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📘 International Business – Study Guide

(Chapters 1, 2, 3, and 5)
Sources: Course slides

🌍 Chapter 1: Globalization & International Business

What Is International Business?

  • International business = any commercial transaction that crosses the borders of two or more nations [FILLED IN: commercial transaction]

  • Imports: Goods and services purchased abroad

  • Exports: Goods and services sold abroad

🌐 Global trade annually:

  • Goods: ~$16.2 trillion

  • Services: ~$4.7 trillion

Perspectives on Globalization

  • People view globalization from very different perspectives [FILLED IN: different]

  • Businesspeople see globalization as an opportunity

  • Allows firms to source goods from lower-cost locations [FILLED IN: lower-cost]

Drivers of Globalization

  • Technology reduces costs of communication and travel [FILLED IN: technology]

  • Globalization is altering private lives and business practices

Key Players in International Business

  • Large multinational corporations

  • Firms from emerging markets

  • Small & medium-sized enterprises (SMEs)

  • Born global firms

Multinational Corporation (MNC)

  • A firm with direct investments abroad in multiple countries
    [FILLED IN: direct investments, multiple]

  • Generate jobs, investment, and tax revenue

  • Can also cause economic disruption if they exit

Born Global Firms

  • Engage in international business from or near inception

  • Often global competitors in under 3 years

  • Grow rapidly with help from technology [FILLED IN: technology]

What Is Globalization?

  • Growing interdependence of economies

  • Freer flow of:

    • Goods

    • Services

    • Money

    • People

    • Ideas

Globalization = trend toward greater interdependence among national institutions
[FILLED IN: interdependence, national]

Globalization of Markets

  • Convergence of consumer tastes and preferences
    [FILLED IN: consumer tastes]

  • Global products sold in many countries without changes
    [FILLED IN: many, without]

Benefits

  • Lower marketing costs

  • New market opportunities

  • Ability to sell seasonal products globally [FILLED IN: seasonal]

  • Sustainability focus

Globalization of Production

  • Dispersing production globally to:

    • Minimize cost

    • Maximize quality [FILLED IN: quality]

Benefits

  • Lower labor costs

  • Access to services [FILLED IN: services]

  • Technical know-how

  • Natural resources [FILLED IN: natural resources]

Trade Organizations

  • GATT = treaty promoting free trade
    [FILLED IN: treaty]

  • Tariffs = taxes on imports [FILLED IN: tariffs]

  • WTO enforces trade rules
    [FILLED IN: international, enforces]

Regional agreements:

  • NAFTA

  • EU

  • APEC
    → More regional in nature [FILLED IN: regional]

Debate: Jobs & Wages

Against Globalization

  • Eliminates jobs [FILLED IN: jobs]

  • Lowers wages [FILLED IN: wages]

  • Exploits workers

For Globalization

  • Increases global wealth

  • Creates labor market flexibility [FILLED IN]

  • Helps developing economies grow

Globalization & Culture

  • Culture strongly influences values and behavior [FILLED IN: influences]

  • Risk of cultural homogenization

  • Loss of diversity of cultures [FILLED IN: diversity]

🌐 Chapter 2: Cross-Cultural Business

What Is Culture?

  • Culture = set of values, beliefs, rules, and institutions
    [FILLED IN: set]

  • Nation-states intervene in business to protect culture
    [FILLED IN: intervene]

Subcultures

  • Exist within a dominant culture [FILLED IN: within]

  • Can exist across national borders [FILLED IN: across]

Cultural Knowledge

  • Ethnocentrism = belief one’s culture is superior
    [FILLED IN: superior]

  • Cultural literacy = detailed knowledge of a culture
    [FILLED IN: detailed]

Cultural Change

  • Culture is not static [FILLED IN: static]

  • Cultural traits define ways of life

  • Cultural diffusion spreads traits

  • Cultural imperialism replaces local culture

Social Structure

  • Social groups shape identity and self-image [FILLED IN: self-image]

  • Systems:

    • Caste

    • Class

Communication

  • Communication = system of conveying thoughts and ideas
    [FILLED IN: system, conveying]

Hofstede’s 6 Dimensions (Know These)

  • Individualism vs Collectivism (self vs group)

  • Power Distance

  • Uncertainty Avoidance (ambiguity) [FILLED IN: ambiguity]

  • Masculinity vs Femininity (competition vs cooperation)
    [FILLED IN: competition, cooperation]

  • Long-term orientation [FILLED IN: long term]

  • Indulgence vs Restraint (self-control) [FILLED IN: self-control]

🏛 Chapter 3: Political Economy & Ethics

Political, Economic & Legal Systems

  • Political system: who rules [FILLED IN: rulers]

  • Economic system: how you score points (profits) [FILLED IN: score]

  • Legal system: the rulebook [FILLED IN: rulebook]

  • Protects brands and inventions [FILLED IN: protected]

Political Systems

  • Political system = how a nation governs itself
    [FILLED IN: governs itself]

Totalitarianism

  • Centralized power

  • Controls people’s lives [FILLED IN: control]

  • No constitutional guarantees [FILLED IN: constitutional]

  • Often maintained by military force [FILLED IN: military]

Types:

  • Theocratic (religious)

  • Secular

  • Tribal

  • Right-wing (few individual freedoms)
    [FILLED IN: individual freedoms]

Democracy

  • Leaders elected directly or by representatives
    [FILLED IN: directly, representatives]

  • Rights:

    • Expression

    • Property [FILLED IN: property]

    • Minority protection

Economic Systems

  • Centrally planned

  • Mixed

  • Market economy

Privatization = selling state assets [FILLED IN: selling]

Legal Systems

  • Common law (England)

  • Civil law (Rome) [FILLED IN: Rome]

  • Theocratic (Islamic law)

Intellectual Property

  • Patents → inventors [FILLED IN: inventor]

  • Trademarks → symbols & words

  • Copyright → creator freedom [FILLED IN: freedom]

Ethics & CSR

  • Corporate Social Responsibility = going beyond legal obligations
    [FILLED IN: legal]

📦 Chapter 5: International Trade Theory

International Trade

  • Exchange of goods/services across national borders
    [FILLED IN: national borders]

Benefits of Trade

  • Greater choice

  • Job creation [FILLED IN: job]

  • Efficiency gains

Trade Interdependence

  • North-to-North trade

  • Subsidiary trade [FILLED IN: subsidiaries]

  • Risk during political turmoil [FILLED IN: political]

Mercantilism

  • Encourage exports

  • Discourage imports

  • Zero-sum game [FILLED IN: zero sum]

Absolute Advantage

  • Produce more efficiently than others

  • Trade = positive-sum game [FILLED IN: positive-sum]

Comparative Advantage

  • Specialize in what you do relatively best

Factor Proportions Theory

  • Export goods using abundant resources [FILLED IN: resources]

International Product Life Cycle

  1. New product [FILLED IN: new]

  2. Maturing (exports grow)

  3. Standardized [FILLED IN: standardized]

  • Eventually exports become imports [FILLED IN: import]

New Trade Theory

  • Focus on productivity

  • First-mover advantage

  • Economies of scale

National Competitive Advantage (Porter Diamond)

  • Factor conditions

  • Demand conditions

  • Related industries

  • Firm rivalry

  • Government & chance