IB chapter one
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Identify and explain the reasons why companies
seek foreign markets.
Emerging countries, Stagnant and saturated markets in most of the industrialized nations, Rising input costs in industrialized countries, Availability of low cost resources
outsourcing, manufacturing, and marketing goods and services that consciously address global customers, markets, and competition in formulating business strategy. Companies should view the world as one single market to assemble, produce, and market goods and services
identify and distinguish among various types of international organizations,
International Company (any size)(e.g., export/import, licensing/franchising, etc.), Multinational Corporation (direct investment and control of operations), Multinational Enterprise (considerable resources invested abroad.), Transitional Corporation (managed and owned by national from different countries). A Global Company (a network. standardize its products and services offerings)
How do international companies use research? Discuss some methods and issues.
- secondary and primary research to identify market potential, to make financial decisions, to select locations for manufacturing plants, and
- to develop strategies.
Why is corporate social responsibility important?
The environment, employees, customers, and the general public may be harmed, suppliers may incur losses...Companies need to be concerned about the wider group of stakeholders than the typical stockholders of the company for the welfare of the people and the environments they live in.
Enumerate and explain the various ethical
Utilitarian—if the outcome is good, process is justified, Deontological—process has to be sound regardless of outcome, Moral Language—combination of ethics to focus what is right to avoid harm.
After struggling to defend the peg, the Thai government abandoned its defense and announced that the Baht would float freely against the dollar. With its foreign exchange rates depleted, Thailand lacked the foreign currency needed to finance its international trade and service debt commitments, and was in desperate need of the capital the IMF could provide. When inflation and increasing imports put pressure on the currencies, the resulting devaluations led to default on dollar denominated debts by the mid 1990s, imports were expanding across the region by mid-1997, it became clear that several key Thai financial institutions were on the verge of default foreign exchange dealers and hedge funds started to speculate against the Baht, selling it short, Following the devaluation of the Baht, speculation caused other Asian currencies to fall due to similar factors to those that led to the earlier devaluation of the Baht--excess investment, high borrowings, much of it in dollar denominated debt, and a deteriorating balance of payments position
Mexican currency crisis of 1995
due to high debts, a pegged exchange rate that did not allow for a natural adjustment of prices, to keep Mexico from defaulting on its debt, a $50 billion aid package was created
list, define, and contrast five levels of economic integration
1. A free trade area eliminates all barriers to the trade of goods and services among member countries, but members determine their own trade policies for nonmembers 2. A customs union eliminates trade barriers between member countries and adopts a common external trade policy 3. A common market has no barriers to trade between member countries, a common external trade policy, and the free movement of the factors of production. 4. An economic union has the free flow of products and factors of production between members, a common external trade policy, a common currency, a harmonized tax rates, and a common monetary and fiscal policy 5. A political union involves a central political apparatus that coordinates the economic, social, and foreign policy of member states
What are the two most important pressures IB
managers must deal with?
cost and localization
low cost pressures, low pressure for localization responsiveness
global standardization strategy
strong pressures for cost reductions, low pressure for local responsiveness
low cost pressures, substantial differences across nations for customer tastes (high local)
intense cost and localization pressures
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