1. How does the balance of trade differ from the balance of payments?

The balance of trade is the total economic value of all products that a country imports minus the total economic value of all products it exports. The balance of payments is the flow of money into or out of a country.

2. What are the three possible levels of involvement in international business? Give examples of each.

The three levels are importing/exporting, international business, international business. Examples will vary.

3. How does a country’s the economic system affect the decisions of outside firms interested in doing business there?

In dealing with mixed and planned economies, firms must be aware of when and to what extent the government is involved in a given industry.

4. What aspects of the culture in your state or region would be of particular interest to a foreign firm thinking about locating there?

Many foreign firms will likely consider the diversity and subcultures among the citizens of a particular state or region, and the willingness of those citizens to work for or buy from a foreign company. However, aspects may vary depending on whether the firm plans to set up a production facility in the area or whether it is looking to increase its customer base.

5. Suppose that you are the manager of a small firm seeking to enter the international arena. What basic information would you need about the market that you are thinking of entering?

The manager of the small firm will likely be interested in the economic system of the potential market and thus the ease with which the firm could enter the market. Also important will be the nature of the customer base and whether those new customers possess the same buying characteristics as the firm’s current customers. In addition the small firm may need to modify the product and/or the promotional strategy based on any cultural or social differences.