B AD 3513 Lecture Notes copy.docx

B AD 3513 Lecture Notes copy.docx - B AD 3513...

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B AD 3513 Lecture/Chapter notes Chapter 1: What is International Business? Dimensions of International Business o Globalization of markets o International trade o International investment o International business risks o Participants: firms, intermediaries, facilitators, governments o Foreign market entry strategies The “flows” of international business o Knowledge o Trade in products o Trade in services o Direct investments Why are markets globalizing? o Unprecedented growth of international trade. o Trade between nations, accompanied by substantial flows of capital, technology, and knowledge. o Development of sophisticated global financial systems and mechanisms that facilitate the cross-border flow of products, money, technology, and knowledge o Greater collaboration among nations through multilateral regulatory agencies such as the WTO and the IMF 4 risks of international business o Cross-cultural risk o Country risk (corruption risk) o Currency (financial) risk o Commercial risk Who can participate in International business? o Multinational enterprises (MNEs) Eg. Caterpillar, Samsung, unilever, Vodafone, disney o Small- and medium-sized enterprise (SMEs) o Born Global Firm o Non-governmental organizations (NGOs) Eg. Bill and Melinda Gates Foundation Why do firms participate in IB? o Seek opportunities for growth through market diversification o Earn higher margins and profits o Gain new ideas about products, services, and business methods o Serve key customers that have relocated abroad
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o Be closer to supply sources, benefit from global sourcing advantages, or gain flexibility in the sourcing of products o Gain access to lower-cost or better-value factors of production o Develop economies of scale in sourcing, production, marketing and r&d o Confront international competitors more effectively or thwart the growth of competition in the home market o Invest in a potentially rewarding relationship with a foreign partner Why study IB?
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