The American CollegeChapter 5 Question No 1:Describe the four basic levels of International business activity. Do you think any organization will achieve the fourth level?Why or why not. Question No 2:For each of the four globalization strategies, describe the risks associated with that strategy and the potential returns from that strategy. __________________________________Answer for question No 1:The four general levels of international buisness activity are:1.
Domestic business2. International business3. Multinational business4. Global business. Domestic Business: Is the one that acquires all of its resources and sells all of its products ot services within a single country.
(8/143)Interational business: Is the one that is based primarily in a single country but acquires some meaningful share of its resources or revenues (ot both) from othe countries. (8/143)Multinational business: The one that has a worldwide marketplace from which it buys raw mateials, borrows money, and manufactures its products and to which it subsequently sells its prducts. (8/143)Global business: Is the business that transcends national boundaries and is not committed to a single home country. (8/143)In my opinion there is no opportunity for a business to achieve this level of Iinternationalization.
The reason is that all business in all over the world are controled by the government which are committed. There is no way for a business which is spread-out in all over the world with high revenues and big profits not to be controlled by noone. Answer for question No 2:The four globalization strategies are the followng:1. Importing and exporting2. Licensing3.
Strategic alliances4. Direct investmentsIn all of those strategies there are many risks and of course many efforts. In Importing/exporting,the main risk is that, the products are not adapted to local conditions, and they may miss the needs of a large segment of the market. . On the other hand the effort of imports/exports is that you can get in the market of your country with a small outlay of capital.
In licensing the main risk is that the licensing firm can lose profits if the licensee does not develop the market effectively. This could happen only if the firm tie up control of its product or expertise for a long time period. In addition the advantages of licensing are increased profitability and extended profitability. In strategic alliances the main advantage is that the two or more firms that are cooperating may allow a quick entry into the market by taking advantage of the existing strengths of participants.
In addition strategic alliances are also an effective way to gain access to technology or row material, and they allow the firms to share the risk of cost of the new venture. Finally many firms make direct investment in order to capitalize on lower labor costs. On the other hand in direct investment there is a great economic and political risk, which may cost lots of troubles in the profit and of course in the firm. (8/145-148)Type-Terms Chapter 5 :Domestic Business: Is the one that acquires all of its resources and sells all of its products ot services within a single country.
Interational business: Is the one that is based primarily in a single country but acquires some meaningful share of its resources or revenues (ot both) from othe countries. Multinational business: The one that has a worldwide marketplace from which it buys raw mateials, borrows money, and manufactures its products and to which it subsequently sells its prducts.Global business: Is the business that transcends national boundaries and is not committed to a single home country.Exporting: Making a product in the firm’s domestic marketplace and selling it in another country.Importing: Bring a good,service, or capital into the home country from abroad.Licensing: An arrangement whereby on company allows another company to use its brand name, trademark, technology, patent, copyright, or other assets in exchange for a royalty based on sales.Strategic alliance: A cooperative arrangement between two or more firms for mutual gain.Joint venture: A special type of strategic alliance in which the partners share in the ownership of an operation on an equity basis.Direct Investment: When a firm headquartered in one country builds or purchases operating facilities ot subsidiaries in a foreign country.Maquiladoras: Light assembly plants built in nothern Mexico close to the U.S border which are given special tax breaks by the Mexican government.Market economy: An economy based on the private ownership of business which allows market factors such as supply and demand to determine business .
