Chapter 01 Flashcards
International Managers Must:
Bridge cultural boundaries, cope with a fast paced environment, recognize global trends, and become skilled in the use of information technology
WTO
A negotiating forum (e.g., the Doha round) for agreements related to regulation of the flow of trade and commerce among its members.
Globalization
The process by which national economies are increasingly woven together worldwide.
Tarrif
A government-imposed tax on imports.
List a couple of threats for international CEOs
Over-regulation
Increased international competition
Currency fluctuations
Price deflation
Loss of critical talent
Global Terrorism
Hottest Areas for Growth and Investment
FDI, Bric countries and The Triad
What is FDI (foreign direct investment)
Capital and managerial knowledge that flows into a country from outside its borders.
What is the BRIC
Those are emerging economic powers that are part of a group - Brazil, Russia, India, and China
The triad is:
Traditional economic powerhouses—the United States, the European Union (EU), and Japan
GDP
is the total value of economic activity in a country
China’s Ascendance in Global Trading (challenges)
Dramatically rising labor costs,
Encouraging home-grown “innovation”,
Weak legal and regulatory systems; reliance on guanxi to conduct business
China’s Ascendance in Global Trading
Market and Competitive Factors
(affluent consumers,
Globalization of strong local competitors,
Strong positions in emerging high-tech industries,
Limits on foreign competition in “strategic” industries)
Give examples of challenges in doing business in specific countries
Challenges in the Middle East
Palestinian–Israeli discord.
Regional ethnic and religious conflicts.
In russia: Avoid engaging in partnerships with local firms in “strategic” industries (e.g., aerospace, oil, telecommunications).
Avoid “oligarchs”—businesspeople of dubious means whose political fortunes can shift quickly
Key challenges facing International Business
Technological sophistication and international volatilty (cultural differences, political, currency, commodity prices)
culture is
Collective mental programming that distinguishes one group of people from another.
Multinational Enterprises:
Large, well-developed international firms operating in a variety of overseas locations.
MNEs are enterprises that engage in FDI and own or control value-adding activities in more than one country.
Transitional Firms
Multinationals that evolved to the point where organizational diversity is a core value.
MNE’s tipically
Have multiple facilities around the globe. A firm must own a majority stake in plants in the three key regions of North America, Europe, and the Pacific Rim
Derive a “substantial” portion of revenues from foreign operations
Run subsidiaries that possess a common strategic vision and draw from a common pool of resources
Place foreign nationals or expatriates at the board level and/or in senior management posts
MNE’s cont.
The annual revenues of the largest MNEs are higher than the tax incomes of some countries
MNE’s competitive advantages
Can draw on larger financial knowledge and human resources
Have broader experience than most local firms
Can afford to operate at a loss in unfavorable markets for a longer time before turning a profit
Have superior knowledge of their home market
Are often supported by their governments
