Terms in this set (29)

* Recent technical advances:
- efficient means of production
- new products (mobile devices)
- new applications of old products (guar beans being used in oil and natural gas mining)
- rising productivity = frees up more people to develop new products because it takes fewer people to produce them
- people can also buy more by working the same number of hours
- entry of new products into the market creates a need for other complementary products, accelerating the need for scientists and engineers
- collaboration among and dependence on firms in different countries that have financial resources and specialized capabilities
Ex: 2010 rescue of Chilean miners: Center Rock drill from U.S., high-strength cable from Germany, super-flexible fiber optics comm cable from Japan, special cell-phone from South Korea.
- Companies need to sell both domestically and internationally in order to spread the fixed developmental and production costs over more units of production (optimum scale size of production seldom corresponds with the market demand in a single country.)

* Advances in Communications and Transportation
- better global communications allow us to discover and desire products and services developed in far parts of the world
- Innovations in transportation: more countries compete for sales, flowers from Ecuador, Israel, Netherlands, and NZ compete for U.S. market because growers can ship them quickly and economically.

- improved communications also enhance a manager's ability to oversee foreign operations
1) Geographic influences
- determining the location, quantity, quality and availability of the world's resources, as well as ways to exploit them
- explains why different products and services are produced in different places
- geographic barriers often affect communications and distribution channels
- adverse climatic conditions and natural disasters make business riskier in some areas than in others while affecting supplies, prices, and operating conditions in far-off countries
- population distribution and the impact of human activity

2) Political policies
- influence how and whether IB will take place in the country
- political disputes and military confrontations disrupt trade and investment

3) Legal policies
- domestic law includes both home and host country' regulations on such matters as taxation, employment and foreign exchange transactions
- international law (legal agreements between countries) determines how earnings are taxed by all jurisdictions, and also determine how companies can operate in certain places.
- how fastidiously are the policies enforced in different countries?

4) Behavioral factors
- different values, attitudes and beliefs help make operational decisions abroad
- difference on the type of court tennis is played on, in each country, due to popularity and tradition

5) Economic forces
- higher incomes in the U.S. and Canada allow major league teams to offer higher salaries that attract Dominican players, and people can afford the tickets
- explain why some countries can produce goods or services for less
- provides analytic tools to determine the impact of an international company's operations on the economies of both host and home countries, as well as the impact of the host country's economic environment on a foreign firm