Podcast
Questions and Answers
Which of the following best describes political drivers in international business?
Which of the following best describes political drivers in international business?
- Economic factors that lower production costs.
- Market trends that influence consumer behavior globally.
- Regulations and policies that affect trading relationships. (correct)
- Factors that arise from international technological changes.
What does economic globalization primarily aim to achieve?
What does economic globalization primarily aim to achieve?
- Protection of local businesses from foreign competition.
- Isolation of national economies.
- Decreased trade relations among nations.
- International integration and interdependency. (correct)
Which argument against globalization highlights concerns about labor?
Which argument against globalization highlights concerns about labor?
- It leads to an increase in job creation worldwide.
- Globalization has deleterious effects on labor standards. (correct)
- It promotes better working conditions across the globe.
- Globalization enhances economic equality.
What factor contributes to the growth of foreign direct investment?
What factor contributes to the growth of foreign direct investment?
Which of the following best exemplifies market drivers in international trade?
Which of the following best exemplifies market drivers in international trade?
Which concern associated with globalization emphasizes environmental issues?
Which concern associated with globalization emphasizes environmental issues?
How do technological drivers affect internationalization of business?
How do technological drivers affect internationalization of business?
Which is NOT a component of the major trading partners' relevance for managers?
Which is NOT a component of the major trading partners' relevance for managers?
What defines a trade deficit?
What defines a trade deficit?
Which statement accurately describes mercantilism?
Which statement accurately describes mercantilism?
What is the primary characteristic of the theory of absolute advantage?
What is the primary characteristic of the theory of absolute advantage?
Which of the following best describes the concept of comparative advantage?
Which of the following best describes the concept of comparative advantage?
How does currency devaluation affect trade?
How does currency devaluation affect trade?
What factor best explains the concept of resource endowment?
What factor best explains the concept of resource endowment?
What is meant by product differentiation?
What is meant by product differentiation?
Which type of foreign investment involves purchasing enough stock to control a company?
Which type of foreign investment involves purchasing enough stock to control a company?
What distinguishes international business from foreign business?
What distinguishes international business from foreign business?
Which of the following accurately describes the term 'transnational corporation'?
Which of the following accurately describes the term 'transnational corporation'?
In the context of international business, what does Foreign Direct Investment (FDI) entail?
In the context of international business, what does Foreign Direct Investment (FDI) entail?
What are some common challenges firms face when dealing with external forces in the foreign environment?
What are some common challenges firms face when dealing with external forces in the foreign environment?
Which of the following describes a factor under internal environmental forces?
Which of the following describes a factor under internal environmental forces?
What factor contributes to the complexity of decision making in the international environment?
What factor contributes to the complexity of decision making in the international environment?
Which argument is often made against globalization in the context of international business?
Which argument is often made against globalization in the context of international business?
What is a key driver leading firms to internationalize their operations?
What is a key driver leading firms to internationalize their operations?
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Study Notes
International Business Overview
- International business involves operations across national borders, enhancing global interconnectivity.
- Foreign business refers specifically to a company's activities outside its domestic market.
- Transnational corporations operate in multiple nations under unified strategies and policies.
Environmental Forces in International Business
- External forces include competitive factors, economic conditions, political environments, and socio-cultural influences.
- Internal forces encompass organization-specific factors such as production capabilities and management practices.
- Domestic environment consists of uncontrollable factors within the home country affecting business operations.
- Foreign environment includes uncontrollable forces outside the home country that impact the firm.
- International environment arises from interactions between domestic and foreign forces, complicating decision-making.
Trends in Globalization
- A growing number of companies are expanding internationally, contributing to an increase in global trade and investment.
- Foreign Direct Investment (FDI) involves substantial investment in a foreign country, providing significant management control.
- Exporting refers to sending domestic goods or services to other countries, while importing is the entry of goods/services from abroad.
Drivers of Internationalization
- Political drivers include government policies that encourage international trade.
- Technological advancements facilitate global communication and logistics, making international business more accessible.
- Market drivers reference demand fluctuations prompting firms to explore global markets.
- Cost drivers often inspire firms to seek lower operational costs abroad.
- Competitive drivers compel businesses to internationalize to maintain or advance their market position.
Globalization Arguments
- Economic globalization fosters international integration of goods, services, technology, and labor markets.
- Supporters argue globalization enhances socioeconomic development and creates improved job opportunities.
- Critics highlight uneven benefits across nations, adverse effects on labor standards, and environmental deterioration.
International Trade Insights
- Major trading partners maintain favorable business climates and established import/export regulations.
- Favorable conditions include experienced intermediaries and availability of foreign currency for transactions.
- Trade deficit occurs when a nation's imports exceed its exports; trade surplus is the opposite.
Theories of International Trade
- Mercantilism asserts that a nation's wealth is tied to its accumulation of precious metals, advocating for exports over imports.
- Absolute advantage theory posits that efficiency in producing a good dictates trade advantages.
- Comparative advantage theory suggests that even less efficient producers can benefit by specializing in goods where they are comparatively better.
Exchange Rates and Trade Dynamics
- Currency devaluation impacts the relative value of currencies, potentially altering trade balances.
- Factors influencing trade direction include resource endowments, overlapping demand between nations, product differentiation, and the international product life cycle (IPLC).
Foreign Investment Concepts
- Portfolio investment entails buying stocks/bonds for returns without direct control.
- Direct investment means taking significant ownership in a firm for management influence.
- Greenfield investment involves setting up new facilities from scratch; cross-border acquisition means purchasing an existing foreign business.
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