International Business Ch 1&2

Front 1

International Business
Definition

Back 1

The study of transactions taking place across borders for the purpose of satisfying the needs of individuals and organizations

Front 2

Name two types of Internatinal Business

Back 2

Export/Imports

FDI

Front 3

What organization is responsible for regulating International Trade

Back 3

WTO

Front 4

What are the ways MNE's Compete

Back 4

1. Drawing up strategies that focus on regions and geographic areas ensuring they address the needs of their local customers.
2) Innovation
3) Maintaining competitive position by addressing the determinants of national competitive advantage

Hint 4

3 ways

Front 5

What are the ways for MNEs to maintain competitive position by addressing the determinants of national competitive advantage?

Back 5

1. Creating the necessary factor conditions (Land / Labor / capital)
2. Strong local demand for the goods and services produced.
3. Having related and supporting industries that are int'lly competitive.
4. Having a suitable strategy and structure and domestic rivalry that encourages continued innovation

Hint 5

4 things

Front 6

What is an MNE?

Back 6

A company that is hq in one country but has operations in two or more countries.

Front 7

Characteristics of MNE's include:

Back 7

1. Affiliated firms that are linked by ties of common ownership.
2. A common pool of resources.
3. A strategic vision that guides all the affiliates.

Hint 7

Common ownership, resources, vision

Front 8

Internationalization Process

Back 8

One of going abroad at incremental stages on the premise that foreign markets are risky.

Front 9

What is the typical flow of internationalization process

Back 9

License -> Export -> Sales Office --> FDI

Front 10

Reasons to become an MNE

Back 10

1) Desire to protect from risks and uncertainties of domestic business cycle.
2) access world mkt.
3) Response to increased Foreign Competition
4) Desire to internalise in order to reduce costs.
5) desire to overcome tariff barriers
6) to take advantage of technological expertise by manufacturing goods directly rather than allowing others to do it under a license agreeement.

Hint 10

6 reasons dwfitt
dom bus cycle
world mkt
foreign competition
internalize --> reduce cost
tariff barriers
technological expertise

Front 11

What is a political concern of MNEs

Back 11

They hire and fire based on global needs.

Front 12

MNEs rely on strategic mgt process based on 5 phases

Back 12

1) Id of firm's basic mission.
2) External and internal environmental analysis.
3) Formulation of objectives and overall plans
4) Implementation of these plans
5) Evaluation and control of operations

Front 13

MNEs use strategies based on two things...

Back 13

FSAs (Firm Specific Advantages)

CSAs (Country Specific Advantages)

Front 14

Sources of FSAs

Back 14

1) Proprietary technology due to R&D activities

2) Skills specific to the organizational structure of the firm (managerial, mkting, etc)

3) Product differentiation, trademarks, brand names.

4) Large size, reflecting scale economies

5) Large capital requirments for plants of the min efficient size.

Hint 14

5 Sources

Front 15

Sources of CSAs

Back 15

1) Natural Resources

2) Low cost labor force

3) Trade barriers restricting imports.