International Business Exam Questions - Course Name, Sessions 1-3

This document provides a detailed analysis of international business concepts, offering insights into international trade, risk management, and cultural considerations. It explores the meaning of international trade, various forms of international business, and the impact of globalization. The document also addresses how international firms manage risks, motivations for internationalization, and the internalization of a firm's value chain. Furthermore, it examines the obstacles faced by international firms when dealing with different cultures, emphasizing the importance of cultural understanding. The document also covers corporate social responsibility (CSR), sustainability in global businesses, and the effects of piracy and counterfeiting. It also includes examples to illustrate the concepts discussed, making it a valuable resource for students studying international business.

International business exam questions
Session 1
1. In a short essay, explain the meaning of international trade. Describe the
two major forms through which international trade takes place.
The exchange of goods or services along international borders. This type of trade allows for
a 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; and
2. 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 trade
2. Export trade
3. Licensing
4. Franchising
5. Foreign Direct Investment (FDI)
6. Management Contract

2. What is international business, and how has it transformed the world
economy?
https://www.otherpapers.com/Business/What-Is-International-Business-and-How-Has-It/49437.html
GLOBALIZATION +
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 instability
An 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 example
4. 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 each
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
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 motivation
5. 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

flexibility of value chain activities, access customers, inputs, labor or technology and
benefit from foreign partner capabilities.
There are stages, which involve R&D, procurement, manufacturing, marketing, distribution,
sales and service--- give examples
6. In a short essay, identify the four areas in which technological advances
had their greatest impact on business. Describe the impact of each area
on business today.
- Internet Tech
- Medical Tech
- Agriculture Tech
- Nuclear Tech
Session 2
1. In a short essay, explain some of the obstacles that international firms
often face when dealing with employees, customers, and business
partners from other cultures.
It is difficult to be a multi-national enterprise without fully understanding the concept of
culture. Some of the obstacles that international firms often face when dealing with
employees, customers, and business from other cultures are-
- Language differences: language is the most important key of understanding the
cultures we have. It is also the key to understanding values, beliefs and attitudes of a
person or a group. English is the universally accepted language in majority of MNE’s;
it is a pre requisite for employment in Toyota.
The biggest problem with language is that people think that just being able to speak
the same language is enough to remove culture differences; this is a dangerous
assumption because speaking the same language just hides culture differences.
Reliance on English by both Americans and the British makes it hard to adapt and
empathize with other cultures.
For example, on one hand a Chinese manager wonders why his Indian teammates
speak in Hindi in the office and on the other hand, his teammates argue that when
the manager is not around, why they can't speak in English?
- Religion: religion is an influencer of culture, and is linked to language and regional
characteristics which affects businesses through a set of shared, core values. An
example is that protestants hold strong beliefs of delayed gratification, saving and

investment. When a firm is foreign, and they come into a different culture, it is a
problem to align themselves with the same beliefs.
- Difference in ethical values: ethical values differ by culture. Example is when a
scenario was given to students; a car salesman forgot to inform his boss about a
serious engine problem in a car he received, as trade in. the dealership did not fully
repair the car under warranty because they wanted a bigger deal. Both Chinese and
Russian students felt little harm was done
- Hierarchical differences
- Ethnocentricity: using our culture to judge others
2. How is culture like an iceberg? In a short essay, explain the relationship
between the iceberg theory and international business relationships.
Culture is like an iceberg because we are aware of the visible part (high culture and folk
culture), which is a fraction of the whole iceberg. Just like an iceberg, majority of culture is
hidden from normal view. The visible aspects of culture, which are easy to see, are
language, food, and dress.
The other part, which is called the deep culture, is not usually visible until you delve deeper
into the society. These include gender norms, nonverbal communications, concepts of
beauty etc. People usually make conclusions based on the visible aspect.
The relationship between the iceberg theory and international business relationships is
that it is necessary to understand what lies beneath the surface before you can start making
actions. Knowing the real context of stuff. Example is in china
3. In a short essay, describe three guidelines that managers should follow
to achieve cross-cultural success
- Acquire factual and interpretive knowledge about the other culture by understanding the
deeper parts of the iceberg and speaking their language
- Critical incident analysis: this is a technique of analyzing awkward situations in cross-
cultural interactions by developing empathy for other points of view
1. Identify situations where you need to be culturally aware to interact effectively with
people from different cultures
2. When confronted with strange or awkward behavior, do not make judgments
3. Learn the whole process and try to improve
- Self reference criterion- the tendency to view other cultures through the lens of one’s own
culture. Understanding this is the first step.

Session 3
1. What the five (5) effects of Piracy and counterfeiting on International
Business. Give examples
Piracy and counterfeiting has massive effects on international business due to the fact that
MNE’s lose a lot of money from these acts. Some of the effects are-
-International trade- the export of legitimate products must compete with trade in
counterfeit goods in the global arena. The counterfeit goods are usually cheaper,
substandard and potentially dangerous. Example is a buying a fake Samsung smartphone.
-Direct investment- firms try to avoid countries known for large scale violation of
intellectual property. Countries such as Russia, china and Indonesia are high on this list,
due to cheap labor countries do not mind but Chinese companies find it hard to involve
themselves in FDI without going through a lot of procedures
-Company performance- sales, profits and strategies of a company are harmed
-Innovation- companies avoid doing r and d in places where piracy is common. Example is
an MNE doing r and d in a country where pirates are rampant; they will avoid it so other
people do not steal their information
-Tax revenues- pirates usually do not pay taxes. This hurts a countries government
2. How can companies embrace Corporate Social Responsibility (CSR) and
Sustainability into their Global Businesses?
In order to answer this question, I will like to define CSR. CSR can be defined as the
processes involved in operating a business to meet or exceed the ethical, legal, commercial,
and public expectations of stakeholders.
On the other hand sustainability in a business context can be defined as the process of
meeting human needs without harming future generations. The following are ways in
which companies can embrace CSR and sustainability into their global businesses
-Developing closer relations with foreign stakeholders to understand their needs and
create solutions together
-Build capabilities in order to enhance a firm’s contribution to the local community and
globe as a whole
-Ensure diverse voices by creating organizations that employ managers and workers from
around the word
-Train managers in global CSR principles and integrate them into managerial
responsibilities

-Develop global CSR standards and objectives, which will be communicated and
implemented in the firm worldwide.
3. In a short essay, discuss the internalization theory. Provide examples
Internalization theory explains how an MNE chooses to acquire and retain one or more
value chain activities to itself, which in turn provides the MNE with greater control over its
foreign operations. Internalization avoids the challenges of dealing with external partners
like reduced quality control and the risk of losing propriety assets to outsider. It is also the
practice of MNE’s to execute transactions within their organization instead of relying on an
outsider market. Examples are
- In china Intel owns most of its value chain to ensure that intel knowledge, patents
and other assets are not misused
- Samsung makes everything in their smartphones; this gives them control over their
supply chain.
4. What is collaborative venture? In a short essay, describe the two major
types of collaborative ventures
A collaborative venture is a type of cooperation between two or more firms. The firms put
their resources together to create synergies and they share the risk that comes with it. It
provides access to things such as technical knowhow, distribution channels, and capital. It
helps to come around government obstacles
The two major types of collaborative ventures are-
- Equity-based joint ventures- this results in the formation of a new legal entity. It is
different from a fully owned FDI in the sense that the firm collaborates with a a local
firm to reduce risk and capital commitment
- Project based alliances- these no not require equity commitment from the partners
but instead a willingness to corporate in RandD, manufacturing, design, or any other
value-adding activity. They provide better flexibility to the firm and the equity based
because they have narrowly defined scope of activities
Session 5
1. In a short essay, describe some of the risks and challenges of doing
business in emerging markets. What strategies help firms enter
emerging markets successfully?

The following are risks and challenges of doing business in emerging markets-
- Political instability- corruption, weak legal systems, unreliable government
authorities
- Weak intellectual property protection- this discourages producing or selling goods
that entail valuable assets
- Bureaucracy, red tape, and lack of transparency- so many rules and shit
- Lack of physical infrastructure
- Resistance from family conglomerates- chaebols which are already diversified]
The following are strategies for doing business in emerging markets successfully
- Customize offering to unique emerging market needs- developing a deep
understanding of the distinctive characteristics of buyers, local suppliers and supply
chain
- Partner with family conglomerates
- Target government- they buy a lot of products.
- Skillfully challenge emerging market competitors
2. In a short essay, explain why family conglomerates dominate emerging
markets. What are the benefits to foreign firms who collaborate with
FC’s in order to do business in emerging markets
FC’s dominate emerging markets because of the following reasons-
- Family controlled conglomerates have a deep understanding of their countries and
industries and they have considerable influence on regulators.
- They dominate because doing business on behalf of family can signal greater
accountability. If the companies name is at stake, they need stronger commitment.
- They work faster. An owner manager can move faster than an executive hired from
the outside (managers should think like owners)
- How can companies embrace Corporate Social Responsibility (CSR) and
Sustainability into their Global Businesses?
- People who watch emerging markets know that they government is not too keen on
regulations. This makes it easier for FC’s to work without major repercussions.
The benefits to foreign firms who collaborate with FCs in order to do business in emerging
markets are-
- Low cost labor
- Less bureaucracy

3. How are large MNEs from advanced economies competing against new
emerging market MNEs? In a short essay, describe the methods used by
the incumbents to protect market share from emergent firms.
Large MNE’s are usually thought to be anti-entrepreneurial due to the fact that they are
slow to make changes, this is true but things have started to change in such a way that large
MNE’s from advanced economies are starting to run entrepreneurship type programs in
order to compete against new emerging market MNE’s. An example is the program
developed by Lockheed martin called skunk work, which was used to develop the most
iconic military jet till date, the SR-71 blackbird.
MNE’s from emerging markets are usually innovative at early stages, they have the
potential to disrupt markets and MNE’s from advanced economies know this, so they do the
following things to compete against them –
- They hold entrepreneurship contests- help in making startups take off. Google
- They invest in these smaller MNE’s or even acquire them. Example is Microsoft
buying skype, Facebook buying WhatsApp
The following are methods used by the incumbents to protect market share from emergent
firms
- As mentioned above, the incumbents usually buy emergent firms to avoid any future
risks
- Defensive marketing strategy can be described as a set of tactics and actions being
used by the leader of an industry, or the top market share holders in an industry, to
protect their own market share, profitability, product positioning and mind share
against emerging competitors. Example is aggressive advertising, offering more
value
- Making your company into a brand so it is easily recognized. This is easier for
incumbents; emerging firms take a while to become brands.