IB - International Business [OVERVIEW]

International Business

Introduction

Globalization is creating new markets for products. An international business has plenty of challenges and opportunities. Kentucky Fried Chicken has the opportunity to capitalize on so many foreign countries making their way to the middle class. While the US market for fast food has decreased, food franchises like KFC have shifted their business to the international market. Challenges like branding are out there as well. A Japanese franchise tried to downsize the foot long sub, and that didn't really work out. A promotional challenge for KFC in 1987 was, an advertisement in Beijing using the "Finger-lickin' good" slogan, it translated into "We'll eat your fingers off" in Chinese. Needless to say that didn't really work out either. Another challenge for these US fast food companies is product selection. Many options on the US menu cannot be offered in other countries. For instance, Subway in a Muslim or Hindu country cannot carry subs with roast beef or ham. An opportunity for fast food business is the ease of traveling, allowing fast food restaurants to have brand recognition for travelers, not only for traveling American's who are glad to have a meal like they get at home, but the locals think that eating from an American company is prestigious. Global economies are constantly changing and giving companies from all over the world the opportunity to capitalize on the changing market.

Essential Questions

  1. What is international business/marketing?
  2. Why do nations engage in international trade?
  3. How do international factors affect trade, such as culture, political structure, trade barriers, currency fluctuations, and comparative advantage?
  4. What is the importance of marketing in the global economy?
  5. What are the struggles companies have with exporting, importing, and contract manufacturing?

Key Terms

  • Adaptation - The process of adjusting to environmental stimuli such that the stimuli become less noticed.
  • Balance of Trade - The difference between exports and imports.
  • Contract Manufacturing - A joint venture method by which work is contracted to a qualified manufacturer to produce the product(s) that the firm wishes to market. Contract manufacturing offers a chance to enter a market faster with less risk, but has the drawback of less control over the manufacturing process.
  • Customization - Tailoring the product to the special and unique needs of the customer. Each buyer is potentially a unique segment.
  • Embargo - The prohibition of shipment of goods or services to designated countries.
  • European Union (EU) - Free trade among European nations, all using the Euro.
  • Exports - goods and services sold to other countries.
  • Foreign Direct Investment (FDI) - Investing in a country with control or influence over the direction of the investment. For balance of payments purposes, any holding of more than 20 percent of the shares of a company is considered direct as opposed to portfolio investment.
  • Free Trade - The area of jurisdiction encompassing a group of countries that have agreed to abolish all internal barriers to trade between the member countries.
  • Globalization - When a business sells the same product to other countries without any customization.
  • Imports - Goods and services purchased from other countries.
  • International Trade - The exchange of goods and services among nations.
  • Joint Venture - A form of participation in foreign markets by means of alliance with a local partner.
  • Licensing - An agreement between two companies in which the licenser grants the right to the licensee to sell a patented product in specified markets for an agreed-upon fee
  • United Stated - Mexico - Canada Agreement (USMCA) - Trade agreement between Canada, the United States, and Mexico. 
  • Protectionism -The use of legal controls to protect domestic businesses and industries from foreign competition.
  • Quota - A trade term that denotes a specific numerical or value limit applied to a particular type of good either in the case of exports or imports of goods.
  • Tariff - A published set of rates for transportation and distribution services across national boundaries (this is a tax). 
  • World Trade Organization (WTO) - A global group of nations that make rules governing international trade.

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