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International Business

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1. Globalization has been defined with many meanings; however the common one used in international business is, "the tendency toward an international business is technology, information, labor, and capital, or the process of making this integration happen (Ball, Geringer, Minor, & McNett, 2010).

International business differs from domestic business in that the firm operates across borders.

International business must deal with the forces of three kinds of environments; domestic, foreign, and international. Environment is defined by the textbook as, "all forces influencing the life and development of the firm" (Ball, Geringer, Minor, & McNett, 2010). There are 2 classifications of forces, external and internal. External forces cannot be directly controlled by management. The internal forces are controlled by management, which include factors of production and the activities of the organization.

In an international environment decision making is a lot more complicated than those in domestic environment. When mangers have to make decisions that involve subsidiaries in 10 different countries, not only do they have to take into consideration the domestic forces but also must assess the influence of 10 foreign national environments. The forces can have a different meaning or value in different countries, which makes assessing forces difficult.

A common difficulty experienced by a manager is understanding the differences in culture. When a manger references its own culture experience is called the self-reference criterion. This is probably the biggest cause of dysfunctional business activities.

2. The nature of today's competitive global market pushes countries to differentiate by strengthening and developing their competitive assets. Design is understood as a key element in innovation and value creation and plays an important role in strengthening these assets by promoting the development and marketing of new businesses, products and services inside and outside a country. The objective through this is for countries to gain competitive advantages in regional and global industries in order for the nation to progress socially and economically and remain competitive on a global scale.

An economist professor, Michael Porter has identified four main variables that allow nations to gain a competitive advantage. The four variables are factor conditions, demand conditions, related and supporting industries and firm strategy, structure and rivalry.

Demand conditions: The nature of demand rather than the size of demand. If a company's customers are urbane and demanding, every effort will be put into manufacturing high quality and innovative products that would give them the edge in competitiveness.

Factor Conditions: A country creates its own important factors such as skilled resources and technological. Porter distinguishes between

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