms), define responsibilities and terms of export transactions.
Order processing in exports follows specific procedures.

Description

Explore the fundamentals of international business in this quiz. Understand key concepts such as trade theories, national competitive advantage, and the impact of globalization on businesses. Test your knowledge on how political, economic, and cultural factors influence international commerce.