Podcast
Questions and Answers
What is one of the main reasons companies go abroad?
What is one of the main reasons companies go abroad?
- To diversify their risks by entering new markets (correct)
- To reduce their export capacities
- To acquire inputs less competitively than they can at home
- To become overly dependent on one location or market
What is an external driver of international business?
What is an external driver of international business?
- Shift in consumer preferences
- Technological progress worldwide (correct)
- Global economic downturn
- Changes in local government policies
What is the term used to describe the recent trend towards lowering trade barriers?
What is the term used to describe the recent trend towards lowering trade barriers?
- Mercantilism
- Liberalization (correct)
- Globalization
- Protectionism
Why do companies go abroad to acquire inputs?
Why do companies go abroad to acquire inputs?
What is a benefit of going abroad for companies with surplus capacities in their home country?
What is a benefit of going abroad for companies with surplus capacities in their home country?
What affects international business by raising general awareness of foreign markets or products?
What affects international business by raising general awareness of foreign markets or products?
What is a risk that companies may face if they become overly dependent on one location or market?
What is a risk that companies may face if they become overly dependent on one location or market?
What is one of the factors that has helped to improve global communications and logistics?
What is one of the factors that has helped to improve global communications and logistics?
What is the primary reason for the accumulation of value at different speeds in various parts of different value chains?
What is the primary reason for the accumulation of value at different speeds in various parts of different value chains?
What has been the trend in FDI flows over the past decade?
What has been the trend in FDI flows over the past decade?
What is a primary driver of international business for companies seeking to expand sales?
What is a primary driver of international business for companies seeking to expand sales?
What is a consequence of the rise in global trade volumes and FDI since the 1990s?
What is a consequence of the rise in global trade volumes and FDI since the 1990s?
What is a key factor in the decision to internalize activities for companies?
What is a key factor in the decision to internalize activities for companies?
What is a key insight from the study of international business?
What is a key insight from the study of international business?
What is a consequence of the rise of certain LDCs, starting with the Asian ones?
What is a consequence of the rise of certain LDCs, starting with the Asian ones?
What is a key driver of the growth of international business?
What is a key driver of the growth of international business?
What is a significant obstacle to managers succeeding outside of their home country?
What is a significant obstacle to managers succeeding outside of their home country?
What is the primary purpose of studying international business?
What is the primary purpose of studying international business?
What is the term used to describe a company's output as the culmination of a series of acts in which raw materials are transformed into semi-processed goods and finally end products?
What is the term used to describe a company's output as the culmination of a series of acts in which raw materials are transformed into semi-processed goods and finally end products?
What is a key component of a multinational enterprise (MNE)?
What is a key component of a multinational enterprise (MNE)?
What is offshore foreign direct investment an example of?
What is offshore foreign direct investment an example of?
What is the term used to describe activities undertaken during the earlier production phases?
What is the term used to describe activities undertaken during the earlier production phases?
What is a key requirement for successful international business?
What is a key requirement for successful international business?
What is a central concept in international business that helps companies understand their output?
What is a central concept in international business that helps companies understand their output?
Study Notes
Reasons for International Business
- Companies go abroad when their domestic economy is too small to buy all of their output, leaving surplus capacities in their home country factory.
- Going abroad allows companies to diversify their risks, reducing dependence on one location or market.
- Companies also go abroad to acquire inputs more competitively than they can at home, such as physical resources, cheap labor, or technology.
External Drivers of International Business
- Technological progress has improved global communications and logistics, facilitating international business.
- The regulatory framework, including liberalization and trade barriers, affects international business.
- The rise in global trade volumes and foreign direct investment (FDI) has led to an increase in international business.
Value Chains and Foreign Direct Investment
- Companies internalize activities to accumulate value at different speeds in various parts of different value chains.
- Economists compare the value-added contents of national imports versus exports, known as the terms of trade.
- FDI flows have increased, with a shift from North-North flows to North-South, South-South, and South-North flows.
Challenges of International Business
- Companies face obstacles due to xenophobia and protectionism, requiring "insiderization" strategies to succeed.
- Managers need to relativize their own worldview to succeed in international business.
Multinational Enterprises and Configurations
- Multinational enterprises (MNEs) range from huge companies operating globally to small and medium-sized businesses operating overseas sporadically.
- MNEs are often structured into configurations comprising a head office and subsidiaries located in different parts of the world.
Value Chain and Offshore Foreign Direct Investment
- The value chain perceives a company's output as the culmination of a series of acts, from raw materials to end products.
- Activities during the earlier production phases are called upstream, while those during the later marketing phases are called downstream.
- Offshore foreign direct investment is a second pillar of international business, alongside cross-border trade.
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Description
Learn about the reasons why companies expand internationally, including diversified risk and surplus capacities. Understand the benefits and importance of going abroad for business.
