CBA 300 Exam 2 with Questions and Answers
What Is International Business?
This activity is focused on understanding what international business is, why and how it differs from domestic business, why it is important, and its historical development.
International business is a broad and pote...
CBA 300 Exam 2 with Questions and
Answers
What Is International Business?
This activity is focused on understanding what international business is, why and how it
differs from domestic business, why it is important, and its historical development.
International business is a broad and potentially complex field of study and practice. There
are many different definitions and concepts that are critical to this field, and this activity will
emphasize several of the most critical ones that are used throughout the text. Understanding
these terms and concepts will help students, managers and policy makers to better understand
what international business is, how it differs from domestic business, why it is becoming
increasingly important, and how international business has evolved throughout history.
ANSWER International Business Term - General Characteristics
International Business - Activity Across Borders
Foreign Business - Outside Home Market
Self-Reference Criterion - Reference to own cultural values
Environment - All forces impacting firm
International Company - Operations in multiple countries
Uncontrollable forces - External Forces
Controllable Forces - Internal forces
Domestic Environment - Forces in home country
Foreign Environment - Forces beyond home nation
International Environment - Forces with interaction
Drivers of Globalization
,Globalization has been driven by five major factors: political, technological, market, cost, and
competitive. Business has fueled these trends and has been the beneficiary of these trends.
Understanding these trends helps businesses develop strategies and tactics to accelerate these
trends.
Understanding globalization trends helps businesses identify opportunities and threats in their
environment. Understanding these trends will also make the changes much more manageable.
International businesses have greater flexibility, more options, and a broader scope to
consider globalization of production and globalization of markets. ANSWER Driving Force;
Description; Implication for Business
Competitive Drivers; explosive growth in international business; high competition in world
markets
Political Drivers; preferential trading arrangements and privatization of industries; increased
opportunities for trade and investment
Cost Drivers; exporting or producing overseas, or outsourcing; lower cost of goods sold
Technological Drivers; Explosive growth of high-power, low-cost computing; growth in
services due to data processing speed increase
Market Drivers; creating new markets; new opportunities and new markets to sell goods and
services
The Globalization Debate
Many influential economists, politicians, and business leaders think that a shift toward a more
integrated and interdependent global economy is a good thing. There is evidence to support
,the theory that falling barriers to international trade and investment drive the global economy
toward greater prosperity. There are, however, critics who argue against globalization.
Anecdotes, evidence, and arguments can be collected to support each side of the debate.
International businesses need to understand the nature of the globalization debate and observe
how their own practices may act in support of or against globalization. Understanding how
each side sees the issues can lead toward better solutions to the problems caused by
globalization. ANSWER Issue; Argument; For or Against Globalization
Socioeconomic development; there is a link between free trade and economic growth; For
Results across nations and people; there is a widening gap between rich and poor; Against
Jobs; expanded trade is linked to the creation of more and better jobs; For
Labor and Labor standards; jobs are migrating to countries lower standards; Against
Environment and Health; Damage to the environment; Against
Growth of International Business
This activity examines the growth of international firms and international business, and
addresses the key drivers that are leading firms to internationalize their operations.
The size and number of international businesses have been increasing rapidly in recent years.
It is useful to appreciate the extent to which businesses and markets have internationalized, as
well as understand the driving forces underlying this internationalization. ANSWER Driver
of Globalization - General Characteristic
, Political - preferential trade agreements; privatization of industry
Technological - the Internet
Market - saturated home market
Cost - economies of scale
Competitive - new entrants
Which factor does not contribute to the weak economic improvement for the middle class in
developed countries? ANSWER The middle class has not achieved advanced academic
degrees by any effective percentages
(The middle class's lack of financial benefit from trade is NOT due to their lack of improving
their education and opportunities. It is predominantly due to the wealthy business owners
holding tight control of their profits and not allowing it to trickle down to the middle class.)
Which economic class has not seen strong growth from international trade? ANSWER the
middle class in developed nations
(The middle class in developed nations has not benefited from international trade due to
wealthy company owners not sharing profitability from trade.)
The reduction of global financialization is perceived due to ANSWER national politicians
and regulators requiring banks to increase domestic loans and capital levels.
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