International Business

David Ricardo's principle that countries benefit from trade when each specializes in producing goods for which it has the lowest opportunity cost, even if one country is more efficient at producing everything.

An investment made by a firm or individual in one country into business interests in another country, typically involving establishing operations or acquiring assets such as factories, equipment, or ownership stakes of at least 10 percent in a foreign company.

A framework explaining why firms engage in FDI based on three advantages: Ownership (firm-specific assets like technology or brand), Location (host-country factors like resources or market size), and Internalization (benefits of controlling operations rather than licensing).

The various strategies a firm can use to enter a foreign market, ranging from low-commitment options like exporting and licensing to high-commitment options like joint ventures and wholly owned subsidiaries, each with different levels of risk, control, and resource requirements.

The potential for financial losses arising from fluctuations in currency exchange rates, which can affect the value of international transactions, foreign investments, and the translated earnings of multinational companies.

A framework developed by Geert Hofstede that analyzes national cultures along dimensions such as power distance, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance, long-term vs. short-term orientation, and indulgence vs. restraint.

A comprehensive record of all economic transactions between residents of a country and the rest of the world during a specific period, divided into the current account (trade in goods and services), capital account, and financial account.

The coordination and oversight of materials, information, and finances as they move from raw material suppliers through manufacturers, distributors, and retailers across multiple countries to the end consumer.

The likelihood that political forces, events, or conditions in a country will adversely affect a firm's business operations, including expropriation, civil unrest, regulatory changes, currency controls, and corruption.

Agreements among countries in a geographic region to reduce or eliminate tariff and non-tariff barriers to the free flow of goods, services, capital, and labor, ranging from free trade areas to full economic unions.