Ch. 3 CHAPTER 3: ORGANIZATIONAL PARTICIPANTS THAT MAKE THINGS HAPPEN Flashcards
People and organizations make globalization happen, firms through their
value chains
Your book gives 4 types of participants in international business bring various types of expertise, infrastructure, and inputs that make international business occur:
-A focal firm is the initiator of an international business transaction that conceives, designs, and produces the offerings for customers worldwide.
◘ A distribution channel intermediary is a specialist firm that provides a variety of logistics and marketing services for focal firms as part of the international supply chain, both in the home country and abroad.
◘ A facilitator is a firm or individual with special expertise as legal advice, banking, and customs clearance that assists focal firms in the performance of international business transactions.
◘ Governments are increasingly important participants in international business.
Participants can be described or organized by value-chain activity; know what they are
focal firm, distributionary channel intermediary facilitator and govts
participants in global value chains?
Focal firms, intermediaries, facilitators make up participants in global value chains.
The value chain is the…
The value chain is the complete business system of the focal firm, comprising all the focal firm’s activities including R&D, sourcing, production, marketing, and distribution
In focal firms that export, most of the value chain is concentrated
in the home country
In highly international firms, value-chain activities performed…
performed in various countries
Know who the Focal firms are in international business:
◘ MNEs- large global corporations such as Sony and Ford
◘ SMEs now comprise the majority of internationally active firms.
◘ Born globals are a category of SMEs that internationalize at or near the firm’s founding.
Know the Foreign market entry strategies of focal firms:
◘ Licensing- allowing a foreign partner the right to use certain intellectual property for a specified period of time in exchange for royalties or other compensation.
◘ Franchising- granting the right to use an entire business system in exchange for fees, royalties, or other forms of compensation.
◘ Turnkey contracting- leveraging the expertise of a consortium of firms to plan, finance, organize, manage, and implement all phases of a project and then hand it over to a foreign customer after training local personnel.
◘ Joint venture partnering- creating and jointly owning a new legal entity through equity investment or pooling of assets.
◘ Project based, non-equity venture partnering- collaboration through a project with a relatively narrow scope, a well-defined timetable, and without creating a new legal entity.
Distribution channel intermediaries in international business
◘ Foreign distributors are foreign market-based intermediaries that work for an exporter and take title to and distribute the exporter’s products.
◘ An agent is an intermediary that handles orders to buy and sell commodities, products, and services for a commission.
◘ A manufacturer’s representative represents and sells the exporter’s merchandise or services.
◘ A trading company engages in the import and export of a variety of commodities, products, and services.
◘ An export management company (EMC) acts as an export agent on behalf of client companies.
■ Facilitators in international business, such as … assist with international business transactions.
Other facilitators include
logistics service providers, freight forwarders, and customs brokers assist with international business transactions…
other facilitators include banks, lawyers, insurance companies, consultants, and market research firms.
Governments are increasingly …
active in international business. They make and enforce laws and regulations and provide numerous other functions.
Several national governments collaborated to address challenges that emerged in
■ Governments also invest in other economies often through
the global recession.
sovereign wealth funds (SWFs), state-owned investment funds that undertake systematic global investment activities.
