International Business: The New Realities Introduction: What Is International Business? Show
A) the growth of emerging market countries B) the increase in trade barriers C) advances in information technology D) the liberalization of markets Answer: B
; Reflective thinking skills
; Reflective thinking skills Freehold Investment Corp. (Scenario) Dan Freehold and his business partner, Bethany Quinn, are successful investors engaged in a variety of enterprises. Recently Dan and Bethany have decided to expand their foreign investing operations. They hold a meeting for individuals interested in participating in certain overseas ventures.
International Trade Summit (Scenario) An international trade summit is held in Geneva, Switzerland. The purpose of the summit is to cooperatively develop policies that promote international trade. Representatives from 50 different countries attend the summit.
Overseas Expansion (Scenario) Whittaker Semiconductors has recently decided to expand its operations overseas. Amanda Quan, Vice President of International Business, assigned a team of investigators to analyze the risks faced by the company in making this move. Of particular interest were the risks that might affect the success of a new production plant to be located in one of three potential countries.
Sterling Auto International (Scenario) Sterling Auto International is a successful car manufacturing company headquartered in Detroit, Michigan. Over the past year, the company implemented multiple efforts to expand its overseas operations. At a recent shareholder's meeting, attendees questioned the CEO's motivations for authorizing certain of the expansion efforts.
D) a new manufacturing protocol based on an efficient Indian production method Answer: A Page Ref: 17
International business is transforming the world as never before. In the last 50 years, international trade and investment have experienced unprecedented growth. Since the 1980s, emerging markets have provided new impetus to worldwide economic interconnectedness. These fast-growth developing economiessome thirty countries including Brazil, Russia, India, and China, the so-called BRICsare experiencing substantial market liberalization, privatization, and industrialization, which are fueling global economic transformation. Located on every continent, they are gradually breaking away from the stagnation typical of developing economies. The emerging markets are home to the largest proportion of world population and participate increasingly in foreign trade. Along with market globalization, advances in technology is another megatrend helping to transform the global economy. The rise of information and communication technologies, as well as production and process technologies, has dramatically reduced the cost of conducting business with customers located around the world. E-commerce makes international business increasingly imperative for firms of all sizes and resource levels. Technological advances are allowing globalization to progress more rapidly. Globalization, in turn, is accelerating the development of the latest technologies. , 18 , 1-
Singapore is a major entrepôt, or depot, for petroleum products received from the Middle East, which it then exports to China and other destinations in Asia. Other examples of entrepôt economies include Belgium, the Netherlands, Hong Kong, South Korea, and Malaysia. In all of these countries, trade accounts for more than 100 percent of GDP. Page Ref: 6-
Language is a critical dimension of culture. In addition to facilitating communication, language is a window on people's value systems and living conditions. When translating from one language to another, it is often difficult to find words that convey the same meanings. Such challenges impede effective communication and cause misunderstandings. Miscommunication due to cultural differences gives rise to inappropriate business strategies and ineffective relations with customers. Page Ref: 10- AACSB: Communication abilities; Dynamics of the global economy; Multicultural and diversity understanding
Some international risks are extremely challenging. A recent example is the global financial crisis that emerged in the fall of 2008. The crisis spread to banks and insurance firms in Asia, Europe, and elsewhere. Many countries experienced deflation and severe declines in consumer confidence and spending power. The year 2009 saw sharp reductions in international commerce and shipping. Central banks worldwide sought to rally national economies by injecting billions of dollars into their financial systems. Page Ref: 12
Reactive Motivations Firms expand to better serve key customers that have relocated abroad. In a global economy, many firms internationalize to better serve clients that have moved into foreign markets. For example, when Nissan opened its first factory in the United Kingdom, many Japanese auto-parts suppliers followed, establishing their own operations there. Strategic or Reactive Motivations Firms might also internationalize to confront international competitors more effectively or thwart the growth of competition in the home market. International competition is substantial and increasing, with multinational competitors invading markets worldwide. The firm can enhance its competitive positioning by confronting competitors in international markets or preemptively entering a competitor's home markets to destabilize and curb its growth. If the firm acts to confront an existing competitor, it would be responding reactively. If the firm acts to preempt a competitor, it would be responding proactively. One example of a proactive response is Caterpillar's preemptive entry into Japan just as its main rival in the earthmoving equipment industry, Komatsu, was getting started in the early 1970s. Caterpillar's preemptive move hindered Komatsu's international expansion for at least a decade. Had it not moved proactively to stifle Komatsu's growth in Japan, Komatsu's home market, Caterpillar would certainly have to face a more potent rival sooner. Page Ref: 16-
An SME might start as a born global to lower its production costs by establishing manufacturing bases in foreign countries. Alternatively, the company might benefit from establishing international operations as a way to confront its industry competitors. Page Ref: 13, 16-
Exporting is an outbound activity, while importing is an inbound flow of products and services. Both finished products and intermediate goods, such as raw materials and components, are subject to importing and exporting. There is a strong relationship between national prosperity and participation in international trade and investment. Nations once suffering from economic stagnation are now increasingly prosperous. For example, China, India, and Eastern European nations are active international traders. The proportion of affluent citizens in these countries is rapidly growing. In terms of material gain, households in many developing economies have recently experienced huge increases in the ownership of televisions, refrigerators, and other mass-produced products. While these gains are attributable to various causes, the benefits of free exchange of products, services, capital, and technology among nations are paramount. Rising prosperity associated with international trade and investment helps improve literacy rates, nutrition, and health care in nations around the world. Trade and investment promote freedom and democracy and may reduce the likelihood of cross-border conflict. In an era of economic Which of the following defines international business?The correct answer is C) It includes all business transactions involving two or more countries.
Which of the following is an importance of international business?Importance of International Business
International companies export goods and services around the world. This allows in earning valuable foreign exchange. When firms get involved in external trade, it increases the firm's production capacity. Due to the advantage of economies of scale, the cost of production decreases.
Which of the following best defines international business quizlet?Which of the following best defines international business? It includes all business transactions involving two or more countries.
Which of the following is true about the international Monetary Fund quizlet?What is true about the International Monetary Fund? It is seen as the lender of last resort to nation-states whose economies are in turmoil.
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