Chap 1 The Challenging World of International Business Flashcards
Foreign business
The operations of a company outside of its home or domestic market.
International Business
A business whose actives are carried out across nations
Multidomestic Company (MDC)
An organization with multi country affiliates, each of which formulates its own business strategy based on perceived market differences.
Global company (GC)
An organization that attempts to standardize and integrate operations worldwide in all functional areas.
International company. (iC)
Either a global or a multi-domestic company
How does international business differ from domestic business?
A domestic business only deals with the forces of a domestic environment; a international business must deal with the forces of domestic, foreign, and international environments.
Environments
All the forces surrounding and influencing the life and development of the firm.
Uncontrollable Forces
External forces over which management has no direct control, although it can exert an influence
Uncontrollable Forces Examples
Legal Economic Labor Political Physical Sociocultural Technological Distributive Competitive Socioeconomic Financial
Controllable Forces
Internal forces that management administers to adapt to changes in the uncontrollable forces.
Controllable Forces Examples
Factors of production (capital, raw materials, and people)
Activities of the organization (personnel, finance, production and marketing)
Domestic environment
All the uncontrollable forces originating in the home country that surrounds and influences the firm’s life and development.
Foreign environment
All the uncontrollable forces originating outside the home country that surround and influence the firm.
International environment
Interaction between domestic and foreign environmental forces or between sets of foreign environmental forces
Self-reference criterion
Unconscious reference to one’s own cultural values when judging behaviors of others in a new and different environment
Foreign direct investment FDI
Direct investments in equipment, structure and organizations in foreign country at a level that is sufficient to obtain significant management control, does not include mere foreign investment in stock markets.
Exporting
The transportation of any domestic good or service to a destination outside a country or region
Importing
The transportation of any good or service into a court or region, from a foreign originating point
Economic globalization
The tendency toward an international integration of goods, technology, information, labor, and capital, or the process of making this integration happen
Drivers of Globalization
- Political
- Technological
- Market
- Cost
- Competitive
Arguments AGAINST Globalization
- Uneven results across Nations and people
- Deleterious effects on labor and labor standards
- Decline in environmental and health conditions
Arguments SUPPORTING Globalization
- Free trade enhances socioeconomic development
2. Free trade promotes more and better jobs
Reasons to enter foreign markets
Increase profit and sale
Desire to protect the profits and sales from being eroded by competitions.
7 dimensions for Globalizing a Business
- Product
- Markets
- Promotion
- Where value is added to the product
- Competitive Strategy
- Use of non-home-country personnel
- Extent of global ownership of the firm
