Unit 5- International Business

Question 1

What does International Business refer to?

Answer 1

International Business (IB) refers to business activities that involve the transfer of resources, goods, services, knowledge & skills, or information, across national borders

Question 2

What are the 2 ways of conducting IB?

Answer 2

international trade refers to the exchange of capital, goods & services across international borders or territories and foreign direct investment is the practice of investing shareholder funds directly into another country, by building or buying physical facilities, or by buying a company

Question 3

What are the modes of entry of IB?

Answer 3

modes of entry: Imports, Exports, Licensing, Franchising & Offshoring

Question 4

What are international joint ventures?

Answer 4

International joint ventures (entry mode) is an alliance in which the partners agree to form separate, independent organisations for a specific business purpose

Question 5

What are wholly owned subsidiaries?

Answer 5

Wholly owned subsidiary (entry mode) is a company whose common stock is 100% owned by another company (parent company)

Question 6

What is the theory of absolute advantage?

Answer 6

by specialising in the production of goods which they can produce more cheaply, than other countries/nations, will increase their economic well-being

Question 7

What is comparative advantage?

Answer 7

Comparative Advantage is the economy’s ability to produce goods & services at a lower opportunity cost than its trading partners

Question 8

What is culture?

Answer 8

Culture is a system of values & norms that are shared among a group of people & that when taken together constitute a design for living (traditions, values, customs, habits)

Question 9

What is low-context culture?

Answer 9

individualism, personal space in interaction, non-verbal communication less important, communication codified/rule guided, punctuality matters, proper planning

Question 10

What is high-culture context?

Answer 10

Group thinking, little personal space, body contact in communication, punctuality less important, personal relations matter

Question 11

What are 3 different ways to describe & compare culture?

Answer 11

Competing Values Framework (Quinn et all (2015)- Rational Goal, Internal Process, Human Relations & Open Systems), Four Cultural Types (Handy (1993)- Power, Role, Task & Person), Multiple Cultures (Martin (2002)- Integration, Differentiation & Fragmentation)

Question 12

What are Hofstede’s 5 dimensions of culture?

Answer 12

power distance, uncertainty avoidance, individualism vs collectivism, masculinity vs femininity and long-term vs short-term orientation

Question 13

What is organisational culture?

Answer 13

Organisational culture is a set of values, beliefs, norms and assumptions that are shared by a
group and that guide their interpretations of, and responses to, their environments

Question 14

What are types of organisational culture?

Answer 14

power (small entrepreneurial organisations with one or more powerful figures), role (mechanistic, relies on rules and procedures), task (job or project orientated - flexible structures and teamwork) & person (the individual and his/her wishes is the main focus, minimalist structures)

Question 15

What is the cultural web?

Answer 15

The cultural web is a useful tool for analysing assumptions surrounding a business or organisation. It can be used to highlight specific practices and beliefs, and to subsequently align with preferred culture and strategy

Question 16

What does international management refer to?

Answer 16

International management refers to the practice of managing business operations in more than one country

Question 17

What are examples of international management?

Answer 17

manager in another country, managing an international team, and managing in a global organisation whose employees, systems and structures are truly international in that they no longer reflect its original, national base

Question 18

What are the environments affecting international management?

Answer 18

external (political, economic, social, technological, (natural) environmental and legal factors), competitive (customers, suppliers and competitors) & internal environment (people, culture, structure and technology)

Question 19

What is Porter’s 5 forces analysis technique?

Answer 19

Porter’s five forces is an analysis technique that allows managers to gauge the level of competition within their industry, and assess current and potential lines of business. Ultimate goal is to help managers set their profitability expectations, because
profitability decreases as competition increases

Question 20

What are Porter’s 5 forces?

Answer 20

threat of new entry, competitive rivalry, buyer power, threat of substitution & supplier power

Question 21

What is globalisation?

Answer 21

Globalisation is the shift towards a more integrated and interdependent world economy

Question 22

What are the 4 drivers of globalisation?

Answer 22

market drivers, cost drivers, competitive drivers & government drivers

Question 23

What is the globalisation of markets?

Answer 23

The globalisation of markets - refers to the merging of historically distinct and separate national markets into one huge global marketplace

Question 24

What is the globalisation of production?

Answer 24

The globalisation of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labour, energy, land, and capital)

Question 25

What would economies of scale bring?

Answer 25

Economies of scale would bring competitive advantage - cost advantage due to scale of operation, with cost per unit of output decreasing with increasing scale

Question 26

Why are institutions needed in IB?

Answer 26

institutions are needed to help manage, regulate, and police the global marketplace and to promote the establishment of multinational treaties to govern the global business system

Question 27

What is corporate social responsibility?

Answer 27

CSR refers to the idea that business people should consider the social consequences of economic actions when making business decisions and that decisions should have both good economic and social consequences

Question 28

What does internationalisation refer to?

Answer 28

Internationalisation refers to the “process of increasing involvement in international operations”

Question 29

What are international new ventures?

Answer 29

International new ventures (INVs) are firms and business organisation that seek significant competitive advantage from the use of resources and the sale of outputs in multiple countries

Question 30

What are industry factors influencing INV internationalisation?

Answer 30

structure & competition, knowledge intensity, industry globalisation, industry network dynamics, industry business models, local industry cluster internationalism, industry concentration & industry life cycle

Question 31

What do spin-offs refer to?

Answer 31

spin-offs refer to new businesses created by one or more individuals through the exploitation of the knowledge and experiences acquired during their previous occupation

Question 32

What are the conditions for a spin-off?

Answer 32

1. an organisation from which to separate, 2. an entrepreneurial impulse from one or more people, who have easy access to methods, knowledge and relationships, 3. the presence of one or more customers who express the need to benefit from the products and/or services offered by the spin-off

Question 33

What are 3 types of spin-offs?

Answer 33

university spin-offs, research based spin-offs & technology based spin-offs

Question 34

Why do born global firms succeed internationally?

Answer 34

Born global firms succeed internationally due to high knowledge intensity, close relations with specified customers and scale of international exposure