Chapter 15 and 16 Flashcards
Foreign Direct Investment (FDI)
An internalization strategy in which the firm establishes a physical presence abroad through acquisition of productive assets such as capital, technology, labor, land, plant, and equipment
International Collaborative venture
a cross-border business alliance in which partnering firms pool their resources and share costs and risks to undertake a new business venture; also referred to as an “international partnership” or an “international strategic alliance”
Joint Venture
A form of collaboration between two or more firms to create a new, jointly owned enterprise
International Portfolio Investment
Passive Ownership of foreign securities such as stocks and bonds for the purpose of generating financial returns
Greenfield investment
Direct investment to build a new manufacturing, marketing, or administrative facility, as opposed to acquiring existing facilities
Acquisition
Direct investment to purchase an existing company or facility
Merger
A special type of acquisition in which two firms join to form a new, larger firm
Equity participation
Acquisition of partial ownership in an existing firm
Wholly owned direct investment
A foreign direct investment in which the investor fully owns the foreign assets
Equity joint venture
A type of partnership in which a separate firm is created through the investment or pooling of assets by two or more parent firms that gain joint ownership of the new legal entity
Vertical integration
An arrangement whereby the firm owns, or seeks to own multiple stages of a value chain for producing, selling, and delivering a product or service
Horizontal Integration
An arrangement whereby the firm owns or seeks to own, the activities performed in a single stage of its value chain
Project-based nonequity venture
A collaboration in which the partners create a project with a relatively narrow scope and a well-defined timetable, without creating a new legal entity
Consortium
A project-based, nonequity venture initiated by multiple partners to fulfill a large-scale project
Cross-licensing agreement
A type of project-based, nonequity venture where partners agree to access licensed technology developed by the other of preferential terms
Contractual entry strategies in international business
Cross-border exchanges where the relationship between the focal firm and its foreign partner is governed by an explicit contract
Intellectual property
Ideas or works created by individuals or firms including discoveries and inventions, artistic, musical, and literary works, and words, phrases, symbols, and designs
Intellectual property rights
The legal claim through which the proprietary assets of firms and individuals are protected from unauthorized use by other parties
Licensing
Arrangement in which the owner of intellectual property grants a firm the right to use that property for a specific time period in exchange for royalties or other compensation
Royalty
A free paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset
Franchising
Arrangement in which the firm allows another the right to use an entire business system in exchange for fees, royalties, or other forms of compensation
Know-how agreement
Contract in which the focal firm provides technological or management knowledge about how to design, manufacture, or deliver a product or a service
Master franchise
Arrangement in which an independent company is licensed to establish, develop, and manage the entire franchising network in its market and has the right to subfranchise to other franchises, assuming the role of local franchisor
Turnkey Contracting
Arrangement in which the focal firm or a consortium of firms plans, finances, organizes, manages, and implements all phases of a project abroad and then hands it over to a foreign customer after training local workers
Build-operate-transfer (BOT)
Arrangement in which the firm or a consortium of firms contracts to build a major facility abroad, operate it for a specified period, and then transfer control to the project sponsor, typically the host-country government or public utility
Management contract
Arrangement in which a contractor supplies managerial know-how to operate a hotel, hospital, airport, or other facility in exchange for compensation
Infringement of intellectual property
Unauthorized use, publication, or reproduction of products or service protected by a patent, copyright, trademark, or other intellectual property right
