The purpose of this book is to enable students imbibe full knowledge of the conduct of international business and guard companies or businessmen against the challenges they might encounter when they internationalise their businesses.
The uniqueness of this book lies in its simplicity and academic friendliness in the treatment of detailed and relevant key contemporary business concepts.
This book comprises 12 (twelve) key chapters. Each chapter begins with chapter objectives and at the end are found chapter summary, key terms and concepts and chapter questions.
Table of Contents
1. Introduction to international business
1.1 Meaning of international business
1.2 Features of international business
1.3 Forms of international business
1.4 Basic concepts of international business
1.5 Why do we study international business?
1.6 International business career opportunities
1.7 Why do firms/companies go international?
1.8 International business participants
1.9 Differences between domestic business and international business
1.10 Similarities between domestic business and international business
1.11 Drivers of international business
1.12 Benefits of international business
1.13 Challenges in international business
1.14 Globalisation
1.15 Features of globalisation
1.16 Globalisation: The beautiful side
1.17 Globalisation: The ugly side
1.18 Chapter summary
1.19 Key terms and concepts
1.20 Chapter questions
2. The role, objectives and growth of firms
2.1 The role of firms
2.2 Objectives of firms
2.3 Growth of firms
2.4 How do firms grow?
2.5 Internal growth of firms
2.6 Merger
2.7 Takeover
2.8 Why do firms grow?
2.9 Demergers
2.10 Chapter summary
2.11 Key terms and concepts
2.12 Chapter questions
3. Cost, revenue and profit of the firm
3.1 Calculation of the cost of the firm
3.2 Calculation of the revenue of the firm
3.3 Calculation of the profit of the firm
3.4 Chapter summary
3.5 Key terms and concepts
3.6 Chapter questions
4. Barriers to market entry and exit
4.1 Barriers to market entry
4.2 Barriers to market exit
4.3 Chapter summary
4.4 Key terms and concepts
4.5 Chapter questions
5. Market failure, government intervention and government failure
5.1 Market failure
5.2 Types/sources/examples of market failure
5.3 Government intervention in correcting market failure
5.4 Government failure in correcting market failure
5.5 Chapter summary
5.6 Key terms and concepts
5.7 Chapter questions
6. Theory of contestable markets
6.1 Contestable market assumptions
6.2 Productive and allocative efficiency
6.3 Profits earned in contestable markets
6.4 Chapter summary
6.5 Key terms and concepts
6.6 Chapter questions
7. International trade
7.1 Meaning of international trade
7.2 Advantages of international trade
7.3 Disadvantages of international trade
7.4 Forms of international trade
7.5 Why do countries import?
7.6 Theories of international trade
7.7 Chapter summary
7.8 Key terms and concepts
7.9 Chapter questions
8. Trade barriers
8.1 Meaning of trade barriers
8.2 Trade barriers: The good aspects
8.3 Trade barriers: The bad aspects
8.4 Types of trade barriers
8.5 Forms of tariff trade barriers
8.6 Forms of non-tariff trade barriers
8.7 Chapter summary
8.8 Key terms and concepts
8.9 Chapter questions
9. Investment
9.1 Meaning of investment
9.2 Difference between gross investment and net investment
9.3 Types of investment spending
9.4 Theories of investment
9.5 Efficacy of investment theories in least developed countries (L.D.Cs)
9.6 Factors influencing investment decisions
9.7 Chapter summary
9.8 Key terms and concepts
9.9 Chapter questions
10. Price determination, pricing strategies and price discrimination
10.1 Meaning of price
10.2 Price types
10.3 Determinants of customers’ price assessments
10.4 Determinants of pricing decision
10.5 Pricing methods
10.6 Price adjustments
10.7 Pricing objectives
10.8 Pricing policies and strategies
10.9 Price discrimination
10.10 Chapter summary
10.11 Key terms and concepts
10.12 Chapter questions
11. International marketing
11.1 Meaning of international marketing
11.2 Why do firms embark on international marketing?
11.3 International marketing strategies
11.4 International marketing research considerations
11.5 International market selection
11.6 International market entry methods
11.7 Determinants of the choice of market entry methods
11.8 Chapter summary
11.9 Key terms and concepts
11.10 Chapter questions
12. Exchange rate determination
12.1 Meaning of exchange rate
12.2 why do we need exchange rate?
12.3 How is exchange rate determined?
12.4 Sources of demand for foreign currency
12.5 Sources of supply of foreign currency
12.6 Determinants of exchange rate
12.7 Appreciation of a currency
12.8 Depreciation of a currency
12.9 Exchange rate system
12.10 Nominal exchange rate and real exchange rate
12.11 Chapter summary
12.12 Key terms and concepts
12.13 Chapter questions
Objectives & Topics
This textbook provides a comprehensive exploration of international business and economic principles, focusing on how firms operate, expand, and compete across national borders. The core objective is to equip students with the analytical tools to understand global market dynamics, the strategic behaviors of firms, and the regulatory and economic environments that influence international business decisions, including trade barriers, investment strategies, and currency exchange mechanisms.
- Foundational concepts of international business and global market entry strategies.
- Theoretical frameworks for understanding firm behavior, growth, and market structure.
- Analysis of market failures, government interventions, and the complexities of international trade.
- Evaluation of pricing strategies, including price discrimination and its practical application.
- Mechanisms of exchange rate determination and the impact of macroeconomic policies on international trade.
Excerpt from the Book
The role of the firm
The role of the firm is to combine the factors of production, otherwise referred to as factor inputs or productive inputs or productive resources, in a given form to obtain a given level of output. Output can be a good or service. Producers produce goods and services with the motive of maximising profit while minimising costs.
Factors of production are of four types, namely, land, capital, labour and entrepreneur. A factor of production could be in the form of either human or non-human resource. Hence, land and capital are non-human resources while labour and entrepreneur are human resources. There is reward for every factor of production.
Land: In ordinary sense, land means the area of the hard surface of the earth, like areas for farming, building and roads. This meaning does not suffice in economic sense. In economics, land, in addition to the hard surface of the earth, includes all natural resources (raw materials) such as trees, water, sand, diamond, stone, silver, gold, bauxite etc.
Land is a gift of nature in the sense that it is made by God and not by man. It bears no cost of production. Land is fixed in quantity but its quality is not fixed. Its quality will increase or improve with, say, the application of fertilizer.
Summary of Chapters
1. Introduction to international business: Provides a fundamental overview of global business activities, including forms of business, key drivers for internationalization, and the benefits and challenges of globalization.
2. The role, objectives and growth of firms: Examines why firms exist, their objectives beyond profit maximization, and the methods they use for internal and external growth, such as mergers and takeovers.
3. Cost, revenue and profit of the firm: Details the essential economic calculations for determining firm profitability, explaining cost structures, revenue types, and the distinction between normal and abnormal profits.
4. Barriers to market entry and exit: Analyzes the obstacles firms face when attempting to enter or leave an industry, categorizing them into legal, capital-based, and marketing barriers.
5. Market failure, government intervention and government failure: Discusses scenarios where free markets fail to allocate resources efficiently, the rationales for government intervention, and the inherent risks of government failure.
6. Theory of contestable markets: Explores the theory of contestability, focusing on free entry and exit conditions and how competitive pressures influence firm behavior in such markets.
7. International trade: Investigates the motivations behind international trade and provides an overview of foundational theories like mercantilism and absolute and comparative advantage.
8. Trade barriers: Examines the different forms of trade barriers (tariffs and non-tariffs), the reasoning behind their implementation, and their dual-natured impact on domestic and world markets.
9. Investment: Focuses on the definitions and types of investment, various theoretical approaches to investment decisions, and the unique challenges faced in least developed countries.
10. Price determination, pricing strategies and price discrimination: Explores the complexity of setting prices, including various pricing methods, strategies, and the conditions under which price discrimination can be practiced.
11. International marketing: Looks at the strategic aspects of marketing products abroad, including decision-making frameworks, research considerations, and entry methods.
12. Exchange rate determination: Explains how exchange rates are determined through supply and demand, the impact of government intervention in currency markets, and the distinction between nominal and real exchange rates.
Keywords
International business, Globalisation, Market failure, Trade barriers, Profit maximisation, Economies of scale, Competitive strategy, Pricing strategies, Price discrimination, Foreign exchange, Exchange rate, Investment, Comparative advantage, Market entry, Government intervention
Frequently Asked Questions
What is the core focus of this textbook?
The book provides a foundational understanding of how firms manage business transactions across international frontiers, exploring the economic theories of costs, production, market structures, and the impact of government policies on global trade.
What are the primary thematic Schwerpunkte of the book?
The central themes include firm behavior and objectives, the theory of contestable markets, international trade theories, mechanisms of market failure, investment decision-making, and the determination of exchange rates.
What is the primary objective of firms according to this text?
While the text acknowledges other objectives such as survival, sales maximization, and building stakeholder value, it identifies profit maximization as the cardinal and supreme aim for any profit-oriented firm.
Which scientific methods are employed in this analysis?
The author uses standard economic analysis, including mathematical modeling of costs and revenues, graphical depiction of demand and supply curves for market equilibrium and exchange rates, and theoretical comparisons of trade models.
What is addressed in the book's later chapters regarding international trade?
The later chapters address the complexities of international trade and marketing, focusing on how firms select international markets, implement entry methods, and navigate currency exchange and trade policy environments.
Which keywords best characterize this work?
Keywords such as International business, Globalisation, Market failure, Trade barriers, Price discrimination, and Exchange rate determination effectively capture the scope of the material.
How does the book explain the concept of 'hit and run' profits in contestable markets?
The book explains these profits as transient gains exploited by new firms entering a market with low sunk costs; these firms enter to capture existing supernormal profits and exit rapidly once opportunities are exhausted.
What is the "equity-efficiency trade-off" mentioned in the context of government intervention?
It describes the conflict where government attempts to promote social equity (e.g., through income redistribution) can reduce work incentives and lower productivity, thereby creating a lack of economic efficiency.
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- Sylvester Bob Hadji (Autor), 2021, International Business, Múnich, GRIN Verlag, https://www.grin.com/document/984428
