International Business Overview
45 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What are the primary ways firms enter foreign markets?

  • Trade, production and licensing of intellectual property, and foreign direct investment (correct)
  • Trade, foreign direct investment, and franchising
  • Exporting, importing, and partnerships
  • Licensing, trade, and production

    • What does direct exporting involve?

  • Using import specialists to facilitate overseas trade
  • Hiring foreign sales representatives to market products
  • Shipping goods directly to end customers without intermediaries (correct)
  • Selling products through a third-party distributor

    • Which of the following describes foreign distributors?

  • Companies specialized in creating export documentation
  • Firms that purchase goods, warehouse them, and sell to retailers (correct)
  • Individuals who sell products directly to end customers
  • Entities that represent foreign governments in trade negotiations

    • What is an advantage of indirect exporting for small and medium-sized companies?

    <p>Access to larger international markets without extensive investment (B)</p> Signup and view all the answers

    Which statement about export trading companies (ETCs) is true?

    <p>ETCs help firms team up for large foreign projects and share market costs (D)</p> Signup and view all the answers

    What role do foreign sales representatives play in international business?

    <p>They represent a company and sell its products/services in foreign markets (A)</p> Signup and view all the answers

    What is a primary responsibility of an exporter in international trade?

    <p>To assume the bulk of the responsibility for sales transactions (C)</p> Signup and view all the answers

    Which factor does NOT typically characterize international business today?

    <p>Consistent domestic markets (C)</p> Signup and view all the answers

    What happens when a seller quotes prices in their own currency?

    <p>The exchange rate risk is transferred to the buyer. (A)</p> Signup and view all the answers

    What is 'nationalization' in the context of foreign business?

    <p>The process of transforming private firms into government-controlled entities. (A)</p> Signup and view all the answers

    Which statement about 'expropriation' is accurate?

    <p>It typically includes compensation for the taken property. (A)</p> Signup and view all the answers

    What risk does a firm face due to political instability in a foreign market?

    <p>Political risk. (C)</p> Signup and view all the answers

    What is associated with 'cost increases' and 'currency fluctuations' concerning contracts?

    <p>They can exist without rendering the contract impracticable. (B)</p> Signup and view all the answers

    What does 'country risk' entail?

    <p>Risks associated with investing in a foreign country. (C)</p> Signup and view all the answers

    Which role do freight forwarders or customs brokers play in international business?

    <p>They manage the shipping of goods for businesses. (C)</p> Signup and view all the answers

    When a license to open a retail store in Italy is denied, what can it indicate?

    <p>The market is oversupplied according to local authorities. (D)</p> Signup and view all the answers

    What characterizes multinational corporations?

    <p>Firms that acquire a major portion of their revenues from two or more countries (D)</p> Signup and view all the answers

    What defines a transnational corporation?

    <p>It comprises a parent organization and its foreign affiliates (D)</p> Signup and view all the answers

    What role do export management companies typically play in international trade?

    <p>They act as sales representatives or wholesalers in foreign markets. (A)</p> Signup and view all the answers

    What is a significant legal document used in import/export transactions?

    <p>Certificate of Origin (B)</p> Signup and view all the answers

    Which factor is commonly associated with developed countries?

    <p>High per capita income (A)</p> Signup and view all the answers

    What is a characteristic of developing countries?

    <p>Greater state control over the economy (D)</p> Signup and view all the answers

    What percentage of the U.S. exporters were small to medium-sized businesses in 2015?

    <p>98% (B)</p> Signup and view all the answers

    What must firms with significant intellectual property (IP) assets do in other countries?

    <p>Protect their legal rights. (B)</p> Signup and view all the answers

    What are high tariffs, taxes, and licensing requirements indicative of?

    <p>Trade and investment policies in developing countries (A)</p> Signup and view all the answers

    Which organization is recognized for fostering cooperation in developing IP policies internationally?

    <p>World Intellectual Property Organization (WIPO) (B)</p> Signup and view all the answers

    What is a common risk associated with international business?

    <p>Payment or credit risk (D)</p> Signup and view all the answers

    How do least-developed countries (LDCs) typically differ from newly industrialized countries?

    <p>They generally lack basic resources for development (B)</p> Signup and view all the answers

    What is a primary component of international licensing agreements?

    <p>Granting rights to use IP in exchange for consideration. (B)</p> Signup and view all the answers

    What does FDI stand for in the context of international business?

    <p>Foreign Direct Investment (A)</p> Signup and view all the answers

    Which of the following is a characteristic of emerging market economies?

    <p>They have potential for economic growth (B)</p> Signup and view all the answers

    What does export control pertain to?

    <p>Guidelines for the export of goods for security or foreign policy reasons (D)</p> Signup and view all the answers

    What is a disadvantage of a joint venture in international business?

    <p>Potential need to share technology and profits. (C)</p> Signup and view all the answers

    What regulatory body primarily oversees franchising in the United States?

    <p>Federal Trade Commission (FTC) (B)</p> Signup and view all the answers

    Which term defines a tax imposed on imported goods?

    <p>Tariff barriers (A)</p> Signup and view all the answers

    What is an example of a supplier risk?

    <p>Receiving defective goods from a supplier (B)</p> Signup and view all the answers

    What is the term used for the unauthorized use of intellectual property rights?

    <p>Counterfeiting (A)</p> Signup and view all the answers

    Which of the following is NOT a common form of intellectual property?

    <p>Business Models (B)</p> Signup and view all the answers

    What characterizes the negotiations in international trade?

    <p>They often require knowledge of trade regulations across different nations (B)</p> Signup and view all the answers

    Which of the following describes the concept of currency risk?

    <p>Risks arising from fluctuations in the value of currencies during exchange (A)</p> Signup and view all the answers

    In the context of foreign investment, what is a foreign subsidiary?

    <p>An internationally organized company owned by a parent corporation. (C)</p> Signup and view all the answers

    What is a primary disadvantage of language and cultural differences in international business?

    <p>Potential misunderstandings due to language barriers (B)</p> Signup and view all the answers

    What is considered a key factor for small businesses to succeed in exporting?

    <p>An export plan along with commitment. (B)</p> Signup and view all the answers

    What is a potential challenge of franchising in developing countries?

    <p>Restrictions on profit repatriation. (B)</p> Signup and view all the answers

    Signup and view all the answers

    Flashcards

    International Business

    Commercial activities that cross national borders due to globalization.

    Trade

    Importing and exporting goods and services between countries.

    Exporting

    Sending goods or services out from one country to another.

    Importing

    Bringing in goods or services from foreign countries.

    Signup and view all the flashcards

    Direct Exporting

    Selling products directly to foreign customers without intermediaries.

    Signup and view all the flashcards

    Indirect Exporting

    Selling products through intermediaries to reach foreign markets.

    Signup and view all the flashcards

    Foreign Sales Representatives

    Individuals representing a company to sell products in foreign markets.

    Signup and view all the flashcards

    Export Trading Companies

    Firms that assist in exporting by providing support services.

    Signup and view all the flashcards

    Certificate of Origin

    An international trade document confirming the product's origin.

    Signup and view all the flashcards

    Export Management Companies

    Companies acting as sales representatives in foreign markets.

    Signup and view all the flashcards

    Successful Small Business Exporting

    Small multinational corporations effectively exporting goods.

    Signup and view all the flashcards

    Intellectual Property (IP)

    Legal rights resulting from literary and artistic works.

    Signup and view all the flashcards

    International Licensing Agreements

    Contracts granting rights to IP in exchange for payment.

    Signup and view all the flashcards

    World Intellectual Property Organization (WIPO)

    An organization coordinating international IP policy and registration.

    Signup and view all the flashcards

    Infringement

    Unauthorized use or violation of IP rights.

    Signup and view all the flashcards

    Franchising

    Granting the right to run a business under a franchisor's brand.

    Signup and view all the flashcards

    Foreign Direct Investment (FDI)

    Ownership investment in a foreign country by a firm.

    Signup and view all the flashcards

    Joint Venture

    A partnership between firms for profit-sharing.

    Signup and view all the flashcards

    Foreign Subsidiary

    International company organized under the host country's laws.

    Signup and view all the flashcards

    Local Participation

    Revenue share owned by the host country in a business.

    Signup and view all the flashcards

    Export Plan

    A strategy outlining how to enter foreign markets.

    Signup and view all the flashcards

    Technology Transfer

    Sharing technology between firms or institutions.

    Signup and view all the flashcards

    Affiliate

    Several subsidiaries controlled by one parent organization.

    Signup and view all the flashcards

    Multinational Corporation

    Firms earning revenue from two or more countries.

    Signup and view all the flashcards

    Transnational Corporation

    A firm with a parent organization and its foreign affiliates.

    Signup and view all the flashcards

    Developing Countries

    Countries with lower per capita income, lower standards of living.

    Signup and view all the flashcards

    Developed Countries

    Countries with high per capita income and industrialized economies.

    Signup and view all the flashcards

    Least-Developed Countries (LDCs)

    Countries with low income, low literacy, and weak economies.

    Signup and view all the flashcards

    Emerging Market Economy

    Countries projected to grow economically.

    Signup and view all the flashcards

    Countries in Transition

    Nations moving from planned economies to free markets.

    Signup and view all the flashcards

    Payment or Credit Risk

    Risk taken by buyers when managing transactions.

    Signup and view all the flashcards

    Supplier Risk

    The risk of receiving defective goods from suppliers.

    Signup and view all the flashcards

    Export Control

    Guidelines on exporting goods for security or policy reasons.

    Signup and view all the flashcards

    Sanctions

    Restrictions on trade with nations that sponsor terrorism.

    Signup and view all the flashcards

    Tariff

    Tax imposed on imported goods entering a country.

    Signup and view all the flashcards

    Nontariff Barriers

    Trade barriers excluding traditional tariffs.

    Signup and view all the flashcards

    Exchange Rate Risk

    Risks due to fluctuating currency values in international trade.

    Signup and view all the flashcards

    Distance and Logistics

    Challenges in managing international supply chains.

    Signup and view all the flashcards

    Repatriating Profits

    The process of converting foreign profits into the currency of one's home country.

    Signup and view all the flashcards

    Political Risk

    The risk of losses due to political instability or adverse government actions in a foreign country.

    Signup and view all the flashcards

    Nationalization

    The process where private businesses are transformed into government-owned entities.

    Signup and view all the flashcards

    Expropriation

    The government's acquisition of private property with compensation.

    Signup and view all the flashcards

    Confiscation

    The government's taking of property without any compensation.

    Signup and view all the flashcards

    Country Risk

    The potential for investment losses due to risks associated with operating in a foreign nation.

    Signup and view all the flashcards

    Freight Forwarders

    Entities that arrange the logistics of transporting goods from the manufacturer to the buyer.

    Signup and view all the flashcards

    Study Notes

    International Business Overview

    • Modernization creates global interconnectedness, eliminating purely domestic businesses.
    • War, natural disasters, politics, trade ease, and growing demand drive international business.
    • International business occurs in 3 forms: trade, intellectual property production/licensing, and foreign direct investment (not mutually exclusive).

    Trade

    • Involves importing and exporting goods/services across borders.
    • Exporting: Shipping goods/services overseas.
    • Importing: Bringing goods/services into one's country.
    • Trade in services involves services provided by one party to another.
    • Exporting is the first step in international business, requiring significant involvement and responsibility.
    • Direct exporting: Selling to a foreign buyer directly without a third party. Requires managing all aspects of the transaction.
    • Indirect exporting: Using an intermediary (e.g., export management companies, international trading companies, distributors) for sales.
    • Export Specialists/International Sales Representatives: represent the company directly in foreign markets and builds a relationship with buyers.
    • Foreign Distributors: purchase, store, and resell goods/services to foreign retailers.
    • Export Trading Companies (ETCs): Support other firms involved in exporting with services like coordination, market research, or joint ventures.
    • Legal protections exist (e.g., Export Trade Certificate of Review) for ETCs to prevent lessening of US competition.
    • Important documents include Certificates of Origin for verifying legitimate import/export.
    • Successful small businesses focus on experience and a defined export strategy.

    Intellectual Property Licensing

    • Protects creative work (patents, trademarks, copyrights, trade secrets).
    • Essential for firms with IP assets to protect their rights globally (often through contracts/licensing).
    • International Licensing Agreements: Contracts granting IP rights to another party (licensee).
    • Licensing enables the transfer of a valuable asset.
    • IP laws are often governed on federal levels.
    • International organizations (e.g., World Intellectual Property Organization (WIPO)) support international IP protection and enforcement.

    Foreign Direct Investment (FDI)

    • Active investment by a firm in another country's business.
    • Aims for long-term involvement and management.
    • FDI offers potentially high market penetration, but also significant risk.
    • Forms: foreign branch offices, foreign subsidiaries, joint ventures, affiliates.
    • Joint Ventures: partnerships with local firms, often required by host country laws, and are necessary for local involvement.
    • Multinational Corporations (MNCs) generate revenue from multiple countries.
    • Transnational Corporations have an international structure via parent companies and foreign affiliates.

    Developing and Newly Industrialized Countries

    • Definitions of "developing" and "newly industrialized" lack universal consensus.
    • Characteristics of developed vs. developing countries (income, standard of living, industrialization, economic dependence, demographics) are varied but can help business strategizing.
    • Business in developing nations presents particular challenges concerning: trade and investment policies (tariffs and regulations).
    • Access to information, regulations, and transparency can be problematic to international businesses.
    • Businesses should be aware of regulations and potentially changing policies.

    Risks of International Business

    • Distance and Logistics: Shipping delays, payment issues, damage to goods, currency risk.
    • Cultural Differences: Language barriers, cultural misunderstandings. Important to have local personnel/understanding.
    • Trade Controls: Export restrictions, sanctions, tariffs (taxes on imported goods), quotas (limitations on imports).
    • Currency Risk: Fluctuation in exchange rates can impact profits.
    • Political Risk: Instability, hostile regulations, nationalization (government takeover), or expropriation (taking over land/property).
    • Legal Risk: Difficulty in navigating foreign laws and court systems.

    Obtainment of Professional Assistance

    • Enlisting firms/individuals who can assist international businesses.
    • International lawyers, freight forwarders, and custom brokers, and international banking specialists can help negotiate and comply with the rules of foreign countries.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Description

    This quiz provides an overview of international business concepts, highlighting the factors driving global interconnectedness and the various forms of international business, such as trade and foreign direct investment. It explores the processes of importing and exporting goods and services, detailing the differences between direct and indirect exporting. Test your knowledge on the essentials of conducting business across borders.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser