International Business: Strategies and Challenges Report

This report provides a comprehensive overview of international business, exploring the differences between international, global, and multidomestic companies. It delves into the trends in merchandise and service trade, examining Foreign Direct Investment (FDI) and its impact. The report an...Read More

Running head: INTERNATIONAL BUSINESS
International Business
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Chapter 1:
1) Differences that exist between international, global as well as multidomestic companies
are as follows:
Multidomestic Companies usually adapt themselves towards every differences that exist in
the market in terms of availability of resources, cultural values, utilization of various
products as well as several opportunities that available in the market (Cavusgil et al. 2014).
Primary strengths associated with such multidomestic approach are mostly various
customized offerings, efforts due to concentration on business activities and usually they
deliver quick response to various changing demands in the marketplace.
Global Companies usually perform very centralized operations and those primary decisions
that are undertaken associated with the operations mostly at the central headquarters of
respective home countries. Strategies associated with business environment mostly remain
constant across major markets and this is a primary trait for those companies. Relative forms
of those strengths are advantages in terms of costs, consistency in the brands as well as scale
of economies that are achieved by the Companies.
International Companies usually make no such foreign direct investments (FDI) and they
manufacture their products as well as services in their respective home countries. They can
be termed as both exporters as well as importers of their own goods.
10) Even if several forces that act in the foreign environment act as same to those that exist
in domestic environment, however they operate in a different manner since there are
certain differences that come up to the surface with respect to laws, cultures, policies as
well as several languages. As countries have their rules, regulations as well as policies
for organizational operations that are completely different from the others, therefore they
are not able to correctly utilize the rules of domestic environment to run the foreign

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companies. Therefore those organizations usually undergo several changes in terms of
education as well as labour resources to adjust themselves in domestic markets. In some
countries theories associated with distinguished culture make the Companies to undergo
adaptations in terms of provision of various goods as well as services.
Chapter 2
2) Trading in merchandise as well as services has undergone an increment process in last
two decades.
Major trends associated with such services are mostly business partnerships that are
being established by various developed nations with the other and therefore there had
been a rise in terms of trade agreements at regional level. Products mainly raw materials
are exported from developing nations to the developed ones and so it comes to the help
of managing directors to observe that which nations as well as what type of environment,
they can undertake their business operations with and gain more profits. These on-going
trends associated with trade for example export or import regulations, business climate,
sound knowledge as well as experiences in terms of handling shipment of goods actually
facilitate large scale business process.
9) Foreign Direct Investment (FDI) is basically an investment that can be made in terms of
controlling various ownership levels that exist in the business of one particular nation by
the process of an entity that is located in another nation. It is usually differentiated from
that of investments made in foreign portfolio through notions in terms of direct control.
It has been historically following foreign trade and investment procedures since this has
been able to secure globalization in the market and with advancement of technologies,
new economies can also be generated in the foreign market thus undergoing through
expansion as well as changes.

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Chapter 3:
2) a. Theory of Adam Smith on absolute Advantage actually states that countries must
establish specialization in terms of production of goods that they develop efficient means
in order to produce. Exporters are mainly benefitted through payment that they earn from
countries who import goods and profits are obtained by both as a result of these trading
relations.
b. Ricardo’s theories on Comparative Advantage usually differ from that of the former
one, in the sense that two country may not equally be able to achieve absolute
advantage on trading goods however they can enjoy comparative advantages with
respect to one another. It is found that when developed nations import raw materials
from developing those, they manufacture well-furnished products and then send
them back to developing nations and this increase the profits of both at comparative
level (Westermann-Behaylo, Rehbein & Fort, 2015).
c. Usually no gains are obtained due to Specialization therefore two different countries
cannot benefit equal amounts as a result of trade since sometimes products exist in
same ratio in both the countries. Suppose ratio of soybean to cloth is 1:1 in the two
countries that they find no use their products in the other country and they look
forward towards manufacturing items in their own country itself.
8) Porters Diamond Model says that there exist four different kinds of variables to achieve
as a result of competitiveness in the market. Among all these factors, there exist one of
the variables known as factor conditions as well as demand. Indonesia comprises of
emerging markets that has demand towards products of higher quality as well as various
advanced means of telecommunication as well as transportation systems due to rising
people population in the country, therefore it experiences great deal of competition in

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new industries for achievement of “smart” phones or electric gasoline automobile
engines (Sun, 2018).
Chapter 4:
2) United Nations has been involving in various activities in order to preserve peace in
various nations however it also comprises of certain agencies that are also involved in
actions that might greatly affect the business environment. It controls over certain
agencies like United Nations Truce Supervision Organization (UNTSO) to monitor
Armistice Agreement that might take place in between Israel as well as Arab neighbours
(Falkner, 2017). In similar ways it plays a vital role in building peace that would assist
the countries to establish good trading relations without any sort of conflict against each
other.
If these activities were done by private entities then it would have been better as each
individual trade group would be able to look after a particular trade section and this
would have rendered the export as well as import of goods as well as services much
easier and faster.
4) World Trade Organization (WTO) came into effect in order to deal with certain rules as
well as regulations associated with trading between countries. Major decisions that are
undertaken by WTO members in the government to settle trade related disputes in
various developing nations (Cumming & Zahra, 2016). Bilateral approach is much more
feasible than Multilateral approach since there are trade concessions that are swapping
and trade ties can work with primary economic partners that are mostly associated with
investment or biosecurity properties.
Chapter 6

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8) Among the 38 nations that have been marked by United Nations as least developed
countries, only 16 are landlocked and as a result of land locking, it leads to slower
development of nations since they face a number of challenges with respect to trade as
well as development that generally arise from territorial accesses to seas and also they
experience geographical remoteness from that of international markets. Switzerland is a
landlocked country since it has weak infrastructure for transit or transport of goods,
inefficient operations on customary trade and also since it mostly depend on experts for
basic commodities.
8) Sustainability business model also known as the stakeholder model usually helps in
shaping driving forces of the firm and this help the stakeholders to achieve sustainable
business practises that contributes towards ecological modernization of the
organizations. This also helps to achieve sustainability in terms of cultural practises in
the trading firms as well as industries.
Chapter 7:
2) Differences in characteristics of economically developing as well as developed countries
are as follows:
Developed nations are mostly categorized as industrialized countries that consist of very
high per capita income and poverty as well as unemployment percentage of people is
very minimum in these countries.
Developing nations are those that can be termed as less industrialized and also they have
low levels of per-capita income.
6) Purchasing Power Parity is usually termed as method for calculation of exact value for
currency standards that may differ from original market value at current levels. It is
generally essential when international standards of living are to be compared that exist

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between several nations and it also defines correct rates associated with exchange of
goods as well as services.
Managers must be concerned about that since it gives detailed information regarding
costs of those goods as well as services and sets a general law for pricing strategy of
goods in the market.
Chapter 8:
12) There exist free as well as unrestricted international trade relations and the nations
usually focus on comparative advantage associated with goods as well as services in
order to enable higher standards of living. Usually the countries have several restrictions
on incurring import duties since this would help to restrict expansion of foreign goods in
the domestic market and certain companies would enjoy brand positioning in the market
place without any foreign company entering into and capturing the entire market.
16) a. Various types of tarrif barriers are Voluntary Export Restraints, Regulatory Barriers,
Subsidies as well as Anti- Dumping Duties.
b. Some of the non- tarrif barriers to relations associated with trade are Unjustified
Sanitary as well as Phyto- sanitary conditions, Complicated regulation environments,
Unreasonable as well as Unjustified packaging or labelling of product standards,
Discriminatory Rules on the basis of Origin as well as many others that prevail in the
trade market.

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Reference List
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014).
International business. Pearson Australia.
Cumming, D. J., & Zahra, S. A. (2016). International business and entrepreneurship
implications of Brexit. British Journal of Management, 27(4), 687-692.
Sun, H. (2018). Foreign investment and economic development in China: 1979-1996.
Routledge.
Falkner, R. (2017). Business power and conflict in international environmental politics.
Springer.
Westermann-Behaylo, M. K., Rehbein, K., & Fort, T. (2015). Enhancing the concept of
corporate diplomacy: Encompassing political corporate social responsibility,
international relations, and peace through commerce. Academy of Management
Perspectives, 29(4), 387-404.

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