MBA 6601, International Business 1 Course Learning Outcomes for Unit I Upon completion of this unit, students should be able to: 1. Differentiate international business from domestic business operations. 2. Analyze the effects of political, legal, economic, and cultural dimensions of international business on an organization. Unit Lesson Globalization Has Advantages and Disadvantages In this course, we recognize international business as a means of doing business in other parts of the world. Advantages exist to buying, selling, and interacting with companies positioned in other countries. Of course, disadvantages also exist. We hear the term globalization quite often, and it means the ability to interact with other countries in a marketplace that has rules, laws, standards, and expectations of conducting business. If we examine why doing business in another country is advantageous for companies, we will find several reasons. New sources of raw materials : If one’s current source of raw materials dries up, the price has risen, competitors lock up the market, or the government makes it hard to acquire materials because of environmental regulations, you might find an alternative source in another country. New technology : If you find current technology outmoded or wish to develop new uses of a raw material, new technology from another source might work. New products to sell : People in other countries have different needs and could possibly use a product not in use domestically. Such a product might increase local sales. New customers : Customers in other countries have the same needs as local customers. A company could make the product here and send it overseas. New partners : Capitalists in other countries look to invest in sound businesses operating locally or internationally. A company could have an interest in acquiring capital and resources to expand its business. Reduction in risk : Exposure to additional markets reduces business risk if a country experiences economic contraction for any reason. Advantages also exist for countries to encourage international business. Bigger markets : The more companies participate, the larger the marketplace. Participation promotes the concept of a free market without excessive levies and tariffs. Better and varied goods : The larger the marketplace, the more products are available. Because of competition, prices go down and quality goes up. I STUD ernational Business Global Framework, Part 1 MBA 6601, International Business 2 NIT x STUDY GUIDE Title Better investment opportunities : The larger the marketplace, the better the opportunity for private participation and even public partnerships. Fills social needs : Workers have jobs, markets enhance education, and the government has tax revenue.
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