1.) International Business is the performance of trade and investment activities by firms across national borders. Firms involved with international business organize, source, manufacture, market, and conduct other value-adding activities on an international scale. International Business gives you access to products and services around the world and profoundly affects your quality of life. Globalization of Markets on the other hand is the ongoing economic integration and growing interdependency of countries world wide. Globalization refers to the macro trend of intense economic interconnectedness between countries. A more rapid wide spread and diffusion of products, technology, and knowledge world wide, regardless of origin.
2.) Exporting is the sale of products or services to customers located abroad, from a base in the home country or a third country. Foreign direct investment (FDI) is an internationalization strategy in which the firm establishes a physical presence abroad through acquisition of productive assets such as capital, technology, labor, land, plant, and equipment. FDI is a foreign market entry strategy that gives investors partial or full ownership of a productive enterprise dedicated to manufacturing, marketing, or research and development activities. (Long term plan to invest such resources in foreign countries.
3.) The difference between international business and domestic business is obvious. International refers to business transactions from the USA to other counties. Domestic business refers to business transactions within the country itself. The differences can include unique economic conditions, political systems, laws and regulations, and national cultures
4.) There are four risks that are involved with internationalization of a business. 1.) Cross Cultural Risk; a situation or event where a cultural mis communication puts some human value at stake. (differences in language, religion, customs, lifestyles, mindsets) 2.) Country Risk (AKA Political Risk); potentially adverse effects on company operations and profitability caused by developments in the political, legal, and economic environment in a foreign country. ( Government intervention, protectionism, barriers to trade, mismanagement, lack of legal safe guards, property rights) 3.) Currency Risk ( AKA Financial Risk); risk of adverse fluctuations in exchange rates.( Currency exposure, assets valuation, foreign taxation, inflationary and transfer pricing. 4.) Commercial Risk; a firms potential loss or failure from poorly developed or executed business strategies, tactics, or procedures. ( weak partner, operational problems, timing of entry, competitive intensity, poor execution of strategy).
5.) Focal Firms are the major participants in international business; MNE & SME. Multinational enterprise: ( Historically the most important type of focal firm) a large company with substantial resources that performs various business activities through a network of subsidiaries and affiliates located in multiple countries. Small and Medium- sized Enterprise: A company with 500 or fewer employees in the United States, although this number may need to be adjusted downward for smaller nations.
7.) Firms pursue internationalization strategies for more than one motive. They seek opportunities for growth through market diversification, earn higher margins of profit, gain new ideas about products and business methods, better serve key customers that have relocated abroad, be closer to supply sources, gain access to lower cost or better value factors or production, develop economies of scale in sourcing, production, marketing and R&D, Confront International competitors more effectively, and invest in potentially rewarding relationships with a foreign partner. In general companies internationalize to enhance competitive advantage and seek growth and profit opportunities.
8.) You should care and study about international business for the reasons that you can have a competitive advantage when seeking a job and enhance your ability to thrive in the job market. Also international business compels firms to act socially responsible in their host country. And because you have to if you are taking this class.