Introduction to IB/why and how questions (topic 1&2)

Question 1

How IB differs from domestic business

Answer 1

Larger scale, more complex;
Greater opportunity to strengthen competitive advantages;
Greater exposure to international sources of risk;
Greater uncertainty arising from world events;
Greater opportunity for conflict.

Question 2

Physical factors

Answer 2

A country’s geography/demography.

Question 3

Social factors

Answer 3

A country’s law, politics, culture, economy.

Question 4

Competitive factors

Answer 4

The number and strength of a company’s suppliers, rival firms.

Question 5

Global sourcing

Answer 5

‘shopping the world’

Question 6

Proactive/pull factors

Answer 6

Give rise to a virtuous circle of heightened managerial commitment and subsequent internationalisation success.

Question 7

Reactive/push factors

Answer 7

Give rise to a vicious circle of reduced managerial commitment and subsequent internationalisation failure.

Question 8

FDI

Answer 8

An investment that gives the investor a controlling interest in a foreign company. FDI represents a financial flow between countries.

Question 9

FPI

Answer 9

Involves the acquisition of foreign securities and entities without control over the management of the companies concerned.