Podcast
Questions and Answers
What is essential for a nation to gain and hold strong international trading and investment positions?
What is essential for a nation to gain and hold strong international trading and investment positions?
- Influencing trade regulations and developing a global orientation
- Maintaining economic competitiveness, influencing trade regulations, and developing a global orientation (correct)
- Focusing solely on local trade and investment
- Only maintaining economic competitiveness
What is the primary way for companies to achieve competitive advantage?
What is the primary way for companies to achieve competitive advantage?
- Through innovation (correct)
- Through reducing labor costs
- Through process optimization
- Through expanding into new markets
Why can some firms innovate consistently while others cannot?
Why can some firms innovate consistently while others cannot?
- Due to differences in industry and market trends
- Due to differences in firm size and structure
- Due to differences in management style and leadership
- Due to differences in national competitive advantage (correct)
What are the four broad attributes that determine national competitive advantage according to Porter?
What are the four broad attributes that determine national competitive advantage according to Porter?
What do factor conditions include, according to Porter's model?
What do factor conditions include, according to Porter's model?
What helps MNEs remain abreast of low-cost inputs and knowledge regarding their industry?
What helps MNEs remain abreast of low-cost inputs and knowledge regarding their industry?
What determines national competitive advantage, according to Porter?
What determines national competitive advantage, according to Porter?
What is essential for businesses to fashion and shape their goods and services?
What is essential for businesses to fashion and shape their goods and services?
What is a potential consequence of globalization on national sovereignty?
What is a potential consequence of globalization on national sovereignty?
What is a challenge faced by international firms due to differences in economic environment?
What is a challenge faced by international firms due to differences in economic environment?
Why may international firms encounter operating problems in a foreign country?
Why may international firms encounter operating problems in a foreign country?
What is a factor that affects the success of a foreign firm in a particular cultural setting?
What is a factor that affects the success of a foreign firm in a particular cultural setting?
What is a restriction that countries may place on international business?
What is a restriction that countries may place on international business?
What is a reason why capital may be flowing more freely to certain countries?
What is a reason why capital may be flowing more freely to certain countries?
What is a challenge faced by international firms due to differences in legal-political environment?
What is a challenge faced by international firms due to differences in legal-political environment?
What is a consequence of differences in national environments on international business?
What is a consequence of differences in national environments on international business?
What is the primary benefit of having sophisticated buyers in a country?
What is the primary benefit of having sophisticated buyers in a country?
What happens when a company dominates the industry and does not feel the need to upgrade its products and services?
What happens when a company dominates the industry and does not feel the need to upgrade its products and services?
What is the primary role of government in international business, according to G. Porter?
What is the primary role of government in international business, according to G. Porter?
What is a consequence of government intervention to protect home industries?
What is a consequence of government intervention to protect home industries?
What is one way to create an international perspective in a company?
What is one way to create an international perspective in a company?
What has been the trend in the U.S. share of world output over the past 30 years?
What has been the trend in the U.S. share of world output over the past 30 years?
What is a result of a company not having an international perspective?
What is a result of a company not having an international perspective?
What is a factor that influences the four determinants of a company's competitive environment?
What is a factor that influences the four determinants of a company's competitive environment?
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Study Notes
Globalization and Capital Flow
- Capital is flowing more freely to countries with lower tax rates and fewer regulatory restrictions.
- This puts additional pressure on national fiscal and monetary policies.
National Sovereignty
- Globalization may undermine national sovereignty in two ways:
- Cultural borrowing may dilute a country's cultural uniqueness.
- Important decisions may be made abroad by foreign owners of domestically located firms.
International Business Environment
Legal-Political Environment
- Companies operating internationally are subject to the laws and political systems of each country.
- Different laws can cause operating problems (e.g., Blockbuster in Germany).
Economic Environment
- Countries differ significantly in terms of GDP per capita.
- Poor countries have smaller markets, less disposable income, higher illiteracy rates, and lower life expectancy rates.
Cultural Environment
- Country norms, attitudes, values, and beliefs differ from country to country.
- Cultural issues, such as work attitudes and leadership styles, can affect a foreign firm's success.
Mobility
- Countries restrict the international movement of goods, currency conversion, and immigration.
Gaining International Trading Positions
- A nation must maintain economic competitiveness, influence trade regulations, and develop a global orientation.
Innovation and Competitive Advantage
- Innovation is key to achieving competitive advantage.
- This can be accomplished through ongoing improvement or making existing products obsolete.
- Four attributes determine national competitive advantage: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry.
Porter's Model
- Factor conditions include land, labor, and capital.
- Demand conditions require sophisticated local demand to shape goods and services.
- Related and supporting industries provide low-cost inputs and knowledge.
- Firm strategy, structure, and rivalry help manage operations in the face of competitiveness.
National Competitive Advantage
- The four determinants in Porter's model interact and depend on each other.
- Government policies and chance can influence the four determinants.
- A government's major role in international business is as a world trade negotiator.
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