Chap 1 The Challenging World of International Business

Question 0

Foreign business

Answer 0

The operations of a company outside of its home or domestic market.

Question 1

International Business

Answer 1

A business whose actives are carried out across nations

Question 2

Multidomestic Company (MDC)

Answer 2

An organization with multi country affiliates, each of which formulates its own business strategy based on perceived market differences.

Question 3

Global company (GC)

Answer 3

An organization that attempts to standardize and integrate operations worldwide in all functional areas.

Question 4

International company. (iC)

Answer 4

Either a global or a multi-domestic company

Question 5

How does international business differ from domestic business?

Answer 5

A domestic business only deals with the forces of a domestic environment; a international business must deal with the forces of domestic, foreign, and international environments.

Question 6

Environments

Answer 6

All the forces surrounding and influencing the life and development of the firm.

Question 7

Uncontrollable Forces

Answer 7

External forces over which management has no direct control, although it can exert an influence

Question 8

Uncontrollable Forces Examples

Answer 8

Legal 
Economic 
Labor
Political
Physical
Sociocultural
Technological
Distributive
Competitive
Socioeconomic
Financial

Question 9

Controllable Forces

Answer 9

Internal forces that management administers to adapt to changes in the uncontrollable forces.

Question 10

Controllable Forces Examples

Answer 10

Factors of production (capital, raw materials, and people)

Activities of the organization (personnel, finance, production and marketing)

Question 11

Domestic environment

Answer 11

All the uncontrollable forces originating in the home country that surrounds and influences the firm’s life and development.

Question 12

Foreign environment

Answer 12

All the uncontrollable forces originating outside the home country that surround and influence the firm.

Question 13

International environment

Answer 13

Interaction between domestic and foreign environmental forces or between sets of foreign environmental forces

Question 14

Self-reference criterion

Answer 14

Unconscious reference to one’s own cultural values when judging behaviors of others in a new and different environment

Question 15

Foreign direct investment FDI

Answer 15

Direct investments in equipment, structure and organizations in foreign country at a level that is sufficient to obtain significant management control, does not include mere foreign investment in stock markets.

Question 16

Exporting

Answer 16

The transportation of any domestic good or service to a destination outside a country or region

Question 17

Importing

Answer 17

The transportation of any good or service into a court or region, from a foreign originating point

Question 18

Economic globalization

Answer 18

The tendency toward an international integration of goods, technology, information, labor, and capital, or the process of making this integration happen

Question 19

Drivers of Globalization

Answer 19

1. Political
2. Technological
3. Market
4. Cost
5. Competitive

Question 20

Arguments AGAINST Globalization

Answer 20

1. Uneven results across Nations and people
2. Deleterious effects on labor and labor standards
3. Decline in environmental and health conditions

Question 21

Arguments SUPPORTING Globalization

Answer 21

1. Free trade enhances socioeconomic development

2. Free trade promotes more and better jobs

Question 22

Reasons to enter foreign markets

Answer 22

Increase profit and sale

Desire to protect the profits and sales from being eroded by competitions.

Question 23

7 dimensions for Globalizing a Business

Answer 23

1. Product
2. Markets
3. Promotion
4. Where value is added to the product
5. Competitive Strategy
6. Use of non-home-country personnel
7. Extent of global ownership of the firm