Chapter Preview
Do you wear Nike shoes or Timberland boots? Listen to Beyoncé, Pitbull, Twenty One Pilots, or The Neighborhood on Spotify? If you answered yes to either of these questions, you’re a global business customer. Both Nike and Timberland manufacture most of their products overseas. Spotify is a Swedish enterprise.
Why is international business important? Why do companies and nations engage in international trade? What strategies do they employ in the global marketplace? How do governments and international agencies promote and regulate international trade? These questions and others will be addressed in this chapter. Let’s start by looking at the more specific reasons why companies and nations engage in international trade.
Learning Objectives
After studying this chapter, you should be able to:
- Use the concepts of absolute and comparative advantage to explain why nations participate in international trade.
- Evaluate the economic impacts of the concepts of balance of trade and balance of payments on world trade.
- Distinguish between the various opportunities available to businesses operating internationally, including importing and exporting, licensing and franchising, contract manufacturing and outsourcing, strategic alliances, and joint ventures.
- Identify the characteristics of various types of international business organizations, including foreign direct investments, subsidiaries, mergers, and multinational companies.
- Recognize how economic and legal differences between countries create challenges to successful business dealings.
- Use Hofstede’s Cultural Dimensions to describe how cultural differences between countries create challenges to successful business dealings.
- Discuss the various initiatives designed to reduce international trade barriers and promote free trade.
