1.​ What are two (2) ways that international business differs from domestic business?

Two differences between international business and domestic vision are the
environmental factors and levels of decision-making complexity. Decision-making in
international business is more complex due to the need to navigate different cultural values, legal
systems, and market conditions. Managers must consider the self-reference criterion, where their
own preferences may not align with those of foreign markets, requiring adaptations in strategies
and operations that are not typically necessary in domestic business. International business
operates in a more complex environment due to the influence of external uncontrollable forces
such as political, legal, and economic factors that vary significantly from one country to another.
In contrast, domestic business primarily deals with a more stable and familiar environment where
these factors are more predictable and consistent throughout their locations.

2. Should it matter to consumers whether the companies that make their products are based in the
consumers’ home country or not? Explain your rationale.

From my perspective, it shouldn't matter significantly to consumers whether or not the

companies that produce their products are based in their home country. I have several reasons for
this rationale including quality and expertise, as well as global trading benefits. Not all countries
have the same level of expertise or resources to produce certain goods. For instance, some
nations may excel in technology, while others may be better at manufacturing textiles or
agricultural products. By allowing companies from different countries to compete in the market,
consumers can access higher-quality products that may not be available domestically. This
diversity in production capabilities can lead to better overall and even cheaper products. Also,
global trade is essential for economic growth and development. It allows countries to specialize
in what they do best and trade for what they need. This interdependence fosters innovation and
efficiency, ultimately benefiting consumers through a wider variety of choices and potentially
lower prices. If consumers were to prioritize only domestic products, it could hinder this
beneficial exchange and limit the availability of superior goods.

3. Give an example of how an international business manager might manipulate one of the
controllable forces in answer to a change in the uncontrollable forces.

An international business manager may respond to a change in uncontrollable external

forces by adjusting the company's human resources strategy, which is a controllable force. For
instance, if the government enacts a law that restricts foreign hiring, the manager could
implement a plan to prioritize the recruitment and training of local talent to comply with the new
regulations while still maintaining operational efficiency. This approach not only ensures
adherence to the legal requirements but also fosters goodwill within the local community,
enhances the company's reputation, and potentially leads to a more culturally attuned workforce
that can better navigate the local market dynamics. By proactively adapting the human resources
strategy in response to the legal changes, the manager effectively mitigates risks associated with
non-compliance and positions the company for continued success in the international
environment.

4. What are some of the possible conflicts between host governments and foreign-owned
companies?

Conflicts between host governments and foreign-owned companies can arise from a
number of things, such as regulatory differences, economic interests, and national sovereignty
concerns. Host governments may impose strict regulations or defensive measures to protect local
industries, conflicting with foreign companies' profit motives. National security issues can also
create tensions if a foreign company is seen as a threat to local interests or critical infrastructure.
Additionally, cultural misunderstandings and differing business practices can lead to disputes
over compliance and corporate social responsibility. These complexities require collaboration
between all parties in order to align interests and foster a conducive business environment for
everyone involved.

5. A nation whose GNI is smaller than the sales volume of a global firm is in no position to
enforce its wishes on the local subsidiary of that firm. Is this statement true or false? Explain
your reasoning.

The statement is true. When a nation's GNI is smaller than the sales volume of a global
firm operating within its borders, it indicates that the firm has significant economic power and
influence compared to the local economy. In such cases, the global firm may wield more
leverage in negotiations and decision-making processes than the host country, making it
challenging for the nation to enforce its regulations or wishes on the subsidiary. This imbalance
of power can lead to situations where the firm prioritizes its corporate interests over local laws or
social responsibilities, potentially undermining the host country's authority and ability to govern
effectively. Therefore, in this case, the nation may struggle to exert influence over the firm's local
subsidiary, as the economic leverage of the corporation could outweigh that of the entire nation.

6. Explain reasons why the FDI (foreign direct investment) from the United States to the rest of
the world was nearly $1.5trillion from 2013 to 2017.

The $1.5 trillion in foreign direct investment (FDI) from the United States to the rest of
the world between 2013 and 2017 can largely be attributed to the U.S. companies seeking growth
opportunities in emerging markets, diversifying their investment portfolios, and benefiting from
the favorable tax policies of the period. U.S. firms, particularly in industries like technology,
finance, and manufacturing, were actively expanding their global reach to access new markets,
take advantage of lower labor costs, and tap into the increasing demand for goods and services in
developing regions. This period also witnessed the expansion of international corporations, with
many U.S. companies investing in strategic acquisitions and partnerships abroad to solidify their
positions in international markets and secure long-term profits.
 However, I feel as though it’s also important to mention that the FDI flow during this
period was negatively impacted by the policies made under President Donald Trump's
administration, particularly after his election in 2016. Trump's "America First" approach, which
included trade protectionism, tariffs, and skepticism toward international agreements, created an
uncertain and less favorable environment for international investment. His administration's
withdrawal from key agreements like the Paris Climate Accord and the Trans-Pacific Partnership
(TPP), although fully taken effect after 2017, strained relationships with other nations and led to
a rise in trade tensions. This uncertainty, coupled with the unpredictability of U.S. foreign policy
under Trump, made some foreign investors wary of investing in the U.S. itself, while also
influencing global investment patterns as businesses adapted to the shifting economic and
political landscape

7. According to the text, explain the internalization Theory.

The internalization theory suggests that firms expand internationally to exploit their
proprietary advantages, such as brand reputation and technology, by internalizing their
operations rather than relying on external market transactions. This approach allows companies
to maintain control over their resources and capabilities while minimizing transaction costs
associated with market exchanges. The theory emphasizes the importance of firm-specific
advantages and the strategic decision-making process involved in choosing the most effective
mode of entry into foreign markets.

8. What is the Mercantilism theory, Absolute Advantage, and Comparative Advantage?

The Mercantilism Theory is an economic doctrine that emerged in the 16th to 18th
centuries, emphasizing the importance of accumulating wealth, primarily gold and silver,
through a favorable balance of trade. According to mercantilist thought, a nation should export
more than it imports to increase its wealth and power. This theory advocates for government
intervention in the economy, including tariffs and subsidies, to promote exports and restrict
imports.

Absolute Advantage, introduced by economist Adam Smith, refers to the ability of a

country to produce a good more efficiently than another country. In this context, a nation has an
absolute advantage when it can produce a specific product using fewer resources or at a lower
cost than its trading partners. This concept suggests that countries should specialize in the
production of goods where they hold an absolute advantage and trade with others to obtain goods
that they produce less efficiently. By doing so, all nations can benefit from increased overall
production and consumption

Comparative Advantage, introduced by economist David Ricardo, builds on the idea of

absolute advantage by focusing on the relative efficiency of producing goods. A country has a
comparative advantage in producing a good if it can produce it at a lower opportunity cost than
another country. This means that even if one country is less efficient in producing all goods
compared to another, it can still benefit from trade by specializing in the production of goods
where it has the lowest opportunity cost.

9. Discuss and explain how international trade in merchandise and services has changed over the
past two decades and what the major trends are. What future trends can you speculate about?
How might this information be of value to a manager?

Over the past two decades, international trade in merchandise and services has undergone
significant transformation due to factors like globalization, technological advancements, and
trade liberalization. The rapid growth of e-commerce and digital platforms has been a major
driver, making it easier for companies to access global markets and for consumers to purchase
goods and services from anywhere in the world. Also, trade in services, such as finance, IT, and
consulting, has expanded as businesses increasingly rely on outsourcing and offshoring to reduce
costs and access specialized expertise. Another key trend is the rising importance of emerging
markets, especially in Asia, where countries like China and India have become central hubs for
both manufacturing and services. Furthermore, sustainability and ethical sourcing have gained
prominence, influencing the way businesses engage in international trade.

Looking ahead, future trends in international trade may be shaped by the increasing role
of digital trade, automation, and AI technologies, which are likely to further streamline global
supply chains. As sustainability and ethical sourcing continue to gain importance, international
trade may be influenced by stricter environmental regulations and consumer preferences for
responsible business practices. However, policies like the increase in tariffs under President
Trump's approach could negatively affect these trends. Higher tariffs may disrupt global supply
chains by increasing costs for businesses, slowing down the flow of goods, and encouraging
protectionism over global collaboration. This could hinder the efficiency that digital trade and
automation have promised, as businesses face increased uncertainty and higher operational costs.

For managers, understanding these shifts is vital, as it helps in anticipating market

changes, adjusting strategies, and making informed decisions about global expansion, sourcing,
and investment in emerging technologies to remain competitive in an evolving marketplace.

10. Adam Smith theory of absolute advantage had potential limitations for helping policy makers
when making decisions related to international trade? How does Ricardo’s theory of
comparative advantage differ from the theory of absolute advantage?

Adam Smith's theory of absolute advantage did have limitations for policymakers when
making decisions related to international trade as it did not account for the complexities such as
the opportunity costs associated with resource allocation. In situations where a country has an
absolute advantage in producing multiple goods, it may still be beneficial to specialize in the
production of a single good where it has the greatest efficiency, rather than attempting to produce
everything which can lead to suboptimal resource use and hinder overall economic growth.
 In contrast, David Ricardo's theory of comparative advantage expands on Smith's ideas
by emphasizing the importance of opportunity costs. According to Ricardo, even if a country
holds an absolute advantage in the production of all goods, it should still specialize in the
production of goods for which it has the lowest opportunity cost relative to other countries. This
means that countries can benefit from trade by focusing on their comparative advantages, leading
to more efficient global resource allocation and increased overall production. Ricardo's theory
thus provides a more nuanced framework for international policymakers, allowing them to make
informed decisions that enhance trade benefits, even in the presence of absolute advantages.

11. Describe what culture is and its importance to international business.

Culture is the heart of a community. It is the shared values, social norms/behaviors,

customs,, and beliefs that characterize a group of people, including but not limited to, language,
traditions, religion, and even ways of interacting. It shapes how individuals perceive the world
and interact with one another, influencing many important things such as decision-making,
communication styles, and business practices. Culture is deeply ingrained in the daily lives of
individuals and communities, and it varies widely across regions, countries, and ethnic groups.

In international business, understanding culture is crucial for building successful

relationships, negotiating deals, and managing teams across borders. Cultural differences can
affect everything from communication and leadership styles to expectations regarding behavior,
hierarchy, time, and work ethics. Misunderstanding or disregarding these cultural nuances can
lead to many negative consequences such as miscommunication, lost business opportunities, and
strained relationships. For instance, what is considered polite or professional in one country may
be seen as rude or inefficient in another. Therefore, businesses that operate globally must develop
cultural awareness and adaptability to navigate these differences effectively, ensuring smooth
operations, improved collaboration, and greater success in foreign markets.

12. You have been managing an international business in Europe for ten years. How important is
it to adjust business practices to conform with local traditions and expectations in other nations?
How or should a person’s social status be weighted more heavily than education or job
performance in deciding who is selected for a position?

As someone who works in the mental health field with a strong focus on ethical treatment
and equality, I believe adjusting business practices to align with local traditions and expectations
in other nations is incredibly important. Respecting cultural differences helps build trust and
rapport, ensuring that business relationships are both productive and harmonious. While it's
essential to stay true to core values and standards, adapting to local customs, whether it's
communication styles, working hours, or business etiquette, can make a huge difference in how
well a business is received and integrated into a new market. In Europe, for example,
understanding the nuances of different countries, whether it's the approach to hierarchy,
decision-making, or even social interactions, can significantly impact the success of a business
operation.
 Regarding the selection of individuals for positions, I think education and job
performance should definitely play a central role in hiring decisions. However, social status
shouldn't be disregarded completely, as it can sometimes influence an individual's access to
opportunities or how they’re perceived in certain cultures. Ideally, social status should never
outweigh the value of an individual’s qualifications, experience, or ability to perform the job
effectively. That said, it's important to consider how a person's background, values, and even
their social standing can affect team dynamics and cultural compatibility. Ensuring fairness and
equality in decision-making is key, and people should be selected based on their merits,
regardless of their social status, as long as the work environment fosters inclusivity and mutual
respect.

13. If you were traveling to China for a business proposal and was offered a gift, how would you
respond knowing your company does not accept gifts?

If I were traveling to China for a business proposal and was offered a gift, I would
approach the situation with respect and cultural sensitivity, recognizing that gift-giving is an
important part of Chinese business culture. In China, offering a gift is often seen as a gesture of
goodwill and a way to build rapport and trust. However, I also understand that my company has a
strict no-gift policy, and I must adhere to those ethical guidelines. In this situation, I would
politely and graciously acknowledge the gift, expressing my appreciation for the thoughtfulness
behind it. I would then explain that my company has a policy that doesn't allow gifts to be
accepted, as we prioritize transparency and fairness in all business dealings. I would offer to find
another way to express appreciation for the gesture, such as inviting the individual to a business
lunch or offering a small token of appreciation from my company’s side, since those would align
with both my company’s policies and the cultural importance of mutual respect in business
relationships. This approach would show that I value the culture, while also staying in line with
the ethical standards of my company.

14. List the attributes of one culture you are familiar with in your company. How are their
traditions different from yours?

In my work within the severe and persistent mental health field, I primarily interact with
black American clients, many of whom live in low-income areas, Section 8 housing, or
neighborhoods affected by gang violence and gun violence. The culture of the communities I
serve is deeply shaped by a strong sense of family, community, and resilience in the face of
adversity. These clients often rely on close-knit support systems, where extended families and
local networks play a key role in mental health and daily survival. There’s also a deep connection
to cultural identity, with many individuals finding strength in their heritage. Many participate in
traditions like Sunday family gatherings and hold high value for respect in social interactions.

The traditions in these communities are different from mine in a few ways. For example,
in my personal background, I may have more individualistic traditions, with less reliance on
extended family for emotional support. Additionally, the strong cultural connection to the church
or faith-based organizations is more pronounced in these communities than in my own
experience. There’s also a more informal approach to discussing mental health, often relying on
coping mechanisms like faith, community, or street knowledge before seeking formal therapy or
professional help. In contrast, I was raised in an environment where mental health services were
a little more normalized, and therapy was seen as an accessible and common resource. This was
mainly because it was seen as inappropriate to discuss directly with family or friends in many
situations. Understanding and respecting these differences is crucial in my work, as it helps me
build trust and offer culturally competent care to my clients.

15. What is international business?

​International business is the exchange of goods, services, and investments across national
borders. This involves companies operating in multiple countries, navigating different legal,
cultural, and economic environments in order to engage in trade, production, and investment
activities.