What are three factors that have led to the increased growth in international business in recent decades? Which do you think has been most important and why?
Answer:
a. Rapid increase in an expansion of technology—By increasing the demand for new products and services, technology has tremendous impact on international business. As the demand increases, so do the number of international business transactions. Improved communications and transportation speed up interactions and improve managers' ability to control foreign operations.
b. Liberalization of cross-border movements—Although the past decrease in restrictions has been erratic, governments have lowered barriers because their citizens have expressed the desire for better access to a greater variety of goods and services at lower prices. Governments also reason that their domestic producers will become more efficient as a result of foreign competition, and they hope to induce other countries to reduce their barriers to international movements.
c. Increase in global competition—The pressures of increased foreign competition can persuade a company to expand its business into international markets. Today companies can respond rapidly to many foreign sales opportunities. They can shift production quickly among countries if they're experienced in foreign markets and because they can transport goods efficiently from most places.
d. Growing consumer pressures—Consumers are savvier and have more income. They want to be able to buy the variety and low-cost products available from anywhere in the world.
e. Development of supporting services—Companies and governments have developed services that ease international business. Today, producers can be paid relatively easily for goods and services sold abroad because of bank credit agreements, clearing arrangements that convert one country's currency into another's, and insurance that covers damage en route and nonpayment by the buyer.
f. Changing political situations—The schism between communist and noncommunist countries is basically over, as communist countries have moved toward transitioning their economies; therefore, trade between these countries has increased.
g. Expanded cross-national cooperation—Countries realize they can't go it alone. They cooperate to gain reciprocal advantages, to attack problems jointly, and to deal with areas outside the confines of any country.
Learn More :
Multinational Business Chapter 1
- In a short essay, identify and explain three competitive factors that influence international businesses.
- What is foreign direct investment? What social factors in the external environment might affect FDI?
- What is a multinational enterprise (MNE)? How do physical and social factors affect how an MNE functions in a foreign country?
- What is globalization? What modes of international business are used by firms that want to globalize? Briefly describe each method.
- What are the differences between merchandise and service imports and exports? Provide examples to illustrate your answer.
- What is international business? What are the primary reasons that companies engage in international business?
- In a short essay, discuss why governments have been liberalizing cross-border movements of goods, services, and resources.
- Why should domestic managers have an understanding of globalization and international business? What are the current views regarding the future of globalization?
- The view that regionalization, rather than globalization, will prevail in the future is largely based on the use of common languages among countries in a region.
- The fact that a company is the market leader in one country is no guarantee that it will be the leader in another country.
- A company with limited resources is more likely to achieve national distribution within a small country than within a large country.
- Managers need to understand not only the laws of countries where they operate, but also how those laws are enforced.
- Geographical barriers typically affect distribution channels within countries, but they rarely affect distribution channels between countries.
- The terms multinational corporation and multinational company are frequently used synonyms for strategic alliances.
- The ownership of foreign bonds is an example of a portfolio investment.
- A joint venture is an example of a portfolio investment.
- When a U.S. citizen flies Japan Airlines, the airline acts as a service exporter for Japan.
- The production of goods by a French company in Italy for sale in Italy is an example of an Italian merchandise import.
- By operating internationally, a company may take advantage of business-cycle differences among countries and thereby reduce its financial risks.
- Many professional basketball teams recruit tall youngsters in foreign countries into basketball camps where they can develop basketball skills and perhaps become candidates for professional play. This is an example of engaging in international business to acquire resources.
- Critics of offshoring assert that the short-term cost savings derived from offshoring hinder firms from developing more efficient production methods.
- The process of shifting production to a foreign country is known as outsourcing.
- A criticism of globalization is that as economic growth increases, too many nonrenewable resources are used.
- Supporters of globalization assert that the process helps countries strengthen their sovereignty.
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