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International Economics

1. What is a multinational corporation?

A multinational corporation is a corporation that manages production or delivers services in more than one country. (Any corporation registered and operating in more than one country at a time, usually with its headquarters in a single.)

2. a)What are the most common forms of international business activity? b)What are the competitive pressures that force business to internationalize? c)What kind of problems can companies face when they go international?

a) The main common form of international business activities that everybody need to know, are:

1. importing and exporting (Importing, the buying of goods or services from a supplier in another country, and exporting, the selling of products outside the country in which they are produced)

2. licensing (License agreements entitle one company to use some or all of another firm’s intellectual property in return for a royalty payment.)

3. franchising (the franchisee obtains the rights to duplicate a specific product or service—perhaps a restaurant, photocopy shop, or a video rental store—and the franchiser obtains a royalty fee in exchange)

4. strategic alliances and joint ventures (A strategic alliance is a long-term partnership between two or more companies to jointly develop, produce, or sell products in the global marketplace.) (A joint venture is a special type of strategic alliance in which two or more firms join together to create a new business entity that is legally separate and distinct from its parents.)

5. And foreign direct investment (is a type of investment that involves the injection of foreign funds into an enterprise that operates in a different country of origin from the investor.)

b) Firms that want to survive in the 21st century must confront globalization that penetrates every aspect of business. In a wide range of industries from automobiles to food and clothing, firms face the pressures of global competition at home as well as in international markets. Choosing not to participate in global markets is no longer an option. All firms, regardless of their size, have to craft strategies in the broader context of world markets to anticipate, respond and adapt to the changing configuration of these markets.

c)=4=5

3. What international organizations assist world trade?

Nowadays almost all countries interact with each other. This interaction may be through economic and political relations. So, international organizations help to develop cooperation between countries and solve problems that arise during this process.

One of the organizations that provide assistance in world trade is the World Trade Organization. Its most important functions are:

1. to oversee the implementation, administration and operation of the covered agreements

2. to provide a forum for negotiations and for settling disputes.

The WTO is also a center of economic research and analysis.

Next organization is the International Monetary Fund (IMF). It is an intergovernmental organization that promotes international economic cooperation, focusing on policies that have an impact on the exchange rate and the balance of payments.

And last but not the least is the World Bank, officially known as the International Bank for Reconstruction and Development, which provides low-interest loans for specific projects.

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