CH 6 IB Starting IB

Question 1

Until which employee count do firms count as SMEs?

Answer 1

small-and medium-sized enterprises have 500 or less employees

Question 2

entrepreneurs

Answer 2

leaders identifying opportunities and taking decisions to exploit these

Question 3

entrepreneurial team

Answer 3

group of people jointly acting as entrepreneurs, sharing responsibility and contributing complementary capabilities and experience

Question 4

In international business what is a buyer and what a seller

Answer 4

importer and exporter

Question 5

direct exports

Answer 5

sale of products made by firms in home country to customers in another country

Question 6

How is the transaction of direct exports called?

Answer 6

sporadic or passive exporting.

Question 7

Who takes the action in sporadic or passive exporting.

Answer 7

Prompted by unsolicited (unaufgefordert) inquiries from customers who learned about the product and took the initiative for the transaction.

Question 8

Fob

Answer 8

free on board

Question 9

What does Fob mean?

Answer 9

free on board
It is a contract clause: Term of sale under which the price invoiced or quoted by a seller includes all charges up to placing the goods on board a ship at the port of departure specified by the buyer.

Question 10

Cif

Answer 10

costs of insurance and freight

contract clause stating that the seller has to pay all transportation costs to a destination point

Question 11

B/L

Answer 11

Bill of lading
Bills of lading are one of three crucial documents used in international trade to ensure that exporters receive payment and importers receive the merchandise.
A bill of lading (sometimes abbreviated as B/L or BoL) is a document issued by a carrier (or their agent) to acknowledge receipt of cargo for shipment.

A bill of lading (BL or BoL) is a legal document issued by a carrier to a shipper that details the type, quantity, and destination of the goods being carried. A bill of lading also serves as a shipment receipt when the carrier delivers the goods at a predetermined destination. This document must accompany the shipped products, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper, and receiver.

Question 12

L/C

Answer 12

Letter of credit
Financial contract that states that the importer’s bank will pay a specific sum of money to the exporter upon delivery of the merchandise

Question 13

When is indirect exporting used

Answer 13

when firms do not have the resources to build a local marketing operation

Question 14

What is indirect exporting?

Answer 14

exporting through a domestic based export intermediary

Question 15

What is an export intermediary?

Answer 15

a firm that performs an important middleman function. Linking sellers and buyers overseas.

Question 16

For which type of goods is indirect exporting more common?

Answer 16

For standardized products and commodities, where competition focuses mainly on price.

Question 17

What do intermediaries handle?

Answer 17

Intermediaries handle payments communication etc.

Question 18

distributor

Answer 18

An independent person or legal entity that sell goods locally on behalf of a principal. Distributors can be distinguished from agents as distributors buy the goods in their own name, then re-sell them at prices which they have some liberty to set. Distributorship is frequently based on a contract that grants the distributor exclusivity for a specific territory. Some of the main clauses of this type of contracts are: products and territory, exclusivity, non-competition, prices, delivery and payment conditions, promotional activities, services etc.

A distributor trades on its own account. Selling on its own risk

Question 19

sales agent

Answer 19

is an intermediary receiving commissions for sales

Question 20

Why can a distributor be risky for a firm?

Answer 20

because the distributor effectively controls the local market and might share information only selectively with the firm.

Question 21

cross-border services

Answer 21

services that are sent across national borders, such as those provided by airlines, shipping companies…

Question 22

Servicing foreign visitors

Answer 22

Supplying services to customers coming from abroad.

tourism, education and health care businesses

Question 23

Licensing

Answer 23

contract, in which firm A agrees to give firm B the right to user A’s proprietary technology (patent or trademark like logo)

Question 24

What does B pay to A in licensing

Answer 24

a royalty fee

Question 25

franchising

Answer 25

firms A gives B rights to use a package of property assets for a royalty fee

Question 26

What does franchising cover? Only trademarks?

Answer 26

No, entire business concepts including the marketing strategy, operation manuals and quality control procedures

Question 27

What does franchising require

Answer 27

extensive training and continuing communication btw. the franchisor and the franchisee

Question 28

turnkey project

Answer 28

a project in which clients pay contractors to design and construct new facilities and train personnel

Question 29

design and build (DB) contract

Answer 29

encompasses architectural or design work and physical construction

Question 30

Build-operate-transfer (BOT) agreement

Answer 30

contracts that combine the construction and temporary operation of a project before ownership is transferred to the local party, typically a host government

management of the facility after the construction has been completed

Question 31

consortium

Answer 31

a project focused temporary business owned and managed jointly by several firms

Question 32

Subcontracting

Answer 32

(combines the export of raw materials with the import of finished goods. ) unsure about that
Involves outsourcing of an intermediate stage of the value chain.

Question 33

R&D contract

Answer 33

special form of subcontracting.
Allows firms to tap into the best locations for certain innovations at relatively low cost.
(Often difficult and can lead to the loss of some core R&D capabilities)

Question 34

Management contract

Answer 34

concerns the management of assets or a firm owned by someone else. Common for the hotel business or infrastructural operations.

Question 35

Uppsala model

Answer 35

focuses on learning processes
states that internationalization is dynamic process of learning in which firms decide on their next step based on what they know at that time.
Process of incremental decisions that step-by-step reduce market uncertainty

Question 36

network internationalization model

Answer 36

states that internationalization of a firm is interdependent with the internationalization of its network.
Basically an extension of the Uppsala model with firm’s networks

Question 37

stage models of internationalization

Answer 37

firm goes through a sequence of modes that reflect increasing degrees of commitment
The evolution of international expansion follows a discontinuous path. Periods of rapid change are followed by periods of incremental growth.

Question 38

born globals/ international new ventures (INV)

Answer 38

start-up companies that use resources and the sale of outputs in multiple countries from the very beginning.
They mimic the behavior of internationally active firms and finally acquire new resources abroad rather than domestically

Question 39

Strategies of traditional firms for internationalization

Answer 39

Experiential learning and knowledge acquisition

Network building and exploitation

Question 40

Strategies for the accelerated internationalization process

Answer 40

1. Building an entrepreneurial team with international experience
2. Learning from importing and inward foreign investors
3. Learning from others operating in the foreign country
4. Acquiring resources in the foreign country, possibly entire firms

Question 41

institutional distance

Answer 41

extent of similarity or dissimilarity btw. regulatory, normative and cognitive institutions of the countries

Question 42

cultural distance

Answer 42

difference btw. two cultures along identifiable dimensions

Question 43

What is a carrier in shipping?

Answer 43

Company that transports goods and/or people by air, land, or sea, in its own or chartered vessels or equipment, and is named as the carrier in the contract of carriage.