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Flashcards in Ch. 1 What Is International Business Deck (19)
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1
Q

What is International Business

A

International Business is the trade and investment activities by companies across national borders (Expansion of IBUS activities)

2
Q

What is Globalization of markets

A

Refers to the ongoing economic integration, and growing interdependency of countries worldwide

3
Q

Two ways to invest Internationally

A

Passively (portfolio investment-, financial assets) or Actively (Foreign Direct Investment, capital, technology, land, labor, plant and equipment) aaaa

4
Q

Exporting

A

manufacturing a product or service in one country and selling it to another. (outbound activity) -entry strategy involving the sale of products/ services to customers located abroad

5
Q

Importing

A

Global sourcing; inbound activity)-the procurement of products/services from foreign suppliers for consumption in the home country or a third country

6
Q

Why do Firms go International

A

Primarily to increase sales and profits and other reasons like earn higher margins and profit, seek opportunities for growth through market diversification, and gain new ideas about products, services and business methods, better serve key customers and be closer to supply sources, confront intl competitiors and gain rewarding relationship with foreign partners

7
Q

Globalization

A

Integration, interdependency and interconnectedness of internationalization (4 I’S) FOR EXAMPLE Increasing exports vs Sourcing value-chain activities strategically around the globe to leverage factor efficiencies

8
Q

Internationalization

A

refers to the tendency of COMPANIES to systematically increase the international dimension of their business activities

9
Q

Cross-cultural risk

A

occurs when a cultural misunderstanding puts some human value at stake. Cross-cultural risk arises from differences in language, lifestyles, mindsets, customs, and religion.

10
Q

Country risk

A

refers to the potentially adverse effects on company operations and profitability caused by developments in the political, legal, and economic environment in a foreign country. Country risk includes the possibility of foreign government intervention in firms’ business activities.

11
Q

Commercial risk

A

refers to the firm’s potential loss or failure from poorly developed or executed business strategies, tactics, or procedures. Managers may make poor choices in such areas as the selection of business partners, timing of market entry, pricing, creation of product features, and promotional themes.

12
Q

Currency risk (also known as financial risk)

A

refers to the risk of adverse fluctuations in exchange rates. Fluctuation is common for exchange rates—the value of one currency in terms of another. Inflation, foreign taxation, asset valuation and currency exposure key points

13
Q

Who Participates in IBUS

A

SME MNE and Born Global Firms

14
Q

Why study IBUS

A

Comparative Advantage for you and your firm FACILITATOR to global economy and interconnectedness and Contributor to Economic well being

15
Q

IBUS is both a cause and result of increasing

A

national prosperity

16
Q

Trends that characterized Globalization

A

Cross border transactions-unprecedented growth rate-from 100 billion per year in 1960 to current numbers of 14 trillion —TRADE—Development of highly sophisticated global financial systems —Greater collaboration among nations through multilateral regulatory agencies (WTO and Intl monetary Fraud)

17
Q

6 KEY Dimensions of International Business

A
  1. Globalization of markets 2. International trade 3. International investment 4. Risks 5 Participants: Firms distribution channel intermediaries, facilitators and govts. 6. International entry strategies, including exporting and direct invest ment** . GLOB**
18
Q

International Portfolio Investment

A

(short term) is the passive ownership of foreign securities such as stocks and bonds for the purpose of generating financial returns.

19
Q

Foreign Direct Investment

A

FDI) (typically long-term) is a foreign-market entry strategy that gives investors partial or full ownership of a productive enterprise. The firm establishes a physical presence abroad through the acquisition of productive assets such as capital, technology, labor, land, plant, and equipment. Asset ownership and long time frame is the ultimate commitment-level of internationalization, and thus this text focuses primarily on FDI (most common mode of entry strategy) as opposed to International Portfolio investment. Know the Motivations for firm FDI: Know how these fit into the value chain