Introduction to International Business (copy)

What is international business?

International business encompasses all value-adding activities performed on an international scale, including sourcing, manufacturing, and marketing.

What is the definition of international trade?

The exchange of products and services across national borders, typically through exporting and importing.

What is exporting?

The sale of products or services to customers in foreign countries from a base in the home country or a third country.

What is importing (global sourcing)?

Acquiring products or services from suppliers abroad for use at home or in a third country.

What is Foreign Direct Investment (FDI)?

The transfer of assets to another country or the acquisition of significant assets in that country.

What constitutes cross-cultural risk?

Miscommunication arising from cultural differences such as language, lifestyles, attitudes, and customs.

What is country risk?

Potential hazards from harmful political systems, unfavorable laws, red tape, and corruption encountered while doing business in a foreign country.

What is currency risk?

The risk related to fluctuating exchange rates affecting asset values and profitability.

What is commercial risk?

Operational challenges, poor timing of market entry, and competitive intensity presenting risks in international business.

Who are multinational enterprises (MNEs)?

Large companies with extensive resources that engage in international operations.

What are the motivations for firms going international?

Seeking growth through market diversification, higher margins, innovation, and access to resources.

What is a regional economic integration?

A collaborative effort among nations to diminish trade barriers and enhance economic interdependence.

What is an economic bloc?

A region where countries commit to economic integration by lowering trade barriers.

What are the benefits of regional integration?

Increased product choices, improved living standards, and lower prices.

What is the definition of NAFTA?

A trade agreement established in 1994 facilitating trade among the U.S., Canada, and Mexico by eliminating significant barriers.

What are the implications of regional integration for firms?

Encourages internationalization, improves operational efficiencies, and promotes mergers and acquisitions.