Expanding Abroad Motivations And Means

Question 1

What is International business?

Answer 1

Series of transaction flows carried out across borders to satisfy objectives of individuals and companies

Question 2

Elements of IB

Answer 2

1. Flow of ideas, labor and capital
2. Acquisition of wider product variety
3. Shift to global level through resource reallocation

Question 3

IB questions

Answer 3

1. How can an idea fit into the int. market? (Which adjustments are needed to fit into local markets?)
2. What threats come from global competitors?

Question 4

What is a MNE?

Answer 4

Multinational Enterprise, which owns and controls income-generating assets in more than one country or coordinates value added in two or more countries.

Question 5

Requirements to be MNE

Answer 5

1. Direct investment in foreign countries (not just Import-Export)
2. Actively manage foreign operations as integral parts of the company, from strategic and organizational POV

Question 6

Which types of enterprises are included in the IB context?

Answer 6

1. Private
2. State-owned
3. Hybrid combinations (private-state owned or multinational Joint Ventures)

Question 7

Concept involved in UN definition of MNE

Answer 7

One actor can exercise significant influence over the activities of the other (through knowledge, resources and responsibilities sharing)

Question 8

Prerequisites to BECOME MNE

Answer 8

1. Location specific advantages provided by foreign countries
2. Strategic competencies to balance disadvantages connected with unfamiliarity with new market
3. Leverage internal strategic strength rather than using contracts or licenses
4. Presence of infrastructure, to facilitate trade and necessary to invest

Question 9

Soft infrastructure

Answer 9

1. Financial markets
2. Human capital (universities forming HC and their knowledge, capabilities)
3. Administrative and judicial law enforcement agencies

Question 10

Hard infrastructure

Answer 10

Transport infrastructure (roads, bridges, harbours, buildings)
Its absence negatively affects supply chain potential

Question 11

Amount of FDI in 2021

Answer 11

$1.89 trillion

Question 12

Quantity of MNEs worldwide

Answer 12

60,000

Question 13

Which sector holds the most highly capitalized companies?

Answer 13

Tech companies

Question 14

Motivations to expand abroad

Answer 14

1. Key suppliers
2. Market seeking (especially for companies having technology or brand image advantages, [intrinsic]) + home markets saturated
3. Access to low-cost production factors

Question 15

Emerging motivations for expanding abroad

Answer 15

1. Scale economies as a prerequisite to be active especially in capital-intensive industries
2. Global scanning and learning capability