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INTERNATIONAL BUSINESS
ENTREP 131 – International BusinessSecond Semester SY 2021-20221Chapter 01Overview of International BusinessLearning ObjectivesAt the end of the lesson, you will be able to:1.Discuss the meaning of international business.2.Explain the importance of understanding international business.3.Identify the basic forms of international business activities.International Business DefinedItconsistsofbusinesstransactionsbetweenpartiesfrommorethanonecountry.Thetransactions are devised and carried out to satisfytheobjectivesofindividuals,companies,andorganizations. Examples of these transactions includebuying materials in one country and shipping them toanother for processing or assembly, shipping finished products from one country toanother for retail sale, building a plant in a foreign country to capitalize on lower laborcosts, or borrowing money from a bank in one country to finance operations inanother. The parties involved in such transactions may include private individuals,individual companies, groups of companies, or governmental agencies.International business is also called ascross-border businesssince it includes doingbusiness across national borders.Anyone who is planning to engage in international business must carefully assessthe following questions:oHow will an idea, good, or service fit into the international market?oShould trade or investment be used to enter a foreign market?oShould supplies be obtained domestically or abroad?oWhat product adjustments are necessary to be responsive to local conditions?oWhat are the threats from global competitors, and how can these threats becounteracted?The growth of international business activity coincides with the broader phenomenonof globalization of markets. Theglobalization of marketsrefers to the ongoingeconomic integration and growing interdependency of countries worldwide. Whileinternationalizationofthefirmreferstothetendencyofcompaniestosystematicallyincreasetheinternationaldimensionoftheirbusinessactivities,globalizationrefers to a macro trend of intense economic interconnectednessbetweencountries.Globalizationisassociatedwiththeinternationalizationofcountless firms and dramatic growth in the volume and variety of cross-border
ENTREP 131 – International BusinessSecond Semester SY 2021-20222transactions in goods, services, and capital flows. It has led to widespread diffusionof products, technology, and knowledge worldwide.Globalizationbothcompelsandfacilitates companiestoexpandabroad.Simultaneously,companyinternationalizationhasbecomeeasierthan ever before. Afewdecadesago,internationalbusiness was largelythe domain of large,multinationalcompanies.Recentdevelopmentshavecreated a more levelplayingfieldthatallowsalltypesoffirms to benefit fromactive participation ininternational business.

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