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57 Cards in this Set
- Front
- Back
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Exporting |
Sale of products or services to customers located abroad, from a base in the homecountry or a third country. |
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International Business |
Performance of trade and investment activities by firms across national borders. More complex and must use different strategies than domestic |
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What four (4) major risks are encountered when conducting international business? |
Cross cultural risk, Country (political) risk, Currency (financial) risk, Commercial (execution) risk. |
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Multinational Enterprise (MNE) |
large company with substantial resources, subsidiaries and affiliates located in multiplecountries (FDI). |
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What are some of the key motivations for firms to engage in international business? |
growth through market diversification higher margins and profits new ideas about products, services, and business methods Better serve key customers that have relocated closer to supply sources, benefit from global sourcing advantages, or gain flexibility in thesourcing of products lower-cost/better-value factors of production.Develop economies of scale in sourcing, production, marketing, and R&D. |
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Market Globalization |
interconnectedness of national economies and the growing interdependence of buyers, producers, suppliers, and governments, around the world (one large market) Not a new phenomenon (accelerated with tech) |
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Foreign Direct Investment (FDI) |
Transfer of assets to another country or the acquisition of assetsin that country. |
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Domestic Business |
performed within country (home country). |
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Small and Medium-Sized Enterprise (SME) |
companies with 500 or fewer employees, over 90% of all firms in most countries, may or may not include FDI, and often engage third parties in some aspect(s) of going global. |
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4 phases of globalization |
1.) 1830-late 1800s: railroads, ocean transport, and communication; rise of manufacturing and trading companies. 2.) 1900-1930: electricity and steel; early MNEs (mfg,extractive, and agricultural industries). 3.) 1948-1970s (post-war era): GATT; reduction of trade barriers worldwide (World Trade Organization); global capital markets (IMF, World Bank, International Banks) 4.) 1980-present: Internet/tech; liberalization inemerging markets. |
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5 drivers of globalization |
1.) Worldwide reduction of barriers to trade/investment 2.) Market liberalization/adoption of free markets. 3.) Industrialization, economic development, and modernization 4.) Integration of world financial markets 5.) Advances in technology. |
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6 dimensions of globalization |
1.) Integration/interdependence of national economies 2.) Rise of regional economic integration blocs 3.) Growth of global investment/financial flows 4.) Convergence of buyer lifestyles/preferences 5.) Globalization of production activities 6.) Globalization of services |
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implications of globalization for company internationalization (think value chain) |
new business opportunities new risks/intense rivalry from foreign competitors more demanding buyers who source from suppliers worldwide emphasis on proactive internationalization internationalization of firm’s value chain |
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4 categories of participants in international business |
1.) Focal firm 2.) Distribution channel intermediary 3.) Facilitator 4.) Governments |
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international value chain |
complete business system of the focal firm, comprising all the firm’sactivities, (Market Research, R&D, Sourcing, Production, Marketing, Distribution, andAfter Sale Service) |
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Focal Firm |
initiator of international business transactions (MNE/SME's) |
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Distribution Channel Intermediary |
a specialist firm that provides distribution, logistics, and marketing services in the international value chain |
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facilitator |
a firm that provides special expertise in banking, the law, customs clearance, market research, or other |
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governments |
active in international business as suppliers, buyers, and regulators |
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What are the major distribution channel intermediaries based in the home country and thosebased abroad? |
HOME: trading co, export management co (EMC) BOTH: facilitators HOST: foreign distributor, agent, manufacturer's rep |
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trading company |
handles imports/exports of raw materials, parts, and finished products |
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export management company |
finds export customers,negotiates terms of sale, and arranges for international shipping, typically for smaller exporters |
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facilitator |
assist focal firm with specialized services required in international transaction |
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foreign distributor |
extension of focal firm; Takes title to the exporter’s goods and performs marketing functions suchas sales, promotion, and after-sales service on the exporter’s behalf |
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agent/broker |
no title to goods; works on commission basis to bring buyer and seller together |
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manufacturer's representative |
under contract by exporter to rep/sell merchandise |
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international collaborative venture |
partners pool resources and share costs/ risks of new venture |
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exporting |
Sale of products or services to customers located abroad from a base in thehome country or a third country. |
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importing/sourcing |
Focal firms procure numerous parts, components, and servicesfrom suppliers around the world. |
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licensing |
Granting the right to a foreign partner to use certain intellectual property inexchange for royalties. |
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franchising |
Granting the right to a foreign partner to use an entire business system inexchange for fees and royalties. |
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turnkey contractors |
Focal firms or consortium of firms that plan, finance, organize,manage, and implement all phases of a project then hand it to a foreign customer. |
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joint venture partner |
focal firm that creates and jointly owns a new legal entitythrough equity investment or pooling of assets. |
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project-based, non-equity venture |
Focal firms that collaborate to undertake a givenproject with a relatively narrow scope and well-defined timetable, but without creatinga new legal entity. |
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culture |
learned, shared, and enduring orientation patterns in a society |
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cross-cultural risk |
occurs in a situation or event where a cultural miscommunication puts some human value at stake |
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socialization |
process of learning the rules and behavioral patterns appropriate to one's society |
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acculturation |
process of adjusting and adapting to a culture other than one's own; commonlyexperienced by expatriate workers |
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monochronic |
rigid orientation to time; schedules,punctuality, time as a resource, time is linear, “time is money”. For example, people in the U.S. arehurried and impatient |
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polychronic |
flexible, non-linear orientation to time; long-termperspective, time is elastic, relationships valued |
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individualistic society |
each person emphasizes his or her own self-interest; competition; individuals who competebest are rewarded Examples: Australia, Britain, Canada, and the U.S. |
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collectivist society |
ties among individuals are important; group business; life is cooperative experience; conformity/compromisehelp maintain harmony Examples: China, Panama, Japan, South Korea |
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power distance |
how a society deals with inequalities in power that existamong people |
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high power distance |
big gaps between the weak andpowerful Example: middle east |
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low power distance |
small gaps between the weak andpowerful |
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uncertainty avoidance |
the extent to which people can tolerate risk anduncertainty in their lives |
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masculinity |
value competitiveness, ambition, assertiveness,and the accumulation of wealth |
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femininity |
emphasizenurturing roles, interdependence among people, and caring for less fortunate people |
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long term orientation |
long view in planning and living |
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short term orientation |
emphasis on near term (US) |
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cultural metaphor |
distinctive tradition or institution strongly associated with a society; aguide to deciphering attitudes, values, and behaviors (US culture uses football and war asmetaphors for business) |
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idiom |
expression whose symbolic meaning differs from its literalmeaning (e.g., “the nail that stands out gets hammered.”) |
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intellectual property (IP) |
ideas or works created by individuals or firms (intangible) ex: discoveries and inventions; artistic, musical, and literary works; andwords, phrases, symbols, and designs |
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relativism |
belief that ethical truths are notabsolute but differ from group to group "when in rome, do as the romans do" |
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normativism |
belief that ethical behavioral standards areuniversal, and firms and individuals should seek to uphold them consistently around the world |
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Corporate Social Responsibility |
operating a business that meets or exceeds the ethical,legal, commercial, and public expectations of customers, shareholders, employees, andcommunities beyond ethics |
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steps firm can take to develop CSR/sustainability in international business |
Develop closer relations w/ foreign stakeholders to understand their needs; jointlydevelop solutions Build capabilities to enhance the firm’s contribution to the local community/globalenvironment Ensure diverse voices by creating organizations that employ workers fromaround the world Develop global CSR standards and objectives that are communicated/implementedacross the firm worldwide Train managers in global CSR principles; formally integrate these into managerialresponsibilities. |
