IB 3101- Final Exam Guide - Comprehensive Notes for the exam ( 57 pages long!)

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Published on 5 Dec 2017
School
Temple University
Department
International Business Admn
Course
IB 3101
Temple
IB 3101
FINAL EXAM
STUDY GUIDE
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Week 1- Chapter 1- Globalization
International business
o Any firm which does trade as well as foreign direct investment in
other countries
Multinational company
o Any firm which has production activities in more than one country is a
multinational company
International trade
o Occurs when a firm exports goods or services to consumers in another
country
Foreign direct investment
o When firms invest their resources in business activities in foreign
countries
Foreign subsidiary
o Operation in a host country which gives the local firm to conduct its
business activities in that foreign country
Multinational Enterprises
Activities
o Trade- exports and imports
o Foreign direct investment (FDI)
Ways they participate
o Equity modes of international participation (FDI)
Acquisition, wholly owned subsidiaries (start your own)
Joint venture (equity, strategic alliances)
o Non-equity modes (FDI)
Exporting
Licensing
Tech transfer
Non-equity strategic alliances
Globalization
Shift toward greater independence among national institutions and
economies
Trend towards a more integrated global economic system
1. Globalization of markets
Selling all around the world
Merging of historical distinct and separate national markets
into one huge global marketplace
Tastes and preferences of global consumers are converging
upon some global norm
o Ex. Coca-Cola, Apple, Ikea
2. Globalization of production
Making products in different countries
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Sourcing of goods and services from locations around the
globe to take advantage of national differences in the cost
and quality of factors of production (labor energy, land, and
capital)
o Goal:
Lower overall cost structure
Improve quality or functionality of the
product to gain competitive advantage
Drivers of Globalized Economy
1. Benefits to consumers from trade
2. Benefits to producers from trade
3. Foreign direct investment and technology transfer
4. Reduction in trade barriers
a. Since 96s have decreased
b. Technological development
c. US in 1913 tariff rate at 44% (leading to great depression)
d. US in 2010 tariff rate at 3.2%
5. Reduction in transportation costs
6. Evolution of goods in global economy
7. Increasing prevalence in English as the standard business language
After WWII
1945 signed multinational treat GATT (general agreement on tariffs and
trade)
1995 GATT to WTO (world trade organization)
Now ~3.9% tariff or less for a lot of countries
Also more treaties
NAFTA (North America)
EU (European Union)
APEC (Asian pacific econ. Corporation)
Technological Innovation
Internet
o Connect with people in real time
Transportation technology
o Transportation costs decreases (advances in shipping and logistics)
o Commercial jets
o Super freighters
o Containerization
o Allows firms to better respond to customer demands
Lower communication costs (advances in information and communication
technologies (ICT))
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Document Summary

International business: any firm which does trade as well as foreign direct investment in other countries, multinational company, any firm which has production activities in more than one country is a multinational company. Multinational enterprises: activities, trade- exports and imports, foreign direct investment (fdi, ways they participate, equity modes of international participation (fdi, acquisition, wholly owned subsidiaries (start your own) Joint venture (equity, strategic alliances: non-equity modes (fdi, exporting, licensing, tech transfer, non-equity strategic alliances. Improve quality or functionality of the product to gain competitive advantage. After wwii: 1945 signed multinational treat gatt (general agreement on tariffs and trade, 1995 gatt to wto (world trade organization, now ~3. 9% tariff or less for a lot of countries. Also more treaties: nafta (north america, eu (european union, apec (asian pacific econ. Global institutions: ex, wto / gatt, international monetary fund (imf, world bank, united nations (un)