CH 6 IB Starting IB Flashcards
Until which employee count do firms count as SMEs?
small-and medium-sized enterprises have 500 or less employees
entrepreneurs
leaders identifying opportunities and taking decisions to exploit these
entrepreneurial team
group of people jointly acting as entrepreneurs, sharing responsibility and contributing complementary capabilities and experience
In international business what is a buyer and what a seller
importer and exporter
direct exports
sale of products made by firms in home country to customers in another country
How is the transaction of direct exports called?
sporadic or passive exporting.
Who takes the action in sporadic or passive exporting.
Prompted by unsolicited (unaufgefordert) inquiries from customers who learned about the product and took the initiative for the transaction.
Fob
free on board
What does Fob mean?
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.
Cif
costs of insurance and freight
contract clause stating that the seller has to pay all transportation costs to a destination point
B/L
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.
L/C
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
When is indirect exporting used
when firms do not have the resources to build a local marketing operation
What is indirect exporting?
exporting through a domestic based export intermediary
What is an export intermediary?
a firm that performs an important middleman function. Linking sellers and buyers overseas.
For which type of goods is indirect exporting more common?
For standardized products and commodities, where competition focuses mainly on price.
What do intermediaries handle?
Intermediaries handle payments communication etc.
distributor
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
sales agent
is an intermediary receiving commissions for sales
Why can a distributor be risky for a firm?
because the distributor effectively controls the local market and might share information only selectively with the firm.
cross-border services
services that are sent across national borders, such as those provided by airlines, shipping companies…
Servicing foreign visitors
Supplying services to customers coming from abroad.
tourism, education and health care businesses
Licensing
contract, in which firm A agrees to give firm B the right to user A’s proprietary technology (patent or trademark like logo)
What does B pay to A in licensing
a royalty fee
franchising
firms A gives B rights to use a package of property assets for a royalty fee
What does franchising cover? Only trademarks?
No, entire business concepts including the marketing strategy, operation manuals and quality control procedures
What does franchising require
extensive training and continuing communication btw. the franchisor and the franchisee
turnkey project
a project in which clients pay contractors to design and construct new facilities and train personnel
design and build (DB) contract
encompasses architectural or design work and physical construction
Build-operate-transfer (BOT) agreement
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
consortium
a project focused temporary business owned and managed jointly by several firms
Subcontracting
(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.
R&D contract
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)
Management contract
concerns the management of assets or a firm owned by someone else. Common for the hotel business or infrastructural operations.
Uppsala model
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
network internationalization model
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
stage models of internationalization
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.
born globals/ international new ventures (INV)
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
Strategies of traditional firms for internationalization
Experiential learning and knowledge acquisition
Network building and exploitation
Strategies for the accelerated internationalization process
- Building an entrepreneurial team with international experience
- Learning from importing and inward foreign investors
- Learning from others operating in the foreign country
- Acquiring resources in the foreign country, possibly entire firms
institutional distance
extent of similarity or dissimilarity btw. regulatory, normative and cognitive institutions of the countries
cultural distance
difference btw. two cultures along identifiable dimensions
What is a carrier in shipping?
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.
