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27 Cards in this Set
- Front
- Back
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Why does economic growth matter to countries
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*Relook up the answer
- It involves what kind of physical infastructure is available to citizens on a regular basis. - it is important to local and foreign businesses. |
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culture
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a learned set of assumptions, values and beliefs that guide behavior for members of a specific group of people
(Employee behavior can be the result of both national and organizational culture) |
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What are Hofstede's cultural dimensions?
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- Power distance
- Individualism vs. Collectivism - Masculinity vs. Feminity - Uncertainty Avoidance |
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Hofstede's Power Distance
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- The extent to which people accept differences in power and authority among people
- High power distance countries: Malaysia, Guatemala, Panama, Mexico - Low power distance countries: New Zealand, Denmark, Israel, Austria |
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Institutional infrastructure
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facilitates business communications and the movement of good from their source to the ultimate consumer.
- It includes the amount and quality of roads and highways, number of telephone lines, and number of airports |
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What are some of the importances of the institutional environment?
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- Higher rates of economic growth suggest greater market opportunities for all firms and attract new business development and foreign investments in the country's economy
- multinational firms seeking to invest in new international markets need to understand the elements of a country's institutional environment. - Have major effects on firms' international strategies and especially affect which countries firms enter. |
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culture
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learned set of assumptions, values, and beliefs that members of a group have accepted and that affect human behavior
- A person's culture likely affects his or her opinion about the 'right' manegerial behavior |
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Power distance
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the extent to which people accept power and authority differences among people
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uncertainty avoidance
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cultures differ in the extent to which they need things to be clear or ambiguous
- citizens prefer clear norms (rules that govern behavior) - groups create structures and institutions to reduce uncertainty - group low in uncertainty avoidance prefer to have fewer rules and tend to be more comfortable in uncertainty avoidance |
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collectivism
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extent to which identity is a function of the group(s) to which an individual belongs & extent to which group members are expected to look after each other
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gender focus
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the extent to wihch people in a country value masculine or feminine traits
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Why are international markets attractive to firms?
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When more products are sold abroad, these firms gain greater economies of scale, which, in turn, increases their potential profit.
Firms can also gain access to special resources (low cost labor, etc.) in some international locations that can help them become more competitive in global markets |
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Early in internationalization efforts
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- firms prefer to enter markets that have similar institutional environment and similar cultures to their home country because they better understand these environmens and similar cultures to their home country
- As firms gain more experience entering and operating in international markets, they are willing to enter markets where the differences institutional environments and cultures are greater. |
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exporting
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manufacturing products in a firm's home country and shipping them to a foreign market
- this is the most common way of entering international markets (true for smaller firms and firms initially entering into foreign markets) - does require establishing a means of marketing and distributing its goods within the country and avoids large capital investment |
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licensing
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arrangements establishing how to allow a local firm in the new market to manufacture and distribute a firm's product
- usually provides specifications to maintain qualityy and the quantity to produce and sell along with the royalty percentages on the sales |
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What is the disadvantage to licensing
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licensing firm has little control over its product and the use of its brand in the new market
- like exporting, licensing is also unlikely to produce big returns for a firm unless sales in the new market are large |
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strategic alliances
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cooperative arrangements between two firms in which they agree to share resources to accomplish a mutually desirable goal
- allow firms to share the costs and risks of entering new markets, and they provide the opportunity for firms to access resources they do not have. - strategic alliances allow firms to outsource functions they once did in house to other companies abroad |
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outsourcing
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allow firms to gain access to better and often cheaper performance of functions. Firms can compete better in international markets and even to enter and compete in some markets where they could not compete previously
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Some proponents to outsourcing (according to companies) is that...
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- cuts labor costs, making companies able to sell things at a lower price
- converts fixed costs into variable costs, releasing capital that can be used elsewhere in the business - company can put more capital directly into revenue-producing activities |
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Why are equity-based alliances more successful?
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because the firm has more voice in and control of the activities completed by the alliance or venture
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cross-border acquisitions
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local firms made by foreign firms to enter a new international market
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What are some advantages of cross-border acquisitions?
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- provide a fast way to enter a market
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What are some disadvantages of cross-border acquisitions?
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- It is challenging to integrate two previously independent countries
- cost because it has been common for acquiring firms to pay a premium |
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wholly-owned subsidiary
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direct investments to establish a business in a foreign market in which the local firm owns and controls 100 percent of the business
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globally focused organization
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an organization that invests the primary authority for major strategic decisions in the home office
- has centralized authority |
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Disadvantage to global focus?
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- does not allow international subsidiary the flexibility to decide how to compete
- unable to take advantage of market opportunities when they occur - does not have flexibility to react quickly to competitors' strategic moves |
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region-country focus
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when primary authority to determine competitive strategy rests with the management of the international subsidiary based in a region of the world or a specific country
- in this way, region or country managers can tailor their strategies to local market conditions and demands |
