Page 24 - DMGT545_INTERNATIONAL_BUSINESS

Unit 1: International Business: An Overview

l z The company’s external environment conditions such as physical, societal and competitive notes
affects the business functions such as marketing, manufacturing and supply chain
management are carried out.

l z When a company operates internationally, foreign conditions are added to domestic ones
making the external environment more diverse and complex.
l z This pervasive growth in market interpenetration makes it increasingly difficult for any
country to avoid substantial external impacts on its economy.

l z In particular massive capital flows can push exchange rates away from levels that
accurately reflect competitive relationships among nations if national economic policies or
performances diverse in short run.

l z The rapid dissemination rate of new technologies speeds the pace at which countries
must adjust to external events. Smaller, more open countries, long ago gave up illusion
of domestic policy autonomy. But even the largest and most apparently self-contained
economies, including the US, are now significantly affected by the global economy.

l z Global integration in trade, investment, and factor flows, technology, and communication
has been tying economies together.

1.9 keywords

Ethnocentric Approach: Maintenance of domestic approach towards international business.
Foreign Direct Investment: A foreign direct investment is one that gives the investor a controlling
interest in a foreign company.
Geocentric Approach: Under this approach, the entire world is just like a single country for the
company.

International Business: Any firm that engages in international trade or investment.
Merchandise Export: Tangible products sent out of a country.
Polycentric Approach: This approach mostly focuses on the conditions of the host country in
policy formulation, strategy implementation and operations.

Regiocentric Approach: It market more or less the same product designed under polycentric
approach in other countries of the region, but with different market strategies.

1.10 review Questions

1. Describe the concept of international business and explain its analysis.

2. What is the importance of international business?
3. Distinguish between the domestic trade and foreign trade.
4. Why companies engage in international business?
5. What are the reasons for phenomenon international growth in recent years?

6. Describe the evolution of international business.
7. Explain the drivers of globalization.
8. Describe the stages of internationalization.
9. Discuss the approaches of international business.
10. Highlight the advantages of international business.

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