Midterm International Business chapter 1, 2, 3, 4, 5 – Flashcards
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• Focal firm
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o Initiator of an international business transaction, which conceives, designs, and produces offerings intended for consumption by customers worldwide. Primarily MNEs and SMEs.
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• Distribution channel intermediary
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o A specialist firm that provides carious logistics and marketing services for focal firms as part of the international supply chain.
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• Facilitator
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o A firm or an individual with special expertise in banking, legal advice, customs clearance, or related support services that assists focal firms in the performance of international business transactions.
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• Freight forwarder
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o A specialized logistics service that arranges international shipping on behalf of exporting firms.
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• Multinational enterprise (MNE)
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o Large company with substantial resources that performs business activities in multiple countries through a network of subsidiaries and affiliates.
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• Small and medium-sized enterprise (SME)
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o A company with 500 or fewer employees
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• Born Global Firm
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o A young entrepreneurial company that initiates international business activity early, moving rapidly into foreign markets.
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• Licensor
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o A firm that enters a contractual agreement with a foreign partner to allow the partner the right to use certain intellectual property for a specified period of time in exchange for royalties or other compensation.
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• Franchisor
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o A firm that grants another the right to use an entire business system in exchange for fees, royalties, etc.
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• Turnkey contractors
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o Focal firms or a consortium of firms that gets a business running after training local personnel before handing it over to a foreign customer.
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• Joint venture partner
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o A focal firm that creates and jointly owns a new legal entity through equity investment or pooling of assets.
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• Projected-based
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non-equality venture partners, o A collaboration in which the partners create a project with a relatively narrow scope and a well-defined timetable, without creating a new legal entity.
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• Foreign distributor
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o A foreign market-based intermediary that works under contract for an exporter, takes title to, and distributes the exporter's products in a national market or territory, often performing marketing functions such as sales, promotion, and after-sales service.
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• Agent
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o An intermediary that handles orders to buy and sell commodities, products, and services in international business transactions for commission.
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• Manufacturer's representative
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o An intermediary contracted by the exporter to represent and sell its merchandise in a designated country or territory.
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• Trading company
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o An intermediary that engages in import and export of a variety of commodities, products, and services.
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• Export management company (EMC)
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o A domestically based intermediary that acts as an export agent on behalf of a client company
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• Logistics service provider
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o A transportation specialist that arranges for physical distribution and storage of products on the behalf of focal firms. Also controls information between point of origin and point of consumption.
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• Customs brokers
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o Specialist enterprises that arrange clearance of products through customs on behalf of importing firms.
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• Sovereign wealth fund (SWF)
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o A state-owned investment fund that undertakes systematic global investment activities
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• Culture
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o Learned, shared, and enduring orientation patterns in a society.
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• Cross-cultural risk
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o A situation or event in which cultural misunderstanding puts some human value at stake.
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• Ethnocentric orientation
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o Using our own culture as the standard for judging other cultures
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• Polycentric orientation
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o A host country mind-set in which the manager develops a strong affinity with the country in which she or he conducts business
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• Geocentric orientation
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o A global mind-set in which the manager is able to understand a business or market without regard to country boundaries
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• Socialization
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o The process of learning the rules and behavioral patterns appropriate to one's given society.
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• Acculturation
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o The process of adjusting and adapting to a culture other than your own
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• Cultural metaphor
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o A distinctive tradition or institution strongly associated with a particular society
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• Stereotype
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o Generalization about a group of people that may or may not be factual. Often overlooks real deeper differences.
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• Idiom
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o Expression that has a symbolic meaning that is different from its literal meaning.
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• Low-context culture
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o A culture that relies on elaborate verbal explanations, putting much emphasis on spoken words.
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• High-context culture
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o Culture that emphasizes nonverbal messages and sees communication as a way to promote smooth harmonious relationships
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• Individualism versus collectivism
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o Describes whether a person functions primarily as an individual or as part of a group.
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• Power distance
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o Describes how a society deals with the inequalities in power among people
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• Uncertainty avoidance
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o The extent to which people can tolerate risk and uncertainty
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• Masculinity versus femininity
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o Refers to a society's orientation based on traditional male and female values. Masculine tend to value competitiveness, assertiveness, and ambition. Feminine values nurturing roles, taking care of the poor, less fortunate, etc.
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• Long-term versus short-term orientation
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o Refers to the degree to which people and organizations defer gratification to achieve long-term success
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• Monochronic
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o A rigid orientation to time, in which the individual is focused on schedules, punctuality, and time as a resource.
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• Self-reference criterion
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o Tendency to view other cultures through the lens of your own
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• Critical incident analysis (CIA)
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o A method for analyzing awkward situations in cross-cultural encounters by developing objectivity and empathy for other points of view.
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• Ethics
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o Moral principles and value that govern the behavior of people, firms, and governments.
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• Corruption
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o Abuse of power to achieve illegitimate personal gain
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• Corporate social responsibility (CSR)
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o A manner of operating a business that meets or exceeds the ethical, legal, commercial, and public expectations of stakeholders (customers, shareholders, employees, and communities)
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• Sustainability
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o Meeting humanity's needs without harming future generations.
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• Intellectual property
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o Ideas or works created by individuals or firms
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• Intellectual property rights
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o Legal claim through which proprietary assets of firms and individuals are protected from unauthorized use by other parties
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• Relativism
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o The belief that ethical truths are not absolute but differ from group to group.
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• Normativism
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o The belief that ethical behavioral standards are universal, and firms and individuals should seek to uphold them around the world.
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• Corporate governance
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o System of procedures by which corporations are managed, directed, and controlled.
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• Globalization of markets
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o Ongoing economic integration and growing interdependency of countries worldwide.
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• Value chain
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o The sequence of value-adding activities performed by the firm in the course of developing, producing, marketing, and servicing a product.
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o Stages of the Value Chain:
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Research & Development Procurement (Sourcing) Manufacturing Marketing Distribution Sales & Service
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• Contagion
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o The tendency of one country's financial crisis to spread rapidly to other countries.
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• Sovereignty
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o The ability of a nation to govern its own affairs
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• Offshoring
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o The relocation of manufacturing and other value-chain activities to cost-effective locations abroad.
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• International business
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o Trade and investments by firms across national borders
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• Globalization of markets
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o Ongoing economic integration and growing interdependency of countries worldwide
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• International trade
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o Trade across national borders, importing and exporting
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• Exporting
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o The strategy of creating something in one country and exporting the finished product to another country
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• Importing (Global Sourcing)
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o Receiving products or services from suppliers in another country
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• International investment
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o The transfer of assets or the acquisition of assets to another country
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• International portfolio investment
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o Passive ownership of foreign securities such as stocks and bonds for the purpose of generating financial returns
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• Foreign direct investment (FDI)
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o An internationalization strategy in which the firm establishes a physical presence abroad through acquisition of productive assets such as capital, technology, labor, land, plant, and equipment.
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• Cross-cultural risk
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o A situation or event where a cultural misunderstanding puts human value at stake
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• Country risk
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o The risk of potential loss or adverse effects on a company caused by developments in a country's political and/or legal environments. Also know as political risk. :-0
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• Currency risk
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o Potential harm that arises from changes in the currency exchange rate
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• Commercial risk
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o Firm's potential loss or failure from poorly developed/executed business strategies, tactics, or procedures
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• Multinational Enterprise (MNE)
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o A large company with resources that perform various business activities through a network of subsidiaries and affiliates located in multiple countries
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• Small and medium-sized enterprise (SME)
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o A company with 500 or fewer employees
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• Born global firm
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o A young company that initiates international business activity very early in its evolution, moving rapidly into foreign markets.
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• World Trade Organization
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o Organization that reduces trade barriers and makes sure that nations adhere to rules set down in trade treaties.
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Four risks of international business
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Cross-culture risks Country Risks Currency Risks Commercial Risks
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Five drivers of market globalization
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Worldwide reduction of barriers Market liberalization and adoption of free markets Industrialization, economic development, and modernization Integration of world financial markets Advances in technology
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Dimensions of Market Globalization
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Integration and interdependence of national economies Rise of regional economic integration blocs Globalization of production globalization of services
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4 types of participants in international business
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focal firm distribution channel intermediary facilitator governments
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5 strategies for focal firms for international entry
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foreign direct investment international collaborative venture exporting/importing licensing franchising
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facilitators- give examples
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logistics service providers, customs brokers, freight forwarders, advertising agencies, market researchers, insurance companines
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Who came up with high and low context cultures?
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Hall
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Who research national culture to include four dimensions?
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Hofstede They are Individualism vs collectivism; power distance; uncertainty avoidance; masculinity vs feministy; long term vs short term orientation
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What is CSR ?
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Corporate Social Responsibility
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What are the 3 types of interest in sustainability?
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economic, environmental, social
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Four step framework for making ethical decisions:
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1. Recognize ethical problem 2. Get facts 3. Evaluate courses of action 4. implement and evaluate your decision
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What is the U.S. Foreign Corrupt Practices Act?
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A declaration making it illegal for U.S. firms to offer bribes to foreign parties to secure or retain (keep) business
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Give examples of corruption:
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Bribery sweatshop employee abuse false advertising falsify documents
