LO1-5 Managing in the Global Marketplace

What is an international business?

Any firm that engages in international trade or investment (exporting or importing counts).

Does a firm need foreign factories to be an international business?

No — exporting or importing alone qualifies.

Why are more firms becoming international businesses?

Because the world economy is becoming more integrated and interdependent.

What is the fundamental reason international business differs from domestic business?

Countries are different in culture, politics, economics, law, and development.

Why must international firms vary their practices by country?

Because what works in one country may not work in another (e.g., marketing in Brazil vs. Germany).

What must managers be sensitive to when operating internationally?

Local differences and the need to adapt strategies and policies accordingly.

What additional decisions do international managers face that domestic managers do not?

Where to locate production, how to coordinate global operations, which markets to enter, and which entry mode to use.

What are the main foreign market entry modes?

Exporting, licensing, joint ventures, and wholly owned subsidiaries.

Why is choosing an entry mode important?

It has major long‑term implications for the firm’s success.

Why must international managers understand global trade rules?

Cross‑border business is regulated by international trade and investment systems.

Do governments intervene in trade even if they support free trade?

Yes — many impose restrictions or regulations that firms must navigate.

Why are exchange rates important for international businesses?

Currency values change, affecting profits; firms need policies to manage exchange rate risk.

What happens if a firm adopts the wrong exchange rate policy?

It can lose large amounts of money.

What are “Black Swan” events in international business?

Low‑probability, high‑impact events like wars, terrorism, or pandemics.

How did SARS (2003) affect international business?

It disrupted supply chains and forced firms to find alternative inventory sources.

How did COVID‑19 affect international business?

It caused global economic disruption, supply chain breakdowns, and massive declines in trade.

What are the four main reasons managing international business is harder than domestic business?

• Countries are different.

• Problems are wider and more complex.

• Governments intervene in trade and investment.

• International business requires currency conversion.