question

accounting

answer

decision makers with the financial data they need. Like investors, government.

question

USA Financial acct standards board FASB

answer

which requires that companies record foreign currency based transactions at the spot rate - the exchange rate for the delivery within 2 business days- at the time of the transaction.

question

convergence towards IFRS is underway

answer

A slow process can take years.

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International Financial Management

answer

acquisition and use of funds for cross border trade, investment, and other commercial activities. g

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Kraft Module

answer

largest branded food/beverage company headquartered in US. - Northfield, Illinois) From 2006-2012 Kraft focused on reorganizing its organizational structure. Created a good to be more locally responsive across nations with its products & to freshen its brands

question

Cash flow management

answer

ensures cash is available where and when it is needed

question

Kraft Module - 4 steps to achieve goal:

answer

1) Divide company into two 2) Decentralize decision making 3) Encourage country managers to create localized products 4) Decentralized profit & loss responsibility

question

Kraft Module

answer

Kraft merged with Heinz in 2015 and the company is sure to grow further through acquisitions in the future.

question

Organizational Structure

answer

method a company uses to arrange its activities & the relationships between them. - General Characteristics: - Why does any firm need one?: because it provides a hierarchy for the company & establishes responsibilities between different roles

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Organizational Design

answer

process that identifies how a company is organized to achieve its goals. - Goal/Objective: to ensure its worldwide business activities are integrated in an efficient & effective manner. - Who is responsible: Top Management

question

fronting loan

answer

a loan made through an intermediary, usually a bank, from parent company to subsidiary.

question

What influences organizational structure

answer

Size of Organization, Type of product & industry an organization is in, Complexity of operations ex: how important int'l markets are for foreign companies, Domestic or international operations.

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Elements to be considered when designing the structure of an IC-

answer

1) Product ; Technical Expertise for company's different businesses 2) Geographic Expertise on the countries & regions in which a company operates 3) Customer Expertise to gauge the similarity of client groups, industries, market segments, or population groups that transcend the boundaries of individual countries or regions. 4) Functional Expertise in the company's value ; chain activities

question

International Division Structure

answer

Separate unit that is at the same level as the domestic division and is responsible for all non-home country activities. Home replication strategy... Generally accompanied by a significant shift in resource allocation and an increased focus on international business

question

Global Product Structure:

answer

Assigns global responsibilities to each product division, each division has regional product experts.... Responds to cost efficiency pressures, reduces inefficient duplication in multiple countries....Lags in local responsiveness

question

Geographic Region Structure

answer

Management and control are highly decentralized to the level of individual geographic regions, where local managers are responsible for operations within their own regions, strong local responsiveness. Multidomestic strategy

question

Transfer pricing

answer

pricing that is established for transactions between members of the enterprise.

question

Global Functional Structure

answer

: High degree of specialization, often leads to barriers between different functions, often used by aircraft manufactures and oil refining companies

question

translation exposure/risk

answer

potential change in the value of a company's financial position due to exposure created during the consolidation process.

question

Matrix Structure

answer

Difficult to implement, confusion in terms of reporting and authority

question

Expectations of Organizational Structure

answer

1) To be more capable of developing competitive strategies to confront increasing global competition 2) Obtain lower production costs by promoting worldwide product standardization & manufacturing rationalization 3) Enhance technology transfer & the allocation of company resources

question

Market Screening

answer

Idea that a firm is able to identify desirable markets. Firms can do so by looking at two levels of market screening: - Country Screening: Analyzing an entire country ex: Brazil or Germany - Segment Screening: Analyzing market segments within a specific country or across countries or regions ex: high income individuals in market for $150K sports car

question

Basic Needs Potential First screening

answer

Influenced by climate, geography, and natural resources Some needs are easier to assess than others. Easier to assess: industrial goods, such as certain materials and tools. More difficult to assess: desires such as luxury goods and sweets chocolate. - The data used to measure needs potential: imports & local production

question

Leading & Lagging

answer

timing payments early -lead- or late -lag-, depending on anticipated currency movements, so that they have the most favorable impact for the company.

question

transaction exposure / risk

answer

change in the value of a financial position created by foreign currency changes between the establishment and the settlement of a contract.

question

forward market hedge

answer

foreign currency contract sold or bought forward to protect against foreign currency movement

question

Economic exposure / risk

answer

the potential for the value of future cash flows to be affected by unanticipated exchange rate movements

question

Market Indicators & Market Factors

answer

second screening

question

Market Indicators

answer

Economic data used to measure relative market strength of counties or geographic areas. These include market size, market growth rate and ecommerce readiness. - Trends in inflation, currency exchange, int. rates, credit availability & paying habits

question

Market Factors

answer

Economic data that correlates highly with market demand for a product

question

Segment Screening

answer

instead of looking at a lot of info you focus on market segments. Takes into account both the location & segment of customers in that market. Segments refers to groups of (potential customers that have similar needs or characteristics that are important for firms to understand

question

Segment Characteristics- segments must be

answer

All of these are on the exam - Definable: can be identified & measured - Large: worth the effort - Accessible: can be reached - Actionable: easy to target through marketing - Capturable: can be "captured" from competition (if need is already served)

question

Licensing:

answer

an arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period in exchange for royalties or other competition

question

Franchising

answer

an arrangement in which the firm allows another the right to use an entire business system in exchange for fees, royalties, or other compensation. Often more comprehensive and longer term than licensing agreements. - Leading International Franchises: Subway, McDonalds, 7-Eleven, KFC, Pizza Hut, Dunkin Donuts

question

Licensing- Responsibilities of Licensee/licensor:

answer

- A licensing agreement specifies the nature of the relationship between the licensor (owner) and licensee (user) - Licensee pays licensor a fixed amount upfront and ongoing royalty on gross sales generated from using the licensed asset

question

International Business

answer

structure refers to the way an organization arranges its domestic & international units & activities

question

relationships

answer

who does what where, who reports to whom, who takes what decision among these components =parts

question

Process

answer

determines how a company should be organized

question

objective

answer

to ensure its worldwide business activities are integrated in an efficient and effective manner. Typically the job of top management in a company.

question

Influences organizational structure

answer

the size of the organization complexity of its business operation how important international mare

question

Product & technical expertise

answer

the company's different businesses.

question

Geographic expertise

answer

on the countries and regions in which the company operates

question

customer expertise

answer

to gauge the similarity of client groups, industries, market segments, or population groups that transcend the boundaries of individual countries or regions.

question

Functional expertise

answer

the company's value chain activities.

question

Global Corporate form - Product

answer

Worldwide Division

question

geographic Region structure

answer

For example Asia/Pacific DIVISION

question

Companies out to conquer the world

answer

with their products or services, they have to answer two big questions 1. where to start? How do we do that?

question

Where do we start

answer

a. market screening b. segment screening

question

Market screening

answer

1. Basic needs OTT 2. economic - financial OTT 3. Political - legal 4. sociocultural 5. competitive 6. final selection

question

Segment Screening

answer

instead of looking at a lot of info on entire countries - market screening - firm might also focus on market segments

question

Segments

answer

refers to groups of potential customers that have similar needs or characteristics that are important for firms to understand.

question

Licensor provides a combo

answer

1. Intellectual property patent, trademark, design, copyright, or know how

question

Licensee compensates the licensor through a combo

answer

1. lump sum payment 2. down payment plus royalty 3. Products 4. Know how 5. cross licensing

question

trademark

answer

A trademark is a shape, color design, phrase, abbreviation, or sound that stands for a company or its product and that is reserved for that company's sole use.

question

copy right

answer

which are exclusive legal rights of authors, composers, creators of software, playwrights, artists, and publishers to publish and dispose of their work, are protected under the Berne Convention of 1886, adhered to by 164 countries

question

Franchisor provides

answer

1. trademark protected business concept plus 2. everything needed for its implementation - patents - know how - training, services, products

question

Franchisee compensates the franchisor through a combo

answer

1. lump sum payment 2. down payment plus royalty 3. other mark ups and contributions example finance charges, sale of related products

question

Greenfield investment

answer

you start from scratch

question

Acquisition

answer

you simply buy a company assets you can use

question

Direct exporting

answer

Using a subsidiary in a foreign country

question

indirect exporting

answer

intermediary in the home country

question

OTSC

answer

Perishable product shelf life

question

exporting pro ; cons

answer

hi flexibility, resource commitment, risk, labor control. disadvantage Tariffs, trade barriers, currency, exchange rate

question

Export documentation

answer

bill of lading: basic contract between exporter ; shipper. Authorizes the shipping company to transport the goods to the buyer's destination.

question

shipper's export declaration:

answer

lists the contact info of the exporter ; buyer, full description, declared value, ; destination of the products being shipped. used by governments to collect statistics.

question

incoterms ; payment methods

answer

Universal trade terminology developed by the International Chamber of commerce

question

International Commerce Terms

answer

commonly used in international sales contracts and price lists to specify how the buyer and the seller share the cost of freight and insurance, and at which point the buyer takes title to the goods.

question

Ex works

answer

delivery takes place at the seller's premises or another named place works, factory, or warehouse

question

FOB Free on board

answer

delivery takes place when the goods pass the ship's rail at the named port of shipment, the port of origin in the seller's home country

question

CIF Cost, insurance, and freight

answer

seller pays the cargo insurance and delivery of goods to the named port of destination. from the destination port, buyer is responsible for customs clearance and other costs and risks.

question

Cash in Advance

answer

Best for the seller

question

Letter of Credit

answer

A contract between the banks of the buyer and the seller. Largely risk free, it helps establish instant trust.

question

Marketing Mix

answer

4Ps a set of strategy decisions made about the product & its promotion, pricing, and distribution in order to satisfy the needs and desires of customers in a target market

question

4Ps

answer

Product, price, promotion, place

question

Market segmentation

answer

the process of dividing the firm's total customer base into homogeneous clusters subgroups that allows management to formulate unique marketing strategies for each group.

question

Standardization vs. Adaptation

answer

Does the product have to taste differently in the foreign country? does it have to look differently? Does it have to be a different color? Or the way you promote it? The way you charge in the USA can you charge the same price in India? You need to find the right mix.

question

companies

answer

right mix, standardize, what can stay the same. companies prefer to standardize instead of adaptation. Any thing that a company has to make differently is a headache.

question

Standardization exemplifies global integration ; is more appropriate in global industries.

answer

Pursue when: similar market segments exist across countries 2. customers seek similar features 3. products have universal specifications 4. business customers have converging expectations

question

Adaptation exemplifies local responsiveness and is more appropriate in multidomestic industries.

answer

Pursue when there are distinct; National preferences 2. Laws and regulations 3. Living standards and economic conditions 4. national infrastructure

question

Branding

answer

same standardization or adaptation. Like Apple everything is the same. Good Humor ice cream in foreign doesn't fit. have to decide global brand, regional brand, or local

question

Human Resources Labor Market

answer

People, labor, labor market, potential employees. The pool of available potential employees with the necessary skills within commuting distance from an employer. Populations in developing nations tend to be growing and becoming younger. Over 1/3 of the world's 15 - 24 year olds live in India and China.

question

Brain Drain

answer

loss by a country of its most intelligent and best educated people. serious problem for developing countries or countries that are facing prolonged economic uncertainty or civil unrest.

question

parent country National PCN

answer

Employee who is a citizen of the nation n which the parent company is headquartered; also called home country national

question

Host country national HCN `

answer

Employee who is a citizen of the nation in which the subsidiary is operating, which is different from the parent company's home nation

question

Third country national TCN

answer

Employee who is a citizen of neighter the parent company nation nor the host country. Usually employees with unique skill sets

question

Human Resource strategic approaches.

answer

different types of companies have preferences.

question

Ethnocentric

answer

companies that have locations overseas. they prefer to staff from people from their own country.

question

Policentric

answer

host country

question

regiocentric

answer

region from the host country

question

Geocentric Staffing Policies

answer

purely by skill set

question

outsourcing

answer

a multinational corporation buys products or services from one of its suppliers that produces them somewhere else, whether domestically or globally. In that sense, it also refers to external purchasing in relation to purchasing strategy.

question

Insourcing

answer

a multinational corporation decides to stop outsourcing products or services and instead starts to produce them internally; insourcing is the opposite of outsourcing. this it refers to internal purchasing in the context of purchasing strategy.

question

Offshoring

answer

A multinational corporation buys products or services from one of its suppliers that produces them somewhere globally outside the MNCs home country. Offshoring is thus a form of global external purchasing in terms of purchasing strategy.

question

complexity

answer

think working with 500 suppliers around the world, involving dozens of different languages & currencies, laws, regulations distance ...

question

Wonder Cat is a popular, new cartoon series created by the U.S based all Cartoon channel ACC. currently, the only wonder cat item available for sale are shirts that are sold exclusively through the ACC Web site. the cartoon series is a big hit in China, and as a result ACC has been approached by a Chinese firm about a licensing agreement. ACC executives are considering the pros and cons of such an agreement before making an final decisions.

answer

case study

question

Which of the following statements most likely supports an ACC decision to enter into a licensing agreement with the Chinese firm?

answer

The Chinese government restricts complete ownership of local operations by foreign firms.

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