Introduction

Question 1

What is International Business? International business…

Answer 1

• … is conducted across national borders
• … uses distinctive/special business methods
• … is in contact with countries that differ in terms of culture, language, political system, legal system, economic situation, infrastructure, and other factors.

=> Reminder: PESTEL - Political, Economical, Societal, Technological, Environmental, Legal

Question 2

What means gloabalization of markets?

Answer 2

Ongoing economic integration and
growing interdependency of national economies

Question 3

What means Value Chain?

Answer 3

The sequence of value-adding activities the firm performs while developing, producing, marketing, and servicing a product.

Question 4

Which four types of risk does international business face?

Answer 4

1. Cross-Cultural Risks: e.g.,
   * different Ethics, negotiation (direct-indirect)
2. Commercial Risks: e.g.,
   * logistic chains (weak partners)
   * timing of market entry
   * competitive Intensity (great strategy but bad execution, government restrictions)
3. Currency Risks: e.g.,
   * Currency exposure
   * Taxes
   * Inflation abroad
   * Transfer-Pricing (landed cost of a good > end-consumer price range)
4. Country Risks:
   * regulations on im-/export (licence)
   * trade embargos
   * political instability

Question 5

Phases of Socio-economics Development – How did we get here?

Answer 5

agricultural e > industrial e > service e > knowledge e > the 4th industrial revolution

Question 6

What are the phases of Globalization and by what are they characterized?

Answer 6

1. 1830-1900: steam powered technology => ++ manufacturing
2. 1900-1930:rise of electricity & steel prod. => emerge and dominance of MNEs
3. 1948-1970: GATT (General Agreement for Taxes and Trade), end WW2 => – trade barriers, glob. cap. markets, eastern MNEs
4. 1980-2006: privatization of companies, revolution in transportation & ICT, growth EM => ++ CB trade, SMEs
5. 2007-present: digital technologies => ++manufacturing and efficiency in int. trade

Question 7

Which Phase of Globalization was characterized through reduction of trade barriers?

Answer 7

3rd Phase

Question 8

The third phase of globalization was triggered by …

Answer 8

the end of World War II

Question 9

• What are the 4 Archetypes of Internationalization Strategy and Organization (name and alternative names) and what do they aim?

Answer 9

They aim either to put
1. Preassure for Global Integration & cost Reduction => vertical: ++Global (Standardization, Geocentric) Strategy
or
2. Preassure for Local Responsiveness => horizontal: ++Localization (Multi-domestic, Polycentric) Strategy

or both => ++++Transnational (Regiocentric) Strategy

=> low in both is the **+International ** (Home Replication, Ethnocentric) Strategy

Question 10

What are the four main internationalization strategies?

Answer 10

1. Transnational (Regiocentric) Strategy
2. **Global (Standardization, Geocentric) **Strategy
3. **Localization (Multi-domestic, Polycentric) **Strategy
4. International (Home Replication, Ethnocentric) Strategy

Question 11

Name the strategy

A company aims high Local Responsive and low Global Integration & Cost Reduction

Answer 11

Localization (Multi-domestic, Polycentric) Strategy

Question 12

Name the strategy

A comany aims high Cost Reduction but low Local Responsiveness

Answer 12

Global (Standardization, Geocentric) Strategy

Question 13

Name the strategy

A company goes for low Global Integration and low Local Responsiveness

Answer 13

International (Home Replication, Ethnocentric) Strategy

Question 14

Name the strategy

A company aims high Global Integration & Cost Reduction and high Local Responsiveness

Answer 14

Transnational (Regiocentric) Strategy

Question 15

What organization type does a Regiocentric Strategy have?

Answer 15

Global Matrix Structure

Question 16

What organization type does the Polycentric Strategy have?

Answer 16

Geographic Area Structure

Question 17

What organization type does the Home Replication Strategy have?

Answer 17

International/Export Division Structure

Question 18

What organization type does the Standardization Strategy have?

Answer 18

Global Product/Functional Structure

Question 19

What organization type does the Transnational Strategy have?

Answer 19

Global Matrix Structure

Question 20

What organization type does the Ethnocentric Strategy have?

Answer 20

International/Export Division Structure

Question 21

Where is the Multi-domestic Strategy positioned and what organization type does it have?

Answer 21

• Position: high Local Responsiveness and low Global Integration & Cost Reduction
• Organization: Geographic Area Structure

Question 22

Where is the Geocentric Strategy positioned and what organization structure does it have?

Answer 22

• Positioned: top-left => high Global Integration & Cost Reduction
• Organization: Global Product/Functional Structure

Question 23

Name the strategy

Companies export their products or services with minimal local customization while the value chain maintains centralized at home.
=> Adaption & decentralization are unnecessary to sell generic products to similar markets
=> Export Division

Answer 23

International (Home Replication, Ethnocentric) Strategy

Question 24

Name the strategy

Companies changes its product or service to the local market in order to meet the requirements of the local people. In this way they try to increase the profitability.
=> Adaption & decentralization are needed to sell customized products to differing markets
=> Geographic Area Structure (Area Division)

Answer 24

Localization (Multi-domestic, Polycentric) Strategy

Question 25

# Name the strategy Companies focus on their global strategy, ignore the requirements of the local markets in order to have lower costs and better efficiency. The world is seen as single integrated market. => Standardization & centralization are imperative across international operations => Worldwide Product / Functional Devisions

Answer 25

Global (Standardization, Geocentric) Strategy

Question 26

# Name the strategy Combination of localization and global strategy where the companies try to meet the preferences of the various countries and in the same time have lower costs and be efficient. So the products or services are almost the same in the whole word. => Global Matrix Structure

Answer 26

Transnational (Regiocentric) Strategy

Question 27

Why do companies internationalize?

Answer 27

* Growth opportunities through market diversification * Higher margins and profit * New ideas about products, services, and business methods * Co-location with international consumers * Near to supply sources, benefits from global sources advantages, or gain flexibility in product sourcing * Access to lower-cost or better-value factors of production * To develop economies of scale in sourcing, production, marketing and research and development * Effectively compete internationally or prevent the growth of competition in the home market * Invest in a potentially rewarding relationship with a foreign partner

Question 28

Societal Consequences of Globalization - What are the unintended consequences of globalization?

Answer 28

* Contagion - Rapid spread of monetary and financial crises * Job Losses & Offshoring (Effect on the poor) * Loss of National Sovereignty * Environmental Degradation & Pollution * Loss of National Culture

Question 29

What are firm-level Consequences of Globalization?

Answer 29

1. Product/Service Quality is no longer a differentiator 2. Conventional business models are easily disrupted 3. Companies need to focus on solution-oriented and data-driven business models that support the customer in their own decision making => Empowering the customer to make their own decision

Question 30

What are the societal mega trends?

Answer 30

* sustainability * wellness * aging population => gained attention bc of the consequences of International Business

Question 31

What are the Driving Forces of Globalization?

Answer 31

* Worldwide reduction in barriers to trade and investment * Market liberalization and adoption of free markets * Industrialization, economic development, and modernization * Integration of world financial markets * Advances in technology (important driving force and megatrend)

Question 32

By which **dimensions** is the **globalization of markets** characterized?

Answer 32

* Integration and independence of national economies * Rise of regional economic integration blocs (Gr. of countries which reduce trade and investment barriers among themselves => EU) * Growth of global investment and financial flows * Convergence of customer lifestyles and preferences (spend money same ways) * Globalization of production (forces firms to reduce costs of production) * Globalization of services (++ outsourcing of processes and services => also consumer do e.g. beauty surgeries abroad)

Question 33

What are the stages in the Firm's Value Chain?

Answer 33

1. R&D 2. Procurement (Sourcing) 3. Manufacturing 4. Marketing 5. Distribution 6. Sales & Services

Question 34

The first phase of globalization was characterized by the ...

Answer 34

growth of railroads

Question 35

The fourth phase of globalization ...

Answer 35

* facilitated the globalization of the service sector in such areas as banking and retailing * privatization of enterprises * revolutions in transportation & ICTs * Growth of emerging markets > rise in cross-border trades

Question 36

The ... phase of globalization began around 1900 and was associated with the rise of electricity and steel production.

Answer 36

second

Question 37

Over time, the GATT evolved into the ...

Answer 37

World Trade Organization

Question 38

What marked the end of the 50-year Cold War and smoothed the integration of former command economies into the global economy?

Answer 38

Free-market reforms in China and the former Soviet Union