1-5 Flashcards
Foreign environment is
Forces are uncontrollable outside the home country, and operate differently. they have different values, are difficult to assess, and they are interrelated
International organizations that affect the IB environment
WTo, NAFTA, EU, 0PEC
Self reference criterion
Managers tend to ascribe their own cultural values, preferences, taste and opinions to host country
Uncontrollable forces are
Competitive, distributive, economic, Socio economic, financial, legal, physical, political
Controllable forces are
Internal forces that management has control over such production and activities of the organization
Domestic environment, foreign environment, international environment
Domestic environment is all the uncontrollable forces originating in the home country that surround and influence the life of the firm. foreign environment is all the uncontrollable forces originating outside the home country. international environment is the interactions between the domestic environmental forces and the foreign forces.
Transnational corporation is
An enterprise in more than one nation operating under a decision making system that allows a common strategy and coherent policies
Foreign direct investment
It refers to direct investment in equipment, structures, and organizations in a foreign country at a level sufficient to obtain significant management control
Five major kinds of drivers
Political, technological, market, cost, and competitive
Globalization is
The tendency toward international integration of goods, technology, info, labor and capital
In support of Globalization: Free trade enhances
Socio economic development and promote better jobs
Trade deficit
The amount by which the value of imports exceeds value of exports
Trade surplus
Value of exports exceeds the value of imports
Mercantilism
Philosophy based on belief that a nation’s wealth depends on treasures, such as gold and silver and to increase wealth. government policies should promote exports and discourage imports
Favorable trade balance
Exporting more, importing less
Absolute advantage (created by Adam Smith)
When a country can produce more services than another country for the same or lower cost of inputs
Perfect competition
Sufficient large number of well informed buyers and sellers of a product that no one has the ability to determine the price
Comparative advantage
When one nation is less efficient than another nation in the production of goods. Focusing on doing what they do best.
Currency evaluation
Reduction in the states Currency relative to other currencies
- this lowers the value of a nation’s Currency relative to other currencies, and therefore effectively lowers the price of its exports. a nation can attempt to regain competitiveness
Resource endowment
The land, labor, capital, and related production factors a nation possesses.
Overlapping demand
Existence of similar preferences and demands for products among nations with several similar levels of income
Product differentiation
Unique Differences producers build into their products with the intent of positively influencing demand
International product life cycle
A theory explaining why a product that begins as a nation’s exports becomes its import. For example, the nation’s exports becomes its imports because another nation may be able to compete in quality and price
Economies scale
The predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases
Produce more and the price drops
Ethnocentricity
Belief that your own culture is superior to others
Aesthetics
Cultures sense of beauty and good tastes, expressed in many areas such as music, and also applies to human bodies, as well as tattoos
Folklore
Package of Connotation and emotions that are powerful
Nationalization
Taking of private property by the government to make it public. it’s motivated by the belief that the government can manage the public goods or necessity better
Privatization
Selling of government owns property to private sectors to gain more efficiency and to raise money
internalization theory
Theory that to obtain a higher return on investment, a firm will transfer its superior knowledge to a foreign subsidiary that it controls, rather than sell it in the open market
Eclectic theory
For a firm to invest overseas, it has to hv three advantages: ownership specific, location specific, and internalization
Lifecycle Assessment
An Evaluation of the environmental aspects of a product throughout its lifecycle
Cradle to cradle design
A closed loop design that recycles and reuses products; tries to eliminate waste
Carbon disclosure project
Nonprofit organization that provides reporting framework for greenhouse gas emissions and water use
Examples of non-renewable energy and renewable energy
Non-renewable energy is fossil fuels and gas
Renewable energy is wind power solar power
