International Trade Overview

Question 1

What is International Business ?
Performance of T&I Act… by F…. globally.
(3 concepts)
Various strategies…
V-A Activities…
Trading G&S…

Answer 1

• Performance of trade and investment activities by firms globally.

1. Acting internationally through various strategies (FDI, exporting, etc.).
2. Value-adding activities performed internationally (manufacturing, marketing, etc.).
3. Trading internationally in good and services. (capital, labor, technology, products, services, etc.).

Question 2

What is Globalization of markets ?

Ongoing eco… inter… and growing inter… of C… worldwide.

Answer 2

Ongoing economic integration and growing interdependency of countries worldwide.

Question 2

What is International Trade ?
(1 Concept)
Exchange of G&S across…

Answer 2

Exchange of products and services across national borders. (Exporting & Importing).

Question 3

What is Exporting ?

Answer 3

Sale of G&S from a home country to another customers located abroad.

Question 4

What is Importing ?

Answer 4

Purchasing G&S from a suppliers located abroad to be consumed in a home country

Question 5

What is International Investment ?
T or A of A to a FC. (…)

Answer 5

Transfer or acquisition of assets to a foreign country. (FDI).

Question 6

What is International Portfolio Investment ?
Passive O. of F.S. (S&B) to generate F.R.

Answer 6

Passive ownership of foreign securities (stocks and bonds) to generate financial returns.

Question 7

What is Globalization and what does it allow firms to do ?

The inter… of n… eco… & the growing inter… of b…, p…, s…, and g… around the world.

It allows firms to … the world as one … … for g, s, c, l, and k.

Answer 7

The interconnectedness of national economies and the growing interdependence of buyers, producers, suppliers, and governments around the world.

It allows firms to view the world as one large marketplace for goods, services, capital, labor and knowledge.

Question 8

What are the 5 Drivers of Market Globalization ? (WiiMA)
- Worldwide r.o.b.to t&i.
- Market L&a.o.f.m.
- Indus…eco.dev.&modern…
- Integration of w.f.m.
- Advances in t…

Answer 8

• Worldwide reduction of barriers to trade and investment.
• Market liberalization and adoption of free markets.
• Industrialization, economic development, and modernization.
• Integration of world financial market.
• Advance in technology.

Question 9

The 4 Risks of International Business
1. C-C.R.
2. C.R.
3. C. (Financial) R.
4. Com.R.

Answer 9

1. Cross-Country Risk
   - Cultural differences
   - Decision-making styles
2. Country Risk
   - Unstable political system.
   - Protectionism
3. Currency (Financial) Risk
   - Foreign taxation
   - Asset valuation
4. Commercial Risk
   - Weak partner
   -Poor execution of strategy

Question 10

Who Participates in International Business ?

Answer 10

• MNE
• SME
• BGF (born global firm)
• N-GO (non-governmental organizations)

Question 11

What is Free Trade ?
Eliminates res… to the fl… of G&S among N…

Answer 11

The elimination of most restrictions to the flow of goods and services among nations.

Question 12

What are the benefits of Free Trade ? (5)
1. More and better c… for c… and f…
2. Lower $ of G for c… and f…
3. Higher p$ and better w.w.
4. Higher Lv. Stan.. for C.
5. Greater prosp… in p. countries.

Answer 12

1. More and better choices for consumers and firms.
2. Lower prices of goods for consumers and firms.
3. Higher profits and better worker wages (because imported input goods are usually cheaper).
4. Higher living standards for consumers (because their costs are lower).
5. Greater prosperity in poor countries.

Question 13

What are 3 negative impact of globalization ?
Si.Ei.Ns.

Answer 13

• Social impact (poverty).
• Environment impact.
• National sovereignty and local culture.