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International Business
International business refers to the trade of goods, services, technology, capital and/or knowledge across national borders and at a global or transnational scale. It involves cross-border transactions of goods and services between two or more countries. Transactions of economic resources include capital, skills, and people for the purpose of the international production of physical goods and services such as finance, banking, insurance, and construction. International business is also known as globalization. To conduct business overseas, multinational companies need to bridge separate national markets into one global marketplace. There are two macro-scale factors that underline the trend of greater globalization. The first consists of eliminating barriers to make cross-border trade easier (e.g. free flow of goods and services, and capital, referred to as "free trade"). The second is technological change, particularly developments in communication, information processing, and ...
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Goods And Services
Goods are items that are usually (but not always) tangible, such as pens, physical books, salt, apples, and hats. Services are activities provided by other people, who include architects, suppliers, contractors, technologists, teachers, doctors, lawn care workers, dentists, barbers, waiters, online servers, a digital book, a digital video game or a digital movie. Taken together, it is the production, distribution, and consumption of goods and services which underpins all economic activity and trade. According to economic theory, consumption of goods and services is assumed to provide utility (satisfaction) to the consumer or end-user, although businesses also consume goods and services in the course of producing other goods and services (see: Distribution: Channels and intermediaries). History Physiocratic economists categorized production into productive labour and unproductive labour. Adam Smith expanded this thought by arguing that any economic activities directly re ...
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Foreign Exchange Market
The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the credit market. The main participants in this market are the larger international banks. Financial centers around the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends. Since currencies are always traded in pairs, the foreign exchange market does not set a currency's absolute value but rather determines its relative value by setting the market price of one currency if paid for with another. Ex: USD 1 is worth X CAD, or CHF, or JPY, etc. The foreign exchange market works thro ...
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Interest Rate Parity
Interest rate parity is a no-arbitrage condition representing an equilibrium state under which investors interest rates available on bank deposits in two countries. The fact that this condition does not always hold allows for potential opportunities to earn riskless profits from covered interest arbitrage. Two assumptions central to interest rate parity are capital mobility and perfect substitutability of domestic and foreign assets. Given foreign exchange market equilibrium, the interest rate parity condition implies that the expected return on domestic assets will equal the exchange rate-adjusted expected return on foreign currency assets. Investors then cannot earn arbitrage profits by borrowing in a country with a lower interest rate, exchanging for foreign currency, and investing in a foreign country with a higher interest rate, due to gains or losses from exchanging back to their domestic currency at maturity. Interest rate parity takes on two distinctive forms: ''uncovered ...
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Capital Movement
In international economics, the balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., a quarter or a year) and the outflow of money to the rest of the world. These financial transactions are made by individuals, firms and government bodies to compare receipts and payments arising out of trade of goods and services. The balance of payments consists of two components: the current account and the capital account. The current account reflects a country's net income, while the capital account reflects the net change in ownership of national assets. History Until the early 19th century, international trade was heavily regulated and accounted for a relatively small portion compared with national output. In the Middle Ages, European trade was typically regulated at municipal level in the interests of security for local industry and ...
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Financial Investment
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing is to generate a return from the invested asset. The return may consist of a gain (profit) or a loss realized from the sale of a property or an investment, unrealized capital appreciation (or depreciation), or investment income such as dividends, interest, or rental income, or a combination of capital gain and income. The return may also include currency gains or losses due to changes in the foreign currency exchange rates. Investors generally expect higher returns from riskier investments. When a low-risk investment is made, the return is also generally low. Similarly, high risk comes with a chance of high losses. Investors, particularly novices, are often advised to diversify their portfolio. Diversification has the statistical effect ...
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Neoclassical Economics
Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good or service is determined through a hypothetical maximization of utility by income-constrained individuals and of profits by firms facing production costs and employing available information and factors of production. This approach has often been justified by appealing to rational choice theory, a theory that has come under considerable question in recent years. Neoclassical economics historically dominated macroeconomics and, together with Keynesian economics, formed the neoclassical synthesis which dominated mainstream economics as "neo-Keynesian economics" from the 1950s to the 1970s.Clark, B. (1998). ''Principles of political economy: A comparative approach''. Westport, Connecticut: Praeger. Nadeau, R. L. (2003). ''The Wealth of Na ...
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Internationalization
In economics, internationalization or internationalisation is the process of increasing involvement of enterprises in international markets, although there is no agreed definition of internationalization. Internationalization is a crucial strategy not only for companies that seek horizontal integration globally but also for countries that addresses the sustainability of its development in different manufacturing as well as service sectors especially in higher education which is a very important context that needs internationalization to bridge the gap between different cultures and countries. There are several internationalization theories which try to explain why there are international activities. Entrepreneurs and enterprises Those entrepreneurs who are interested in the field of internationalization of business need to possess the ability to think globally and have an understanding of international cultures. By appreciating and understanding different beliefs, values, behavio ...
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Foreign Direct Investment
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct control. The origin of the investment does not impact the definition, as an FDI: the investment may be made either "inorganically" by buying a company in the target country or "organically" by expanding the operations of an existing business in that country. Definitions Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans". In a narrow sense, foreign direct investment refers just to building new facility, and a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. FDI is the sum of equity capital, long-term capital, and short-term capital ...
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Stephen Hymer
Stephen Herbert Hymer (15 November 1934 – 2 February 1974) was a Canadian economist. His research focused on the activities of multinational firms, which was the subject of his PhD dissertation ''The International Operations of National Firms: A Study of Direct Foreign Investment'', presented in 1960, but published posthumously in 1976, by the Department of Economics from Massachusetts Institute of Technology. Charles P. Kindleberger, his thesis supervisor, submitted it for publication, as mentioned by him on the introduction of Hymer's thesis dissertation. Personal life Hymer was born in Montreal, Quebec, Canada. Stephen Herbert Hymer's father was a Jewish clothing store owner from Poland and his mother was the bookkeeper. This inspired him to research the impact that multinational corporations have on local enterprises, as he feared the presence of new competitors might end up affecting his family's business. Hymer received a B.A. with first-class honors in Economics and Po ...
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Education
Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty. Various researchers emphasize the role of critical thinking in order to distinguish education from indoctrination. Some theorists require that education results in an improvement of the student while others prefer a value-neutral definition of the term. In a slightly different sense, education may also refer, not to the process, but to the product of this process: the mental states and dispositions possessed by educated people. Education originated as the transmission of cultural heritage from one generation to the next. Today, educational goals increasingly encompass new ideas such as the liberation of learners, skills needed for modern society, empathy, and complex vocational skills. Types of education are commonly divided into formal ...
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Climate
Climate is the long-term weather pattern in an area, typically averaged over 30 years. More rigorously, it is the mean and variability of meteorological variables over a time spanning from months to millions of years. Some of the meteorological variables that are commonly measured are temperature, humidity, atmospheric pressure, wind, and precipitation. In a broader sense, climate is the state of the components of the climate system, including the atmosphere, hydrosphere, cryosphere, lithosphere and biosphere and the interactions between them. The climate of a location is affected by its latitude/longitude, terrain, altitude, land use and nearby water bodies and their currents. Climates can be classified according to the average and typical variables, most commonly temperature and precipitation. The most widely used classification scheme was the Köppen climate classification. The Thornthwaite system, in use since 1948, incorporates evapotranspiration along with temperature ...
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Trade Agreement
A trade agreement (also known as trade pact) is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that help them trade with each other. The most common trade agreements are of the preferential and free trade types, which are concluded in order to reduce (or eliminate) tariffs, quotas and other trade restrictions on items traded between the signatories. The logic of formal trade agreements is that they outline what is agreed upon and the punishments for deviation from the rules set in the agreement. Trade agreements therefore make misunderstandings less likely, and create confidence on both sides that cheating will be punished; this increases the likelihood of long-term cooperation. An international organization, such as the IMF, can further incentivize cooperation by monitoring compliance with agreements and reporting third countries of the violations. Monitoring by international agencie ...
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