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The Exchange of Goods or Services

Added on -2019-09-16

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International business exam questionsSession 11.In a short essay, explain the meaning of international trade. Describe thetwo major forms through which international trade takes place.The exchange of goods or services along international borders. This type of trade allows fora greater competition and more competitive pricing in the market. The competition results in more affordable products for the consumer. The exchange of goods also affects the economy of the world as dictated by supply and demand, making goods and services obtainable which may not otherwise be available to consumers globally.In terms of ease of doing business internationally, two major forces are important:1. Technological developments which make global communication and transportation relatively quick and convenient; and2. The disappearance of a substantial part of the communist world, opening many of the world's economies to private business.The Various Forms/Types of International Business are: 1. Import trade2. Export trade3. Licensing4. Franchising5. Foreign Direct Investment (FDI)6. Management Contract
2.What is international business, and how has it transformed the world economy? +International business is the study of transactions taking place across national borders with the goal of satisfying individual and organization needs. It consists of import and exports, and FDI in other countries. 80% of FDI is done by the 500 largest firms in the world. -Greater collaboration among nations through multilateral regulatory agencies. -Development of sophisticated global financial systems and mechanisms that facilitate cross border flow of goods and services, tech and knowledge. -Promotes the growth of the world economy.3.Discuss how international firms manage the four types of international business risk. Provide an example that illustrates the process of risk management.As we all know, doing business on an international scale comes with several risks. The following are ways and examples of how these risks can be managed -Cross-cultural risk: cross-cultural risks can be managed by providing adequate training to both employees and managers on how to deal with foreign cultures. It is also important to create cross-cultural tolerance. An example is how Americans are trained to know Chinese workers personally before going straight to business, in America, it is fine to go straight to business but in china you need to build a relationship first-Commercial risk: international firms manage this by creating or developing internalization strategies to make it easier for things to get done. It can also be managed by positioning the firm to have an edge over competitors. Example is Chinese mobile companies offering lower prices in America with more value-Currency risk: currency risk can be avoided by having cash reserves in a stable currency like the USD that could use to balance cash flows if the currency loses value. -Country risk: country risk involves a harmful or unstable political system and other things related to this. It could be managed by collaborating with existing companies, which in turn will lead to less red tape. If the risk is higher than the benefit, the country should be avoided. An example is companies going out of Venezuela due to the instabilityAn example that illustrates the process of risk management is by 1. Identifying the risk
2. Analyzing the risk 3. Ranking the risk 4. Solve the risk 5. Monitor the risk ----use a company example4.Why might firms choose to pursue internationalization strategies? In a short essay, identify five major motivations for expanding overseas. Classify these motivations as strategic or reactive and provide an example of eachA truly international firm configures its sourcing, manufacturing, marketing and other value adding activities on a global scale to save costs, increase efficiency, productivity, and flexibility of value chain activities, access customers, inputs, labor or technology and benefit from foreign partner capabilities. Firms choose to pursue internalization strategies to expand their business and ultimately increase profit. Firms seek opportunities for growth through market diversification. Big numbers of large and small companies obtain more than 50 % of their sales from abroad.Five major motivations for expanding overseas are-Competitive advantages- a firm sees other companies going to a location so they decide to go based on the fact that they can make more money or cost of production and labor is cheaper. E.g. apple expansion in china- this is a reactive motivation-Less government regulation- a firm will decide to internationalize if governmental regulations hampers their activities. Example is when a Chinese company moves production from south USA to Mexico due to less governmental regulations. Strategic motivation-Diversifying suppliers: a company will internationalize if it needs more suppliers and would like to lower procurement costs. Example is Samsung manufacturing in China due to proximity to component suppliers. This is a strategic motivation-Acquire resources: a company will internationalize with the goal of acquiring new resources. Example is when a company internationalizes to India due to man power and cheap labor. Strategic motivation-Market demand: if a company is selling a product and discovers that there is high demand in a certain area, companies that sell the same product will flock to that location – this is a reactive motivation5.What is meant by the internationalization of a firm's value chain?A truly international firm configures its sourcing, manufacturing, marketing and other value adding activities on a global scale to save costs, increase efficiency, productivity, and

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