International Business

Business can take many different forms and can be conducted at different levels. Based on the level of business activity business may be defined as either domestic, international or multinational. If business acquires all its resources and sells all its products within a single country it is considered a domestic business. Although international business is also based in a single country it acquires a meaningful share of its resources and revenues from other countries. A multinational business operates on the world-wide scale regardless of national borders.

More and more domestic businesses decide to enter international markets and become international, while international companies expand and become multinational (transnational). This phenomenon is called globalization – the evolution of economy that comprises interrelated markets. The decision to adopt a global or nationally focused strategy depends upon both markets and technological con­siderations.

There are three primary motivations for firms to engage in international business: 1) to expand sales; 2) to acquire resources; 3) to diversify sources of sales and supplies. When a business decides to expand internationally, i.e. adopts a global strategy, it may choose among several options, including importing or exporting merchandise (visibles), service exports and imports (invisibles), foreign investment in the form of either direct or portfolio investments, setting up joint ventures or subsidiaries.

Although many mechanisms exist for promoting the growth of international business, there are also many barriers to doing business abroad. The major factors causing changes in world trade and investment patterns are economic conditions, technology and political relations.

The economic factor that influences the decision to engage in business beyond national borders includes the level of economic development in various countries, the presence of adequate infrastructure, a country’s balance of payments and monetary exchange rates. The political element is associated with the degree of political risk concerning a particular country, trade barriers erected by govern­ments, legislation encouraging foreign business investments. The technological factor includes various methods of technology transfer.

A considerable amount of international business is conducted by multinational corporations though midsize and even small companies may also engage, especially when they offer a unique product and/or good value.

Exercise 3. Answer the following questions.

1. How do we differentiate between domestic, international and multinational business?

2. What is the usual way of business expansion?

3. What are the primary motivations for firms to become international?

4. Through what mechanisms can business become international?

5. What factors cause changes in world trade and investment pattern?

6.What economic factors influence the decision to become international?

7. What is the essence of political element that causes changes in world trade and investment pattern?

8. In what cases do midsize and small companies engage in international business?

Exercise 4. Translate into English.

Рівень бізнесової діяльності; значна частка; незважаючи на...; приймати глобально/національно спрямовану стратегію; прямі або портфельні інвестиції; сприяти зростанню міжнародного бізнесу; структура світової торгівлі та інвестицій; відповідна інфраструктура; ступінь політичного ризику.

Exercise 5. Translate into Ukrainian.

Within a single country; to operate on the world-wide scale; to enter international markets; interrelated markets; primary motivation; to choose among several options; beyond national borders; concerning a particular country; midsize company.

Exercise 6. Match and learn the synonyms.

A: option, venture, expand, conduct, acquire, merchandise, subsidiary;

B: grow, get, branch, choice, goods, enterprise, operate.

Exercise 7. Substitute the words in italics for their synonyms.

1. Who helps you to operate your business? 2. We’ve decided to set up a branch in this region. 3. Where do you get financial resources from? 4. This merchandise sells well. 5. While planning to set up a new enterprise conduct a thorough marketing research. 6. We were given three choices to consider. 7. When business grows there is a need to hire more specialists.

Exercise 8. Match and learn the opposites.

A: meaningful, expand, encourage, adequate, unique, domestic;

B: foreign, shrink, common, meaningless, discourage, inadequate.

Exercise 9. Substitute the words in italics for their opposites so that the sentences make sense.

1. The production of these high-quality goods needs inadequate technology. 2. As the demand for our products has increased we are going to shrink our business. 3. She is doing her best to discourage her son in his studies. 4. We must not adopt this idea; it seems meaningful. 5. The company was given a common chance to invest in this project. 6. Multinational companies operate in domestic markets.

Exercise 10. Here is a list of words that are used in many languages, the so-called internationalisms. Read them aloud; group them into two groups: general terms, e.g. form, and economic terms, e.g. export. Mark those that belong to both groups.

Adequate, balance, barrier, business, company, corporation, economy, evolution, export, factor, firm, focus, form, globalization, import, infrastructure, international, investment, mechanism, method, motivation, multinational, option, phenomenon, product, resource, risk, strategy, technology.

Exercise 11. Complete the sentencesusing the proper words from the list below:

Visible exports and imports, direct foreign investment, trade barriers, operate, political risk

1. Domestic businesses … within a single country. 2. To protect domestic businesses from foreign competition the government can erect … 3. When the company considers entering a particular foreign market it has to evaluate the degree of … concerning this country. 4. … is one of the means of expanding internationally. 5. Goods that leave or enter the country are often referred to as ….

Exercise 12. On the basis of the text define the following terms:

domestic business, international business, multinational business, globalization.

Grammar point: Sequence of Tenses (p.147-148)

Exercise 13. Read and translate the following sentences. Explain the use of tenses in subordinate clauses.

1. I was glad that he was going to visit us. 2. He was surprised that they had ordered those goods. 3. We knew that the manager would go on business to Kyiv in a week. 4. He agreed that the problem had been solved successfully. 5. The director decided that his deputy would be sent to the meeting. 6. She explained that this improvement was rather necessary. 7. Everybody knew that invisible exports include services. 8. I realized that he tried to explain why he had adopted such strategy for the company. 9. It was clear that the meeting had already started. 10. She expected that we were checking the documents at that time. 11. He was sure that all mistakes had been already corrected. 12. She thought that they would offer a unique product. 13. I explained why portfolio investments were less risky. 14. They learned that globalization is a continuous process of economic development.

Exercise 14. Make the actionsin both principle and subordinate clauses simultaneous.

1. He knew that the problem (to be discussed) in details. 2. They said that the information (to be) rather important. 3. We knew that the shareholders (to be examining) the Balance Sheet and the Income Statement at the moment. 4. She knew that he (to be going) to be present at their meeting. 5. They believed that he (to supply) that product only to their stores. 6. We hoped that we (to own) a unique technology. 7. Suddenly he remembered that they (to sign) a contract at two o’clock. 8. He considered that his company (to be) very small to engage in international business. 9. We knew that he (to run) his business all by himself. 10. I thought that international business (to be) a very prospective area to specialize in.

Exercise 15. Make the action in the subordinate clause prior to the action in the principal clause.

1. They learned that the transaction (to be performed) already. 2. He thought that the investment (to be made). 3. She knew that they (to prepare) all necessary documents. 4. We hoped that they (to adopt) a new legislation in this field. 5. The manager thought that the equipment (to be installed). 6. She believed that they (to finish) checking the financial statement. 7. He learned that we (not to influence) their decision. 8. We knew that our competitors (to decide) to incorporate. 9. He didn’t know that the goods (not to be supplied) yet. 10. She learned that we (to borrow) money from the bank.

Exercise 16. Refer the action in the subordinate clause to the future.

1. They expected that the merchandize (to be delivered) in time. 2. He hoped that a new subsidiary (to be) profitable. 3. We knew that the auditor (to send) his conclusions in a week. 4. The management thought that the revenues (to increase). 5. She supposed that the company (to adopt) a global strategy. 6. I believed that he (to make) a good investment. 7. She knew that he (to be working) at this project for the next three months. 8. She hoped that all preparations (to be arranged) by next year. 9. They expected that a new joint venture (to be set up) soon. 10. They informed that the audit (to be completed) by the end of the month.

Exercise 17. Use the verb in brackets in the proper tense form.

The owner of a large business company (to buy) a number of signs reading ‘ Do it Now ’. He (to order) the office-boy to hang them around the office. He (to hope) that the signs (to inspire) his people and they (to work) with more energy. One day a friend of his (to ask) him how his strategy (to affect) the staff. “Well, not just the way I (to think) it (to affect)”, (to answer) the proprietor. “First, the cashier (to skip) with 30 thousand dollars, then the head accountant (to run) away with my secretary, three clerks (to demand) an increase of salary and the office-boy (to become) a bandit”.

Exercise 18. Translate the second part of the following sentences.

1. They announced that вони планують імпортувати ці товари з Італії. 2. The newspapers reported that компанія була приватизована у відповідності з законодавством. 3. Our partners knew that наш бізнес розширюється завдяки зарубіжним інвестиціям. 4. They decided that цей регіон потребує сучасної інфраструктури. 5. Everybody knew that вони вже відкрили філіал в багатьох країнах Європи.

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