CHAPTER 1 - Learning Objectives
What is international business?
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?
Why do firms internationalize?
Why study international business?
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.
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. Recently Dan and Bethany have decided to expand their foreign investing operations. They hold a meeting for individuals interested in participating in certain overseas ventures. At the meeting, Dan explains to the attendees that Freehold direct investment projects differ from international trade in that ________. •
A) the firm itself is crossing international borders to purchase foreign assets •
B) the firm is restricting its investments to stocks and does not purchase mutual funds •
C) the firm has chosen to focus strictly on the technology sector •
D) the firm is engaging in the transfer of products across national borders Key Concepts in International Business
International business? International business refers to cross-border business. Firms organize, source, manufacture, market, and conduct other value-adding activities on an international scale. They seek foreign customers and engage in collaborative relationships with foreign business partners. While international business is performed mainly by individual firms, governments and international agencies also undertake international business activities. In this book, we are mainly concerned with the international business activities of individual firms. •
Globalization of markets? The growth of international business activity coincides with the broader phenomenon of globalization of markets, which refers to the ongoing economic integration and growing interdependency of countries worldwide, and which results in a worldwide diffusion of products, technology, and knowledge. •
International trade? International trade refers to an exchange of products and services across national borders by either importing or exporting. •
Exporting? Exporting involves the sale of products or services to customers located abroad from a base in the home country or a third country. •
Importing or Global Sourcing? Importing is the procurement of products or services from suppliers located abroad for consumption in the home country or a...
Please join StudyMode to read the full document