International Business Final Exam Prep I

Front 1

Why do companies get involved in international business? (4 reasons)

Back 1

1. expand sales
2. acquire resources
3. diversify sources of sales
4. diversify sources of suplies

Front 2

What are some overall reasons for IB growth? (4 reasons)

Back 2

1. increased use of technology
2. liberalized government policies
3. development of institutions to support and faciliate international business (eg. IMF)
4. increased gobal competition

Front 3

What are the reactive reasons for going international?

Back 3

Market – responding to demand
Competitive Environment – competitors going int’l
Political Environment changes – environmental work/safety regulations (eg. pollution, labour)
Economic Environment changes – costs of productions increase
Chance occurrence – to seek opportunities

Front 4

What are Proactive Reasons for going International?

Back 4

 Strategically seek out advantages
 Launch an offensive into a new market before competitor does (eg. Pepsi into Russia before Coke)
 Power and prestige – bigger firms, affiliated offices outside country
 Incentives – tax breaks from host government to entice investments
 Lower costs of labour, production and energy
 Less stringent rules and regulations effecting pollution and labour

Front 5

When considering a country to evaluate and select, what are the variables you should consider?

Back 5

 Market size
 Operational effectiveness
 Costs – labour, materials and components, infrastructure
 Resources
 Regulations and procedures
 Risks – financial, economic, competitive, political, safety, handling

Front 6

What are reasons for collecting and analyzing data in business?

Back 6

 To minimize financial risk
 To estimate ROI
 Reduce uncertainties by formulating contingency plans

Front 7

Name three categories of information you can choose from.

Back 7

1. Government
2. Associatios
3. Corporate

Front 8

Describe how all the business environments can afect ethics.

Back 8

Political – regional, national, international laws and regulations

Social-Cultural – immigration patterns, continued movement of populations from rural to urban

Technological – communications regionally and globally, effecting work environment and productivity

Economic – currency fluctuations and int’l NGOs (IMF, WB) influencing national and regional economies

Competitive – causes companies to make decisions in global context that could negatively affect employees/customers

Front 9

Case Study:
Describe the ehtical issues around Acres International, and why they are relevant.

Back 9

 Acres International, engineering firm in Lesotho, Africa:
o 1992, Acres found guilty of hiring Lesoth engineer, Zalisiwonga Bam, as local rep to win contacts for Lesotho Highlands Water Project, who relayed part of his fees (nearly $266,000USD) to director of water project, Masupha Ephraim Sole
o July 2004, WB officially laid sanctions against Acres – Acres argues that bribery payments to Sole was from intermediary that Acres hired
o Int’l companies must behave ethically and ensure hired individuals behave ethically

Front 10

Case Study:
Describe the ethical issues around Talisman Energy Ltd., and why they are relevant.

Back 10

 Talisman Energy Ltd, mining company in the Sudan, Africa
o 1990s, accused of spending money in Sudan to pay military forces to protect region of operations
o Forces accused of murdering innocent people in circumstances unrelated to security of the property
o Late 1990s-early 2000s, accused of developing oil exploitation even through middle of civil war

Front 11

What is Bribery n an international context?

Back 11

 Transnational bribery consists in offering or giving of money, valuable goods or other benefits as favours, promises or advantages to foreign government’s official for procuring that official do or omit any action addressed to influence on economic or business transaction which has relationship with his public function

Front 12

Name the motives for International Collaborative Arrangements.

Back 12

 Spread costs to other companies – greater economies of scale, save money
 Specialize in competencies – focus on what you do best
 Avoid competition – cooperating to fight against another competitor
 Secure vertical and horizontal links
 Gain market knowledge – esp when market is complex
 Gain location specific assets – proximity to specific transportation hubs
 Overcome legal constraints – faced by SME that can be satisfied by large MNEs
 Diversify geographically

Front 13

What are the modes of entry ino international business? (12)

Back 13

 Indirect Exporting
 Co-op or Piggyback Exporting
 Direct Exporting
 Licensing
 Licensing Technology
 Franchising
 Contract Manufacturing  Management Contracts
 Turnkey Operations
 Joint Venture (Co-op/Equity)
 Alliances (Strategic/Equity)
 Wholly Owned Subsidiaries (Acquisitions/Greenfield Operations)
 Consortiums

Front 14

What are some collaborative relationships?

Back 14

-Licensing
-Licensing technology
-Franchising
-Contract Manufacturing
-Management Contracts
-Turnkey operations
-Joint ventures (co-op/equity)
-alliances (strategic / equity)
-Consortiums

Front 15

What are the advantages and disadvantages of exporting directly to the forein buyer?

Back 15

o Adv: minimized costs, direct communication
o Dis: Internal specialists needed, buyer may not know much about import process, exporters take big risk

Front 16

What are the advantages and disadvantages of exporting through a domestic intermediary?

Back 16

o Adv: specialized expertise, internal resources not tied up in exporting, financial risk transferred to intermediary
o Dis: expensive, indirect communication with buyer

Front 17

What are the advantages and disadvantages of exporting through a foreign intermediary?

Back 17

o Adv: specialized knowledge in foreign environment, good contacts
o Dis: additional costs, block/hinder communication with buyer, still need expertise on your side

Front 18

What are the advantages and disadvantages of this export relationship:

Export intermediary - foreign intermediary - foreign buyer

Back 18

 Export – Export Intermediary – Foreign Intermediary – Foreign Buyer
o Adv: staff focus on core activity of producing, avoidance of risk
o Dis: complete reliance on others, higher costs

Front 19

What are the advantages and disadvantages of exporting through mail order?

Back 19

o Adv: control, eliminate customs procedures for personal order, provide customer made service & product
o Dis: high shipping costs, need worker in host country to receive rejections, warranty, complaints

Front 20

What are the advantages and disadvantages of exporting via an online service.

Back 20

o Adv: minimized costs, receive money in advance, direct communication, better info
o Dis: customer hesitation (privacy/security issues)

Front 21

What are factors influencing the decisions of an exporter?

Back 21

 Ownership advantages of the company
 Location advantages of the market
 Internationalization advantages of integrating transactions within the company
 Intelligence and networking on target market
 Relationships with host government
 Regulations of the parent government patience of the financiers to achieve ROI