Chapter 1 What is international business

Question 1

• refers to trade of goods, services, tech, capital, and/or knowledge across national borders
• involves cross-border transactions of goods and services between two or more countries
• the study of the internationalization process of multinational enterprises (MNEs)
• differs from domestic because it crosses borders, has different risks, and different market entry strategies

Answer 1

international business

Question 2

• cross border integration and growing interdependecy of countries around the world
• drivers inclue the geropolitical and technological revolutions
• trade between nations, is accompanied by substantial flows of capital, technology, and knowledge
• globalization both compels and facilitates firms to expand abroad (internationalize)

Answer 2

globalization of markets

Question 3

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

Answer 3

international trade

Question 4

goods or services sold abroad

Answer 4

exporting

Question 5

products or services from suppliers located abroad

Answer 5

importing (global sourcing)

Question 6

why is studing international business is so important

Answer 6

the difference in the growth rates of world production and world trade

Question 7

what is the driving demand for internationally traded goods (from a consumer perspective)

Answer 7

consumers knowing more than ever about goods and services being produced worldwide

Question 8

the ______ the difference between the growth rates of world trade and world population, the greater the extenet of golablization

Answer 8

larger

Question 9

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

Answer 9

international investment

Question 10

passive ownership of foreign securities such as stocks and bonds

Answer 10

international portfolio investment

Question 11

• internationalization strategy in ehich the firm establishes presence abroad through acquisition of resources
• an investment in the form of a controlling ownership in a business in one country by an entity based in another
• it is distinguished from foreign portfolio investment by a notion of direct control

Answer 11

foreign direct investment (FDI)

Question 12

is in contact with countries that differ in terms of culture, language, political and legal systems, economies, infrastructure and other factors

Answer 12

international business

Question 13

strategic way of organizing these macro level factors in order to manage things at the firm level is by conducting a

Answer 13

PESTEL and SWOT analysis

Question 14

provides a realatively straighforward way to scan, monitor, and evaluate important external factors and trends that present opportunities and threats to a firm when it engages in international business

Answer 14

the PESTEL framework

Question 15

• a situation or event where a cultural miscommunication puts some human value at stake
• is posed by differences in language, lifestyles, mindsets, customs, and/or religion
• understanding things like how people communicate, lead, make decisions or value time are critical

Answer 15

cross cultural risk

Question 16

in giving employees feedback and evaluating their performance, managers in the US are less direct than is the cultural norm in France
which risk is this?

Answer 16

cross cultrual risk

Question 17

• refers to the potentially adverse affects on company operations and profitablity
• can be caused by developments in the political, legal and economic environment of a foreign country
• includes the possibility of foreign government intervention in a firms business avtivities

Answer 17

country risk (political risk)

Question 18

in the EU there was a tariff in retaliation to US tariffs on steel and aluminum from the region. the EU threatened to increase the import tariff on Harley Davidson motorcycles from 6% to 56%
which risk is this?

Answer 18

country risk (political risk)

Question 19

• arises from the change in price of one currency in relation to another
• investors or companies that have assets or business operations across national borders are exposed to currency risk that may create unpredictable profits and losses
• many multinational corporations use forex futures, options contracts, or other derivatives to hedge the risk

Answer 19

currency risk (financial risk)

Question 20

rising value of the US dollar during 2022 and 202 relative to other key currencies cut into revenues of US multinational firms such as netflix, IBM, and johnson and johnson
which risk is this?

Answer 20

currency risk (financial risk)

Question 21

• firms potential loss or failure form poorly conceived or executed business strategies, tactics, or procedures
• business partner risk, timing of market entry, pricing, product features, promotional themes
• risks also unclude social media risk (unfavorable trending), and cyber risk too

Answer 21

commerical risk

Question 22

the recent joke by volkswagen it would change the company name to voltswagen because it was producing more elctric vehicles. it wasnt well received
which risk is this?

Answer 22

commericak risk

Question 23

a large company with substantial resources that performs various business activites through a network of subsidiaries and affiliates located in multiple countries (Disney)

Answer 23

multinational enterprise

Question 24

typically, companies with 500 or fewer employees, compromising over 90% of all firms in most countries. SMEs increasingly engage in international business

Answer 24

small and medium sized enterprise

Question 25

a young, entreprenueurial SME that undertakes substantial international business at or near its founding

Answer 25

born gloabal firm

Question 26

• seek opportunities for growth through market diversification
• earn higher margins and profits
• gain new ideas about products, services, and business methods
• examples of ?

Answer 26

why firms internationalize