Comprehensive Study Notes: Global Business, International Trade, and Multinational Strategy

International Business

All commercial transactions, including trade, investment, and services, that take place between two or more countries.

Multinational Enterprises (MNEs)

Entities that own or control production or service facilities in more than one country.

Market-Seeking (Sales Expansion)

Motivation for internationalisation that involves accessing larger consumer bases to expand sales volumes.

Resource-Seeking (Resource Acquisition)

Motivation that entails securing lower-cost production inputs and acquiring proprietary technology from other countries.

Risk Diversification (Risk Reduction)

Offsetting market volatility by spreading sales across multiple country cycles.

Environmental Disparities

Differences across country-level operating environments that require customized strategic approaches.

Currency Conversion

The necessity of converting financial assets across multiple currencies when transacting internationally.

Globalisation

The shift toward a more integrated and interdependent world economy, characterized by the global exchange of goods, services, and ideas.

Globalisation of Markets

The convergence and merging of distinct national markets into a single global marketplace.

Globalisation of Production

The dispersal of components of the value chain across worldwide sites based on comparative advantages.

Trade Flow

Movement of goods, services, capital, information, and people across borders.

World Trade Organization (WTO)

Multilateral institution that governs international trade rules and resolves trade disputes.

Foreign Direct Investment (FDI)

Investment made by a firm or individual in one country in business interests in another country, typically involving a significant degree of control.

Cultural Intelligence (CQ)

The capability to function effectively across various cultural contexts.

Hofstede's Cultural Dimensions

Framework for cross-cultural communication, detailing aspects such as power distance, individualism vs collectivism, masculinity vs femininity, uncertainty avoidance, long vs short-term orientation, and indulgence vs restraint.

The Law of One Price

Concept asserting that in efficient markets, identical goods must have the same price when expressed in a common currency.

Purchasing Power Parity (PPP)

Theory that compares different countries' currencies through a market 'basket of goods' approach.

Floating Exchange Rate System

A system where the currency's value is determined by market forces without direct government or central bank intervention.

Economic Union

An integration stage where member states harmonize their domestic policies and might adopt a common currency.

Risk Management Tactics

Strategies used to mitigate political and economic risk in international business operations.

Turnkey Projects

A type of foreign investment where a contractor provides a complete facility ready for operation.

Wholly Owned Subsidiaries (WOS)

Foreign operations in which a parent company owns 100% of the subsidiary.

First-Mover Advantages

Benefits gained by being the first to enter a market, such as securing distribution channels and brand loyalty.

Trade Creation

Economic gains that arise when efficient producers within a trading bloc displace less efficient domestic producers.

Trade Diversion

Economic losses that occur when lower-cost external suppliers are replaced by higher-cost internal suppliers due to preferential treatment.

Core Competencies

Unique strengths and resources that provide a company with a competitive advantage in international markets.