International Business 2025 Exam
with Complete Solutions
Characteristics of company internationalization - Answer-• Push and pull factors serve
as initial triggers. Usually a combination of triggers inside and outside the firm is
responsible for initial international expansion.
• Initial internationalization may be accidental. Foreign expansion is often unplanned or
the result of chance events, such as a meeting with a foreign distributor.
• Risk and return must be balanced. Managers weigh the potential returns of
internationalization against the initial costs in terms of money, time, and other company
resources. International ventures typically take longer than domestic ones to reach
profitability.
Adv/disadv of exporting - Answer--increase economies of scale and reduce cost of
production
-increase sales volume, market share and generate profit margins that are often more
favourable than in domestic market
• Requires firm to acquire new capabilities and redirect organizational resources;
• Sensitive to tariffs and other trade barriers;
• Sensitive to exchange rate fluctuations;
Methods of payment - Answer-METHOD
ADVANTAGES
DISADVANTAGES
-Cash in Advance
Best for the seller
Risky from the buyer's standpoint, and thus unpopular; tends to discourage sales.
-Open Account
Easy for the exporter, who simply bills the buyer, who is expected to pay at some future
time as agreed.
Risky unless there is a strong, established relationship between exporter and buyer
-Letter of Credit
, A contract between the banks of the buyer and the seller. Largely risk-free, it helps
establish instant trust.
Requires following a strict protocol specified in the contract. Can involve much
paperwork.
Challenges of international human resource management - Answer-• Recruiting,
managing, and retaining human resources at a firm with extensive global operations are
especially challenging.
• For example, German firm Siemens has more than 400,000 employees in some 190
countries: 230,000 throughout Europe, 90,000 in the Americas, 70,000 in the Asia-
Pacific region, and 12,000 in Africa, the Middle East, and Russia.
• Volkswagen, Nestle, IBM, Unilever, Walmart, McDonald's, and Matsushita each has
more than 150,000 employees outside the firm's home country.
Key tasks of IHRM - Answer-1. International staffing policy - activities directed at
recruiting, selecting, and placing employees
2. Preparation, training of international employees
3. International performance appraisal - providing
feedback for employees' professional development
4. Compensation of employees - including formulation of benefit packages that vary
greatly from country to country.
5. International labor relations - managing relationships with unions; collective
bargaining processes, known as industrial relations
6. Diversity in the international workforce
Three employee categories in the MNE (multinational enterprise) - Answer-• Parent-
country nationals (PCNs): Also known as home- country nationals, PCNs are citizens of
the country where the MNE is headquartered.
• Host-country nationals (HCNs): Citizens of the country where the subsidiary or affiliate
is located. HCNs make up the largest proportion of employees that the firm hires
abroad.
• Third-country nationals (TCNs): Employees who are citizens of countries other than
the home or host country. Most work in management and have unique skills.
Expatriate - Answer-refers to an employee who is assigned to work and reside in a
foreign country for an extended period, usually a year or longer.
• Repatriation: Return of the expatriate to the home country.
• Requires advance preparation.
• Unless managed well, returning expatriate may encounter
problems, such as career disruptions and 'reverse culture shock'.
• Expatriate assignment failure: The premature return of an expatriate due to an inability
to perform well abroad.
• Costly to the firm (lost productivity and relocation costs) and to expatriates themselves
(family stress and career disruption).
with Complete Solutions
Characteristics of company internationalization - Answer-• Push and pull factors serve
as initial triggers. Usually a combination of triggers inside and outside the firm is
responsible for initial international expansion.
• Initial internationalization may be accidental. Foreign expansion is often unplanned or
the result of chance events, such as a meeting with a foreign distributor.
• Risk and return must be balanced. Managers weigh the potential returns of
internationalization against the initial costs in terms of money, time, and other company
resources. International ventures typically take longer than domestic ones to reach
profitability.
Adv/disadv of exporting - Answer--increase economies of scale and reduce cost of
production
-increase sales volume, market share and generate profit margins that are often more
favourable than in domestic market
• Requires firm to acquire new capabilities and redirect organizational resources;
• Sensitive to tariffs and other trade barriers;
• Sensitive to exchange rate fluctuations;
Methods of payment - Answer-METHOD
ADVANTAGES
DISADVANTAGES
-Cash in Advance
Best for the seller
Risky from the buyer's standpoint, and thus unpopular; tends to discourage sales.
-Open Account
Easy for the exporter, who simply bills the buyer, who is expected to pay at some future
time as agreed.
Risky unless there is a strong, established relationship between exporter and buyer
-Letter of Credit
, A contract between the banks of the buyer and the seller. Largely risk-free, it helps
establish instant trust.
Requires following a strict protocol specified in the contract. Can involve much
paperwork.
Challenges of international human resource management - Answer-• Recruiting,
managing, and retaining human resources at a firm with extensive global operations are
especially challenging.
• For example, German firm Siemens has more than 400,000 employees in some 190
countries: 230,000 throughout Europe, 90,000 in the Americas, 70,000 in the Asia-
Pacific region, and 12,000 in Africa, the Middle East, and Russia.
• Volkswagen, Nestle, IBM, Unilever, Walmart, McDonald's, and Matsushita each has
more than 150,000 employees outside the firm's home country.
Key tasks of IHRM - Answer-1. International staffing policy - activities directed at
recruiting, selecting, and placing employees
2. Preparation, training of international employees
3. International performance appraisal - providing
feedback for employees' professional development
4. Compensation of employees - including formulation of benefit packages that vary
greatly from country to country.
5. International labor relations - managing relationships with unions; collective
bargaining processes, known as industrial relations
6. Diversity in the international workforce
Three employee categories in the MNE (multinational enterprise) - Answer-• Parent-
country nationals (PCNs): Also known as home- country nationals, PCNs are citizens of
the country where the MNE is headquartered.
• Host-country nationals (HCNs): Citizens of the country where the subsidiary or affiliate
is located. HCNs make up the largest proportion of employees that the firm hires
abroad.
• Third-country nationals (TCNs): Employees who are citizens of countries other than
the home or host country. Most work in management and have unique skills.
Expatriate - Answer-refers to an employee who is assigned to work and reside in a
foreign country for an extended period, usually a year or longer.
• Repatriation: Return of the expatriate to the home country.
• Requires advance preparation.
• Unless managed well, returning expatriate may encounter
problems, such as career disruptions and 'reverse culture shock'.
• Expatriate assignment failure: The premature return of an expatriate due to an inability
to perform well abroad.
• Costly to the firm (lost productivity and relocation costs) and to expatriates themselves
(family stress and career disruption).
