Starting International Business

Buying and Selling abroad

100

Is the Definition for exporting correct?                                                                     

Buyers of goods or services from another country

                                                       

    

Definition for exporting is:                                                                       

Sellers of products or services to another country

                                                       

    

200

What is the difference between FOB (free on board) and CIF cost of insurance and freight)?

FOB (free on board): Contract clause: the seller has to deliver goods free on board of a ship or train.

CIF (costs of insurance and freight)
Contract clause: the seller has to pay all transportation costs to a destination port.

                                                       

    

                                                       

    

300

Could you give us an example of a company supply from overseas subsidiaries based on Figure 11.2?

An example of supplying services from overseas subsidiaries is Starbucks. Starbucks has subsidiaries in many countries that manage local cafes. The main company in the U.S. owns these subsidiaries, which serve coffee and provide the same experience to customers in each country.

400

What are the main advantages and challenges of using a letter of credit in international trade (based on Figure 11.1)?

Advantages of a Letter of Credit:

• Reduced Risk: Ensures the exporter gets paid once shipment proof is provided.
• Trust Building: Helps establish trust between new trade partners.
• Bank Support: Adds security with banks overseeing the transaction.

Challenges of a Letter of Credit:

• Costly: Involves bank fees, adding to transaction costs.
• Complex Process: Requires strict documentation, which can be time-consuming.
• Non-Compliance Risk: Small errors in documents can delay or block payment.

Resources and Internationalisation

100

What is experiential knowledge?

Knowledge learned by engaging in the activity and context.

                                                       

    

200

Could you please explain the traditional process of building resources for international business?

Experiential learning and knowledge acquisition

Network building and exploitation

                                                       

    

                                                       

    

300

Could you give a specific example of a company known as an international new venture (born global)?

Spotify

400

Why does a company’s commitment to resources increase over time as it grows internationally? Could you provide specific reasons why decisions regarding resource commitment also intensify?

Experimental learning and knowledge acquisition 

Opportunity recognition 

Risk perception 

Costs of expansion