Chapter 6

Question 1

Globalization

Answer 1

Establishing your business in new areas of the world

Question 2

Declining Trade Barriers

Answer 2

Tariffs have been declining, many countries are now free trade markets

Question 3

Technology Enablement

Answer 3

Advancements in air travel, communication, etc. have enabled the spread of information

Question 4

Rise of Multinational Enterprises (MNEs)

Answer 4

More trade experience + sharing best practices

Question 5

Global Institutions

Answer 5

World Trade Organization, World Bank

Question 6

Global Standard

Answer 6

Keep products the same throughout international stores/markets (helps establish consistency + brand image)

Question 7

Local customization

Answer 7

Products/services modified to tailor to individual markets (caters to tastes of the country)

Question 8

Combination

Answer 8

Some countries stay the same (more similar ones), some are changed

Question 9

Entry Strategy

Answer 9

How a company plans to enter their market of choice

Question 10

Export

Answer 10

Ship the products into the foreign market

Question 11

License

Answer 11

Sell the rights to a third party to make/sell the businesses’ products/services

Question 12

Franchise

Answer 12

Authorize a business partner to use the trademarks/patents and provide guidance for how to successfully operate the business

Question 13

Joint Venture

Answer 13

Set up a formal arrangement with a business partner to conduct business together in a foreign country

Question 14

Strategic Alliance

Answer 14

Less formal arrangement where one business provides an aspect (i.e. tools/resources) and the other provides smth different(i.e. local manufacturing, sales and support)

Question 15

Political economy of a region

Answer 15

Political climate, economic conditions, legal system

Question 16

World Bank and World Trade Organization

Answer 16

Establish international trade rules, oversee international commercial activities, help developing countries build infrastructure to support international trade

Question 17

Political climate

Answer 17

Country’s government –> does it support free trade? (low tariffs, minimize difficulty to import/export goods)

Question 18

Economic conditions

Answer 18

Is the country’s economy flourishing? Is the country’s economy large enough to enable successful sales/profits?

Question 19

Legal system

Answer 19

Will business assets be protected? Does the government’s laws favor domestic businesses over foreign?

Question 20

Finding the right entry strategy:

Answer 20

-Management preferences regarding direct control
-How many suitable businesses/targets are available
-Legal factors, including foreign ownership restrictions, that may prevent a certain option
-Nature of products/services
-Time/risks required for a certain option to work