IB COURSE NOTES - CHAPTER 1

CHAPTER 1 - Learning Objectives
1. What is international business?
2. What are the key concepts in international trade and investment?
3. How does international business differ from domestic business?
4. Who participates in international business?
5. Why do firms internationalize?
6. Why study international business?
QUESTION
• International business is defined as the performance of ________ activities by firms across national borders.
• A) marketing and fiduciary
• B) trade and investment
• C) finance and operational
• D) manufacturing and sales
The Nature of International Business
• What are examples of VALUE-ADDING ACTIVITIES? What is the VALUE CHAIN? All value-adding activities—including sourcing, manufacturing, and marketing—can be performed in international locations.
• Where can these activities be performed? SEE ABOVE
• Key elements to international trade?
• Products, services, capital, technology, know-how, and labor.
• What are the different entry strategies (to engage in intl trade or investment)?
• What are examples of VALUE-ADDING ACTIVITIES? What is the VALUE CHAIN?
• All value-adding activities—including sourcing, manufacturing, and marketing—can be performed in international locations.
• ENTRY MODES: Firms internationalize through various entry strategies, such as exporting and foreign direct investment.

QUESTIONS
• What are examples of factors of production?
• What is an example of FDI?
• Difference in Foreign Direct Investment and Portfolio Investment?
International investment: Transfer of assets to another country or the acquisition of assets in that country. Also known as “foreign direct Investment” (FDI). We will focus on this type of investment.
International portfolio investment: Passive owner-ship of foreign securities, such as stocks and bonds, in order to generate financial returns.

Dan Freehold and his business partner, Bethany Quinn, are successful investors engaged in a variety of enterprises.