Chapter 1

Question 1

international business

Answer 1

• the trade of goods, services, tech, capital and/or knowledge across national borders
• the study of the internationalization process of multinational enterprises (MNEs)

Question 2

globalization of markets

Answer 2

• cross-border integration and growing interdependency of countries around the world
• drivers include the geopolitical and technological revolutions

Question 3

international trade

Answer 3

goods and services exchange across national borders (through exporting and importing)

Question 4

exporting

Answer 4

goods and services sol abroad

Question 5

importing

Answer 5

products or services from suppliers located abroad (also referred to as global sourcing)

Question 6

international trade

Answer 6

the difference in the growth rates of world production and world trade is why studying international business is so important

Question 7

international investment

Answer 7

the transfer of assets to another country or the acquisition of assets in that country

Question 8

international portfolio investment

Answer 8

passive ownership of foreign securities such as stocks and bonds

Question 9

foreign direct investment (FDI)

Answer 9

• internationalization strategy in which the firm establishes a presence abroad through the acquisition of resources
• it is distinguished from a foreign portfolio investment by a notion of direct control

Question 10

the PESTEL framework

Answer 10

provides a relatively straightforward way to scan, monitor, and evaluate important external factors and trends that may impinge upon a firm when it engages in international business

Question 11

four risks of international business

Answer 11

• cross-cultural risk
• country risk
• currency risk
• commercial risk

Question 12

cross-cultural risk

Answer 12

• a situation or event where a cultural miscommunication puts some human value at stake
• posed by differences in language, lifestyles, mindsets, customs, and/or religion

Question 13

country risk (political risk)

Answer 13

• refers to the potentially adverse affects on company operations and profitability
  0 can be caused by developments in the political, legal, and economic environment of a foreign country

Question 14

currency risk (financial risk)

Answer 14

arises from the change in price of one currency in relation to another

Question 15

commercial risk

Answer 15

firms’ potential loss or failure from poorly conceived or executed business strategies, tactics, or procedures
- social media risk
- cyber risk