Final: chapter 9, 11 Flashcards

1
Q

CHPT11: DEFINITION:
Foreign exchange market
Foreign exchange risk

A

market for converting one countries currency into another

Adverse consequences of negative changes in exchange rate

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2
Q

CHPT11: What is Currency Conversion?

What is Currency Speculation?

A

when international businesses use foreign exchange markets to/when
- they have spare cash they wanna invest short term
-when a firm recieves a payment/income from a foreign firm
-when they must pay a foreign company for its prodcuts/services in foreign money

CURRENCY SPECULATION: short term movements of funds from one currency to another in hope of PROFITING from SHIFTS in Exchange rate

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3
Q

CHPT11: What are they 3 ways to insure against foreign exchange risk?

A
  • Spot exchange rates
    • watch the market
      -forward exchange rates
    • agreeing to rain check the currency exchange to when the dollar is better
      -currency swaps
    • simultaneous pruchase an sale of a given amount of foreign exhances for 2 difffereentt dates
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4
Q

CHPT11: where is the currency trading capitol of the world?

A

LONDON

followed by every other cool european city, nyc, and tokyo

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5
Q

CHPT11: What 3 theories determine the prices and exchange rates

what 1 theory determines Interest rates and exchange rates, whats its formula

A
  • law of ONE PRICE
    -Purchasing Power Parity
    (PPP)
    -money supply and inflation

Fisher effect: i = r+l (i =interest rates, r is sum of real rate, l is expected rate of inflation)

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6
Q

CHPT11: what economic fundamentals are analyzed to make forecasts of the market (3) hint: think Macro

A
  • Money supply
    -inflation rates
    -interest rates

based on those trends come up with ur own idea on them

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7
Q

CHPT11: brief on convertible vs nonconvertible vs externally convertible currencies

A
  • convertible: ultimited access for both foreigns and citizens to purchase with foreign currency (mexico with US)
  • Nonconvertible Currency
    opposite (CAD with JUAN)

-Externally Convertible currency:
residents ability to convert their currency into foreign is limited, but foreigner can

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8
Q

what is Value creation (2)

A
  • amount of value customers place on the firm’s goods or services
    -firms costs of production

more value customers place on a good, more money you can charge

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9
Q

What are the 4 steps of OPERATION in the VALUE CHAIN

A

R&D, production, marketing/sales, customer service

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10
Q

T or F: Brand equity = Enterprise value

A

True

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11
Q

internal and external factors of strategic positioning? Def + examples

A

INternal: things you can mitigate costs of: COGS, maybe rent

External: things that cannot be mitigated by price

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12
Q

What are the 2 main pressures of cost reductions and local responsiveness

A
  • Be locally responsive: American firm going to Canada – things gotta be in French
  • Cost reductions
    o Responding to pressures for cost reduction requires a firm to try and lower the costs of value creation
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13
Q

What makes up “international marketing research data”?

A
  • Data on the country and potential market segments
  • Data to forecast customer demands within a specific country or world region.
  • Data to make marketing mix decisions.
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14
Q

CHOOSING A STRATEGY: what is global strategy?

A

a strategy that focuses on ↑ PROFITABILITY AND PRFOIT GROWTH by establishing ECONOMIES OF SCALE+LEARNING EFFECTS and reaping the COST REDUCING BENEFITS.

Some product differentiation, but staples are the same

EXAMPLE: McDonalds: Big mac, Freddo Cappuccino

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15
Q

CHOOSING A STRATEGY: what is international strategy?

A

A strategy that takes products first poduced for their domestic market and selling them internationally with MINIMAL customization

Serves a universal NEED, no pressures to reduce costs

Ex: APPLE, Coke

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16
Q

CHOOSING A STRATEGY: what is multidomestic strategy?

A

Autonomy and High levels of differentiation between locations

Example: P&G, modifies products for idk wwhat reason. Federal vs Provincial Government.

17
Q

CHOOSING A STRATEGY: what is Transnational global strategy?

A

A strategy that tries to: achieve LOW COSTS THROUGH LOCATION ECONOMIES+ECO OF SCALE +LEARNING EFFECTS.

Product differentiation across geographic markets/local

Create multidirectional flow of skill between different subsidiaries in the firms network of operations

EXAMPLE: nestle changes GERBER baby food logo for that one country that doesn’t understand marketing

18
Q

Transnational strategy? what are its adv and disadv (4:1)

A

ADVANTAGES:
Exploit experience curve effects
Exploit location economies
Customize product offerings and marketing in accordance with local responsiveness
Reap benefits of global learning

DISADVANTAGES:
Difficult to implement due to organizational proble

19
Q

multidomestic strategy? what are its adv and disadv (1:3)

A

ADVANTAGES:
Customize product offerings and marketing in accordance with local responsiveness

DISADVANTAGES:
Inability to realize location economies
Failure to exploit experience curve effects
Failure to transfer core competencies to foreign markets

20
Q

what is international strategy? what are its adv and disadv (1:3)

A

ADVANTAGES:
Transfer core competencies to foreign markets

DISADVANTAGES:
Lack of local responsiveness
Inability to realize location economies
Failure to exploit experience curve effects

21
Q

what is global strategy?what are its adv and disadv (4:1)

A

ADVANTAGES:
Exploit experience curve effects
Exploit location economies

DISADVANTAGES:
Lack of local responsiveness

22
Q

What is Socio-Political-economic dissonance as it relates to migration of ETHNOCENTRIC labour forces within a transcontinental foreign market?

A

(っ◔◡◔)っ ♥ Cum dies rationis super nos est, te ingluvies impia, quasi porcos crepant, sicut vera vis intelligis ♥

23
Q
A