International Business Essay
Question No 1:
Describe the four basic levels of international business activity.Do you think any organization will achieve the fourth level?Why or why not.
Question No 2:
For each of the four globalization strategies, describe the risks associated with that strategy and the potential returns from that strategy. __________________________________
Answer for question No 1:
The four general levels of international buisness activity are:
1. Domestic business
2. International business
3. Multinational business
4. Global business.
Domestic Business: Is the one that acquires all of its resources and sells all of its products ot services within a single country.(8/143)
Interational …show more content…
The four globalization strategies are the followng:
1. Importing and exporting
3. Strategic alliances
4. Direct investments
In all of those strategies there are many risks and of course many efforts.In
Importing/exporting,the main risk is that, the products are not adapted to local conditions, and they may miss the needs of a large segment of the market..On the other hand the effort of imports/exports is that you can get in the market of your country with a small outlay of capital.
In licensing the main risk is that the licensing firm can lose profits if the licensee does not develop the market effectively.This could happen only if the firm tie up control of its product or expertise for a long time period.In addition the advantages of licensing are increased profitability and extended profitability.
In strategic alliances the main advantage is that the two or more firms that are cooperating may allow a quick entry into the market by taking advantage of the existing strengths of participants.In addition strategic alliances are also an effective way to gain access to technology or row material, and they allow the firms to share the risk of cost of the new venture.
Finally many firms make direct investment in order to capitalize on lower labor costs.On the other hand in direct investment there is a great economic and political risk, which may cost lots