79.
An international business, unlike a multinational enterprise, _____.
A.
needs to have manufacturing units in at least two foreign nations
B.
needs to manufacture products or provide services that target a global
market
C.
need not customize its products to the requirements of national markets
D.
need not invest directly in operations in other countries
An international business is any firm that engages in international trade or
investment. A firm does not have to become a multinational enterprise,
investing directly in operations in other countries, to engage in international
business, although multinational enterprises are international businesses.
80.
Which of the following statements is true about an international business?
A.
An international business needs to invest directly in operations in other
countries.
B.
An international business needs to have homogenous practices across
countries.
C.
An international business can be managed in the same way that a
domestic business is managed.
D.
An international business must find ways to work within the limits
imposed by government intervention.
Conducting business transactions across national borders requires
understanding the rules governing the international trading and investment
system. Managers in an international business must also deal with
government restrictions on international trade and investment.
81.
With the help of an example discuss the characteristics of globalization.
Globalization refers to a fundamental shift in the world economy in which
national economies are no longer relatively self-contained entities. Instead,
nations are moving toward an interdependent global economic system.
Within this new global economy, an American might drive to work in a car
designed in Germany that was assembled in Mexico by DaimlerChrysler
from components made in the U.S. and Japan that were fabricated from
Korean steel and Malaysian rubber. A company does not have to be the size
of these multinational giants to facilitate, and benefit from, the globalization
of markets.
82.
Explain what is meant by the globalization of markets. Provide an example.
What are the most global markets?
The globalization of markets refers to the idea that historically distinct and
separate national markets are merging into a single, huge global
marketplace. For example, Coca-Cola, Starbucks, and McDonald’s offer the
same basic product worldwide, and are in fact, not only a part of the trend,
but facilitators of the trend as well. The most global markets are not
actually for consumer goods, but instead are for industrial goods and
materials that serve the same needs across the world.
83.
Discuss the concept of the globalization of production.
The globalization of production refers to the sourcing of goods and services
from locations around the globe to take advantage of national differences in
the cost and quality of factors of production (such as labor, energy, land,
and capital). By doing this, companies hope to lower their overall cost
structure or improve the quality or functionality of their product offering,
thereby allowing them to compete more effectively.
84.
What is the World Trade Organization? What is its role in the world
economy?
The World Trade Organization (WTO) is primarily responsible for policing
the world trading system and making sure nation-states adhere to the rules
laid down in trade treaties signed by WTO members. The WTO currently has
148 members that collectively account for 97 percent of world trade. The
WTO has been instrumental in lowering barriers to cross-border trade and
investment. In addition to these responsibilities, the WTO also facilitates
the establishment of additional agreements between member states.
85.
What is the International Monetary Fund? What is the World Bank? What is
their relationship, if any, with each other?
The International Monetary Fund (IMF) was created to maintain order in the
international monetary system. The World Bank was established to promote
economic development. Both organizations were launched as part of the
1944 Bretton Woods Agreement, and have emerged as significant players in
the global economy. The IMF is often seen as the lender of last resort to
nation-states whose economies are in turmoil and currencies are losing
value against those of other nations.
86.
What is the Uruguay Round? List the measures implemented in the Uruguay
Round?
Under the umbrella of GATT, eight rounds of negotiations among member
states worked to lower barriers to the free flow of goods and services. The
most recent negotiations to be completed, known as the Uruguay Round,
were finalized in December 1993. The Uruguay Round further reduced trade
barriers; extended GATT to cover services as well as manufactured goods;
provided enhanced protection for patents, trademarks, and copyrights; and
established the World Trade Organization to police the international trading
system.
87.
Explain the trends in world trade and foreign direct investment over the last
half century.
Since 1950, the volume of world merchandise trade has grown faster than
the world economy. In particular, there has been acceleration in world trade
since 1980. This trade and investment pattern implies that firms are
dispersing parts of their production to different locations around the world
to drive down production costs and increase product quality, that the
economies of the world’s nation states are becoming more intertwined, that
foreign direct investment is playing an increasing role in the global economy
as firms increase their cross-border investments, and that the world has
become significantly wealthier over the last 50 years.
88.
Explain how a company competes using outsourcing. Provide an example.
The lowering of trade and investment barriers also allows firms to base
production at the optimal location for that activity. Thus, a firm might design
a product in one country, produce component parts in two other countries,
assemble the product in yet another country, and then export the finished
product around the world. For example, consider Boeing’s 777, a
commercial jet airliner. Eight Japanese suppliers make parts for the
fuselage, doors, and wings; a supplier in Singapore makes the doors for the
nose landing gear; three suppliers in Italy manufacture wing flaps; and so
on. In total, some 30 percent of the 777, by value, is built by foreign
companies.
89.
Discuss the impact of technological change on global markets.
Major advances in communication, information processing, and
transportation technology have facilitated the globalization of markets and
production. The microprocessor and the Internet have been central to the
technology explosion. The development of the microprocessor vastly
increased the amount of information that can be processed by individuals
and firms, and the growth of the Internet has allowed companies to expand
their global presence at a fraction of the cost of more traditional methods of
business. Jet air travel, by shrinking travel time, has also helped to link the
worldwide operations of international businesses. These changes have
enabled firms to achieve tight coordination of their worldwide operations
and to view the world as a single market.