International businessLesson 5 of 7 in the course Competing in the Global Marketplace

International Market Entry and Resilience: Trade, Partnerships, and Investment

5 flashcards · 5 quiz questions · 5 match pairs · 4 fill-in sentences · English

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Summary

Companies enter international markets for different reasons, from finding new customers to using production capacity more efficiently. This lesson introduces common motivations for going global and explores exporting, often the simplest first step into international trade.

A company may seek international markets to earn additional profits, especially when it has a distinctive product, technology, or expertise that competitors abroad do not yet offer. Managers may also have valuable information about foreign customers or market conditions. Such an advantage can help a firm get started, but competitors may eventually catch up.

All flashcards

What is exporting?
Selling products made in one country to buyers in another country.
What is licensing in international business?
An agreement allowing a licensee to use specified intellectual property or know-how in return for a fee or royalty.
What is direct foreign investment?
Active ownership of a foreign company or of overseas manufacturing or marketing facilities.
What is countertrade?
An arrangement in which some or all payment for goods or services is made with other goods or services.
How can a global firm balance consistency and local responsiveness?
It can maintain core principles while allowing local teams to adapt operations to local customers and conditions.

Quiz questions

  1. Why is exporting often a relatively low-risk way to begin international business?Answer: A firm can sell abroad without first building or buying overseas production facilities.
  2. What distinguishes franchising from a simple license of intellectual property?Answer: The franchisee uses the brand and a business system under agreed conditions.
  3. Which description best fits direct foreign investment?Answer: Active ownership of a foreign business or overseas operating facilities.
  4. How is countertrade different from a transaction paid for entirely in cash?Answer: Some or all of the payment consists of other goods or services.
  5. When might a company with low debt and strong growth prospects choose to maintain or increase investment during a downturn?Answer: It may be financially able to invest while competitors reduce spending.

Based on Introduction to Business 2e by Lawrence J. Gitman, Carl McDaniel, Amit Shah, Monique Reece, Linda Koffel, Bethann Talsma, James C. Hyatt (OpenStax), licensed CC BY 4.0. Adapted into a summary, flashcards and quizzes.

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