a.i. When an imperfection makes a transaction less efficient than it could
be, the company will undertake FDI to remove the imperfection
a.ii. Common imperfections
Technical expertise comp
a.i. Problem: If one company stops working, can stop whole companies
a.ii. Increase in technology lead to corporations to engage cross-border
alliances and acquisitions
b. Customer knowledge
b.i. Behavior of buyers major influence on FDI un
Regional economic integration
a. countries in a geographic region cooperate to reduce trade barriers of product,
people or capital
b. regional trading bloc - group of nations in a region undergoing economic
c. levels of integrations:
FDI(Foreign Direct Investments)
a. The purchase of physical assets or significant amount of stock of a company in
another country in order to game control
b. Portfolio investment = investment that does not involve obtaining control of a
International Business Final Study Guide:
Regional Integration: Process where geographically close countries corporate to reduce barriers to trade,
people and capital. A regional trading bloc is when a group of nations close together have econom
Free Trade- pattern of imports and exports that occurs in the absence of trade
o Governments impose trade barriers for reasons that are due to political,
economical, or cultural.
o Countries often intervene on free trade by supporting
The nation of Panama is located in Central America; it borders Colombia from the north
and Nicaragua to the south. Panamas geography is mostly mountainous with upland plains and
rolling hills; the size is comparable to that of South Carolina. The official
The Nation of Panama
Study Guide for Midterm Exam on March 2nd, 2016 (Wednesday)
The midterm will have 30 multiple choices and 10 short answer questions. The multiple choices
are directly from homework. Please review your homework by clicking on the same link. Pay
IB Final Exam Study Guide: Chapters 6-10
Chapter 6: Business Government Trade Relations
-Protecting industries deemed important for national security
-Retaliating to unfair foreign competition
Think about government intervention
What are the pros and cons?
Make two lists, pros on one side and cons on the other
THE POLITICAL ECONOMY OF INTERNATIONAL TRADE:
Purchase of physical assets or significant amount of ownership
of a company in another country to gain some measure of
By contrast, portfolio investment does not involve o
Chapter 4: Theories of International Trade and Investment
Theories of International Trade and Investment:
o Comparative advantage: superior features of a country that provide it with unique
benefits in global competition typically derived from either natu
Chapter 3: Organizational Participants that Make International
3 types of participants in international business:
1. Focal firm: the initiator of an international business transaction, including MNEs
(akaMultinational Corporations/MNCs) an
A capital market allocates financial resources according to their most efficient uses and provides
a way to borrow or invest money efficiently.
Debt is a loan in which the borrower repays the borrowed amount, called principal, plus interest.
November 12, 2012
Exchange rates can increase or decrease world prices and, therefore, demand of a nations
Devaluation, which entails lowering the value of a currency, reduces the price of expo
November 26, 2012
Chapter 12 Notes
A systematic approach to screening markets and sites aids companies as they pursue international
opportunities at continually earlier points in their growth. The following four-st
Rule of Law- well established inside independent legal structure. Efficient court system, secure
contracts and private property rights. Strong anti-corruption actions and also the Bri
Chapter 1 notes
Globalization reshapes our cultures and systems of politics, laws, and economics; affects
standards of living; and alters global trade and investment patterns.
We encounter the result of international business transactions every day.
Chapter 2 notes
Why should we try to avoid ethnocentricity?
1. It can cause us to view other cultures in terms of our own and cause us to overlook
beneficial aspects of other cultures.
2. It can undermine our business projects if we are insensitive to cul
Chapter 3 notes
Every nations political and legal systems are rooted in its peoples history and culture.
National history and culture are then reflected in values such as individual responsibility, law and
order, free enterprise, and the role of family.
International Trade notes
International trade is the purchase, sale, or exchange of goods and services across national
We can measure the importance of trade to a nation by examining its trade volume
relative to its total output.
The main benefi
Factors of Production notes
Wherea the absolute and comparative advantage theories focus on productivity, factor
proportions theory concentrates on factors of production.
Factor proportions theory says that countries produce and export goods that require
Sometimes, governments intervene in trade to achieve political motives.
Lawmakers often try to protect jobs in the domestic economy because they fear being
voted out of office for high rates of unemployment.
Imports and exports in industries vital to na