FVC1 Flashcards
1
Q
5 major dimensions of national culture as they apply to HRM throughout the world (11)
A
1 power distance - degree of equal authority given to society and its workplace. Egletarian/low power distance is casual.
2 uncertainty avoidance - taking things seriously or not
3 individualism vs collectivism
4 masculinity vs femininity - assertiveness/dominance
5 long-term vs short-term
2
Q
most important issue in the field of international HRM (11)
A
gov regulations related to border security
3
Q
globalization def (1)
A
the socio-economic reform process of eliminating trade, investment, cultural, information technology, and political barriers across countries, which could lead to increased economic growth and geo-political integration and interdependence among nations of the world.
4
Q
emerging market economies def (ch1)
A
countries that have been moving toward more open trade and free-market policies
5
Q
trend of globalization in developed/developing countries (ch1)
A
world’s center of economic gravity is shifting toward emerging market economies and globalization is no longer synonymous with “Westernization”
6
Q
decoupling def (ch1)
A
a fundamental global shift in which developing economies that were once dependent upon industrialized countries for economic advancement, begin to solidly grow based on their own underlying economic strengths rater than the ups and downs of the world’s richest countries
7
Q
primary lesson for developing country with regard to economic growth and stability (ch1)
A
diversify export-oriented market to ensure that a global economic slump doesn’t impact the country’s economy as badly
8
Q
multi-polar world def (ch1)
A
- sustainable decoupling process leads to this
- a world economy in which the engines of growth could comprise the US, European Union, China, India, Brazil, Russia, and S Africa rather than the US alone
9
Q
3 institutions that coordinate global trade (ch1)
A
1 International Monetary Fund/IMF - purpose is to organize currency exchange rates and encourage members to eliminate foreign exchange restrictions, oversees the international monetary system which coordinates monetary exchange and allows countries to purchase from one another. Keeps an eye on trends and advises countries to facilitate financial stability
2 the World Bank - Primary goal was to aid the reconstruction of Europe after WWII, major role now is to aid in reconstruction of economies to make them efficient, works to bridge the digital divide between countries (developed/developing), works to eradicate disease.
3 World Trade Organization/WTO - began as General Agreement on Tariffs and Trade (GATT), works on liberalization of the trading system (removing barriers), gets participating countries to sign legal agreements to encourage fair trade,
10
Q
In addition to help from the WTO, IMF, and World Bank, countries need institutions that support these 4 things (ch1)
A
1 a democratic system of gov
2 free markets
3 an independent judiciary
4 a free press
11
Q
institution def and 3 important roles (ch1)
A
rules, enforcement mechanisms, and organizations that support market transactions
1 channel info about market conditions, goods, services, and participants
2 define property rights and contracts, determine who gets what and when
3 promote competition and innovation in markets
12
Q
adaptive institution def and 2 key factors(ch1)
A
gov orgs that create strong incentives for private investment and operate under a system of checks and balances that function best in a democratic gov
1 accountability
2 transparency
13
Q
transparency internationals def and bottom 3 countries (ch1)
A
Berlin-based, anticorruption organization
1 Nigeria
2 Iraq
3 Afghanistan
14
Q
digital era def (ch1)
A
period of transformation in which internet and wireless technologies are a part of every day life
15
Q
digital divide def (ch1)
A
perceived economic gap between countries or people with easy access to digital tech and those with limited or no access
16
Q
demographic of next billion Internet users compared to 1st billion (ch1)
A
next billion will be in developing countries
17
Q
3 reasons why text messaging will likely predominate emerging economies’ mobile phone usage
A
1 cell phones send texts
2 users know what it costs to text, and
3 web based access requires fancier handsets and may not always be supported by cell companies
18
Q
sustainable development def (ch1)
A
development that meets the needs of the present without compromising the ability of future generations to meet their own needs whether environmentally, socially, or economically
19
Q
corporate social responsibility/CRS role in business (ch1)
A
many global companies will only do business with companies that have CRS policies in place
20
Q
who are the real losers of globalization (ch1)
A
countries that have not been able to seize the opportunities and participate in the process
*Central Asia, Africa, North Korea
21
Q
3 ways international trade benefits consumers (ch2)
A
1 a greater amount of choice in the availability of goods and services
2 lower prices for goods and services consumed
3 higher living standards
22
Q
BRIC def (ch1)
A
Brazil, Russia, India, and China
developing and rapidly growing economies
23
Q
Mercantilism def and its drawback (ch2)
A
a theory of international trade that supports the premise that a nation could only gain from trade if it had a trade surplus
*surplus reduced prices and make exporters poorer
24
Q
what broke through Mercantilism (ch2)
A
Adam Smith educating about absolute and comparative advantages
25
2 theories that expand on comparative advantage and discuss exploitation of abundant resources of nation for export (ch2)
1 Heckscher-Ohlin (H-O) Theory - comparative advantage of nation is contributed to its factor endowments: Land, labor, capital, and technology.
2 Factor price equalization theory - when factors are free to move among trading nations, efficiency increases, which leads to superior allocation of production of goods and services
26
4 group characteristics of firms and countries in Porter's model about import/exports
*2 additional variables outside the diamond that play an important role in the competitiveness of nations (ch2)
1 factor conditions - quality
2 demand conditions - high domestic demand results in innovation and in turn specialization of trade
3 related supporting industries - more of them results in greater success
4 firm strategy, structure, and rivalry
*chance and government
27
trade policy def (ch2)
all gov actions that seek to alter the free flow of merchandise or services from or to a country
28
2 types of import tariffs/custom duties (ch2)
1 specific - import tax that assigns a fixed amount per physical unit
2 ad valorem - tax on imports levied as a constant percentage of monetary valure
29
preferential duties def (ch)
low tariff rates applied to specific imports coming from certain countries, especially in the developing world
*designed to help developing countries
30
3 types of non-tariff trade restrictions (ch2)
1 import quotas/quantitative restrictions (QRs)
2 voluntary export restraint/VER - nation temporarily limits exports to allow competitors in the importing country to become more efficient
3 domestic content provisions - require certain % of value of import be domestically sourced
31
managed trade def (ch2)
refers to agreements, sometimes temporary, between countries that aim to replace global market or economic forces with gov actions to determine trade outcomes.
*hit socio-economic or geo-political goals
32
4 types of managed trade in the socio-economic category (ch2)
1 countertrade - agreement to export and import equal value of goods between countries (0 net change)
2 export cartels - natural-resource rich countries joining together to control export volume and prices, such as the Organization of Petroleum Exporting Countries/OPEC
3 infant industry argument - protects country getting late start into industry to help boost them into global business
4 questionable labor practices and environmental considerations - Imports from violating countries may be taxed or restricted
33
3 reasons that geo-political managed trade strategies sacrifice some economic efficiency for the greater good of the country (ch2)
1 national security - high tech equipment or weapons is only traded to allies
2 protection of critical industries - such as the automotive industry
3 international commerce - enforcement of embargoes (such as the US has with Cuba)
34
regional integration def (ch3)
includes a multitude of economic and/or political steps that may be taken by member states of a union to increase their global competitiveness
* especially helpful for smaller countries
* need to undertake spatial transformations to be successful
35
spatial transformation def (ch3)
allow efficient geographic distribution of economic activities within and among countries
36
5 steps of regional integration (ch3)
1 two or more countries create a free-trade area while keeping external tariffs
2 creation of customs union in which all free trade member countries adopt common external tariff with nonmember countries
3 creation of common market of single market - flow of investment to countries that need capital
4 economic and monetary union - creation of common social programs and coordinated macroeconomics policies
5 creation of political union - common defense against foreign threats
37
3 categories that are essential for successful regional integration (ch3)
1 institutions that unify the markets
2 infrastructure that efficiently connects these markets
3 lower economic barriers to facilitate trade
38
3 fundamentals of an appropriate approach for small countries to benefit from regional integration (ch3)
1 start small - start with a small and well defined area
2 think global - help countries communicate and get transport access to other countries
3 compensate the least fortunate - provide money for those developing but not as advanced as others yet
39
3 categories of regional integration blocs (from an economic geography perspective ) (ch3)
1 regional blocs close to major world markets - advantage if close due to quick transport of perishable goods
2 remote regions with large local markets - with solid infrastructure can prosper and gain access to world markets
3 remote regions with small local markets
40
What is the most highly evolved example of regional integration in the world and at what stage is it? (ch3)
EU, headquartered in Brussels, Belgium
| fourth stage of process
41
reasons why Turkey hasn't been admitted to the EU (ch3)
* most of it is not geographically in Europe
* it is a poor country
* it is predominantly Muslim with a large population and would gain sway with voting rights
* human rights issues with Turkish Kurds
42
Introduction of the Euro (ch3)
* part of Maastricht Treaty of 1992
* meant to integrate EU economies
* EU members must be approved to use euro
43
Info about NAFTA (ch3)
North American Free Trade Agreement
* Canada, US, and Mexico
* eliminates all trade barriers
* protection of intellectual property rights
* creation of institutions to address potential problems
44
Info about ASEAN 2 objectives (ch3)
Association of south East Asian Nations
*has the larges and most prolific free trade network in the world
1 accelerate economic growth, social progress, and cultural development in the region
2 promote regional peace and stability through the rule of law in relationship among countries in the region
45
Info about regional integration in Latin America (ch3)
* Latin American Free Trade Agreement/LAFTA never got off the ground because they couldn't agree on details
* some counties made the Andean group and agreed on external tariffs and investing in more rural countries
* MERCOSUR group created common market
* US attempted to make Free Trade Area of the Americas/FTAA but it fell through due to Venezuela's president thinking there were ulterior motives
* DR-CAFTA - DR and Central American Free Trade Agreement signed in 2005
46
Balance of Payments/BOP def and 2 major components (ch4)
statement of account that summarizes all transactions between the residents of one country and the rest of the world for a give period of time, usually a year
1 the current account - net balance
2 the financial account - shows how current account balance is financed
47
4 subaccounts of the current account of BOP (ch4)
1 trade/goods balance - net imports/exports
2 services balance - again, net imports/exports
3 income balance - net investment income from abroad/or paid to foreighers
4 net transfers - net payments between countries
48
3 subcategories of the financial account of BOP (ch4)
*1 US-owned assets abroad
*2 foreign-owned assets in the US
3 net financial derivatives
*greatly affected by foreign direct investment/FDI (investment in physical capital abroad) and security investments
49
foreign exchange market/forex def and 3 largest markets (ch4)
network of international banks who work with exporters and importers and currency traders.
1 London
2 New York
3 Tokyo
50
independent floating exchange rate system def and 3 country examples (ch4)
in a free-market-oriented foreign exchange market, major currency values are determined by the demand for a supply of currencies
1 US dollar
2 euro
3 yen
51
managed floating exchange rate system def (ch4)
currency's value depends partly upon demand and supply in the foreign exchange market, and partly on active gov intervention in the foreign exchange market (by means of central bank purchases and sales of its own currencies to manage currencies)
52
fixed exchange rate systems def (ch4)
countries conduct bulk of their international transactions with a few major trade partners and for this reason link their currencies to those of the partners
53
3 forex market types (ch4)
1 spot - currencies on real time basis for immediate delivery. Bank profits on bid-ask spread for converting.
2 forward - arranges cost of something paid for later with current exchange rate
3 futures markets
54
Bretton Woods Agreement def (ch4)
established global currency system based on gold standard with US dollar pegged at a fixed rate of exchange to gold in an effort to control inflation
* established IMF to ensure stability of international monetary system
* US dollar became overvalued and was adjusted with Smithsonian Agreement
* 1974 us relinquished the dollar-gold exchange standard
* 1976 Jamaica Agreement reformed monetary order - no more gold standard, special drawing right/SDR is weighted basket of currencies
55
Flexible exchange rate system info (ch4)
* emerged in 1971
* rate tied to supply and demand
* central banks intervene in forex by buying or selling currency to manipulate value
56
float and dirty float currency def (ch4)
* float - minimal gov intervention and is market determined
| * dirty float - varying degrees of gov intervention
57
dollarization def (ch4)
use the dollar or some other foreign currency together with, or instead of, a domestic currency
58
hard vs soft currencies (ch4)
1 hard - leading world currencies of developed countries, including US dollar, European euro, Japanese yen, and British point sterling
2 emerging market countries' currencies that are less stable in value than hard currencies and are sometimes pegged to hard currency values
59
law of one price def (ch4)
identical good should sell for the same price in diff countries according to local currencies
60
arbitrage def (ch4)
buying goods in a lower priced market and selling them in a higher priced market to make profit
61
purchasing power parity (PPP) def (ch4)
theory stating that a basket of goods should have approximately the same prices across diff countries
62
Big Mac Index def (ch4)
calculation using the cost of a McD's sandwich to assess the relative values of currencies
63
inflation's relationship to currency value and PPP (ch4)
inflation will cause people to buy another country's goods, selling their currency and purchasing from that country. This will cause the value of their currency to drop (due to excess supply) and the other currency to appreciate (due to demand)
64
interest rate parity/IRP def (ch4)
theory stating that interest rates on bonds in diff countries should be the same, as investors would buy and sell these bonds to make arbitrage profits until its condition holds
65
uncovered interest rate parity def (ch4)
principle implying that the expected future spot exchange rates and spot exchange rates set interest rates on bonds in diff countries equal to one another
66
culture def and 4 characteristics of culture (ch5)
learned behavior; a way of life for one group of people living in a single, related, and independent community
1 it is not inherited but taught
2 it is impossible to change an entire country's culture
3 firm is responsible to ascertain cultural importance in other countries
4 firms must recognize and adjust to cultural environment (known as acculturation)
67
8 aspects of society that culture impacts (ch5)
1 language - verbal and non-verbal communication, use backward translation to be cautious with ads
2 religion
3 values (beliefs or philosophies) and attitudes (opinions)
4 manners and customs - the way a society does things
5 material elements - result of technology; best demonstrated by economic, social, financial, and marketing infrastructures
6 aesthetics - color, form and music are important
7 education
8 social institutions - reference groups (church, school, work, friends, etc.), may have high or low level of social stratification (upper/lower class divide)
68
5 culture levels/dimensions according to Hofstede (ch5)
```
1 individualism vs collectivism
2 power distance - egalitarianism/equality vs authority
3 masculine vs feminine
4 uncertainty avoidance
5 time orientation - long or short-term
```
69
4 additional cultural variables according to Trompanaars (ch5)
1 universalism (rules ) vs. particularism (relationship)
2 neutral vs emotional - expression
3 specific (single role expectation) vs diffuse (multiple role expectation)
4 achievement vs ascription - rewards based on performance or birthright
70
6 regional clusters of countries based on the Global Leadership and Organizational Behavior Effectiveness/GLOBE survey (ch5)
1 Germanic Europe - most in favor of uncertainty avoidance
2 Eastern Europe - least risk averse
3 Southern Asia - higher power distance
4 Arabic
5 Latin Europe
6 Anglo - highest institutional collectivism
71
what behavior must be considered when crossing cultural boundaries (ch5)_
variations in management styles
72
democracy vs totalitarianism (ch6)
* democracy - vote by people. Athenian democracy was everyone gathering to vote on everything, representative means you vote on parties to make decisions, constitutional have ceremonial monarch in representative system
* totalitarianism - individuals govern without support or consent of citizens
73
which is more influential on global business in a country, political system or economic ideology (ch6)
economic ideology
74
types of economic ideologies (ch+6)
1 communism - gov owns and controls all major factors of production, collectivist (China is larges country operating this way)
2 socialism - gov plays strong role in economy and may own stakes in certain businesses, more collective than individual (European countries are example), highest unemployment rates in the world.
3 capitalism - businesses are privately owned with strong individualism (US)
75
economic risk def (ch6)
economic problems or mismanagement in a given country that will have a meaningfully negative impact on the conduct of business in that country
Ex: currency depreciation, militant labor unions, corruption, and economic risks related to political risks
76
political risk def, micro and macro (ch6)
1 political risks - risks that political forces or problems in a given country will have meaningfully negative impact upon the conduct of business in that country
2 micro - only affects a certain industry or set of firms in a given country
3 macro - affects all business in a given country
ex: terrorism
77
2 insurance policies for risk of doing business overseas (ch6)
1 Terrorism Risk Insurance Act of 2002- insurance policy to cover loss of investor due to terrorist attack
2 overseas private investment corporation/OPIC - insurance available to US firm sold by US gov for business in other countries
78
corruption and private corruption/public defs (ch6)
1 corruption - situation where businesses are able to illegally alter relevant private and/or public decision making through bribes, kickbacks, etc.
2 private - involves other private businesses or groups (ex: racketeering). Can be difficult to detect and define.
3 public - practice of making illegal payment to gov officials, etc to obtain gov contracts.
79
Foreign Corrupt Practices Act/FCPA def and 2 parts (ch6/7)
law in US prohibits US companies from corrupting foreign gov officials to win contracts
1 anti-bribery provision
2 requirement to maintain an adequate internal control system
80
3 primary kinds of legal systems in countries throughout the world (ch6)
1 civil law - based on a comprehensive listing of legal rules in sets of written codes of law. Little room for judicial "interpretation" (ex: Germany)
2 common law - legislative bodies enact less specific legal rules, so judges and courts have authority to interpret rules (ex: US with free speech)
3 theocratic law - based on religious document (ex: Islamic law in Iran and Saudi Arabia)
81
criminal law def (ch6)
establishes which violations of a nation's laws are crimes punishable by possible incarceration (adultery, drinking, smoking pot, etc)
82
contract law def (ch6)
body of law governing legally enforceable agreements between parties to engage in economic exchange
*advised to obtain local attorney's help to write contracts involving foreign jurisdictions
83
tax law def (ch6)
addresses gov levying of taxes upon individuals and corporations
*many US corps moved operations to tax haven countries (countries with little or no tax transparency to illegally avoid US taxes)
84
product safety law def (ch6)
establishes standards of product safety to which the manufacturers and sellers of products are to be held
85
caveat emptor vs caveat venditor def (ch6)
emptor - buyer beware
| venditor - seller beware (US lands in this category)
86
dispute settlement law def (ch6)
law that governs how disputes in global business will be settled
87
litigation and arbitration def (ch6)
* litigation - bring case to public or gov-run court to settle
* arbitration - alternative dispute resolution process where neutral party decides
88
intellectual property def (ch6)
creative product of intellectual activity
89
3 types of intellectual property rights (ch6)
1 patents - excludes others from selling, making, or using the invention for a certain period of time (allows temp monopoly)
2 trademarks - distinctive phrase, name, word, etc owned by a business
3 copyrights - exclusive legal right that authors, artist, etc have to publish their work
90
genericized trademark def (ch6)
so well known, title is used (kleenex, google, etc.)
91
3 philosophical principles regarding ethincs (ch7)
1 the imperative principle - do the right thing/lying is wrong
2 the utilitarian principle - do what produces the greatest good
3 the generalization argument - combo, do what is right, but filter it to consider consequences
92
ethics and integrity def (ch7)
* ethics - branch of philosophy that addresses values pertaining to human behavior
* integrity - adherence to moral and ethical principles; soundness of moral character; honest
93
4 basic steps in ethical decision-making (ch7)
1 define all the facts an circumstances
2 identify people affected by the situation and their rights and obligations
3 identify the alternative decisions and consequences
4 make the decision: determine the right thing to do and then do it
94
Corruption Perception Index/CPI purpose (ch6/7)
ranks nations by how likely they are to be corruptible
| *low CPI score/high corruption risk
95
corporate social responsibility/CSR def (ch7)
a company's obligations to society, including the welfare of a wide range of stakeholders
96
3 ways to act ethically in business (ch7)
1 follow legal rules
2 apply formal policies of your company
3 follow an informal guideline such as moral intuition
97
2 principles that can help when making an ethical decision (ch7)
1 principle of consistency
| 2 principle of respect
98
4 recent corporate financial scandals in the last decade (ch7)
1 Enron - Had market to market account reflect future earnings as thought they were already present. Resulted in Sarbanes-Oxley Act/SOX of 2002
2 WroldCom
3 Vivendi
4 Parmalat
99
Ponzi scheme def (ch7)
type of fraud aka pyramid scheme in which money received from later investors is used to provide returns to earlier investors, thus giving an appearance of profitable investment
100
5 suggested fundamentals of ethics in education (ch7)
```
1 personal integrity
2 responsibility of business in society
3 ethical decision-making
4 ethical leadership
5 corporate governance
```
101
2 categories of internal business controls (ch7)
1 preventative
| 2 identifying
102
risk profile def with relation to global investment (ch8)
the potential financial loss that entrepreneurs are willing to take in a business
103
3 reasons why the export-import business is relatively low-risk (ch8)
1 capital is not tied up
2 it is relatively easy to enter or exit the business
3 banks play role to facilitate and finance trade
104
info about licensing (ch8)
* company or individual provides the foreign partner with the necessary means to manufacture and sell its products in the target country for an annual license fee
* slightly more risk to licensor than international trade
105
franchising def (ch8)
parent firm provides specialized equipment and/or services to the franchisee. Franchisee pays fee/portion of sales volume.
106
strategic alliance def (ch8)
two or more firms gain revenue through cooperation for a certain period of time
107
international joint venture def (ch8)
business that is jointly owned and operated by two or more firms that pool resources to penetrate market in another country
108
acquisition vs merger def (ch8)
* acquisition - home country firm purchases host country firm and implements its own international business strategy
* merger - management of both companies plays an active role in business development and execution
109
wholly-owned subsidiaries def (ch8)
new facilities built and operated overseas that require large investment of capital because they are tailored to the exact needs of the home country firm
110
multinational enterprises/MNEs (ch8)
firms that are headquartered in one country, but own and control things on foreign soil
*ex: Exxon Mobil, Apple, etc
111
reason for MNE to want to invest abroad in a free enterprise system and 3 strategies (ch8)
maximize shareholder wealth
1 increase revenue - enter high growth market, stable, high-income market, monopolistic market. or trade restricted sectors
2 cut cost - economies of scale in production, minimize factor (of production) input cost, or react to exchange rate movement
3 diversify operations to minimize risk - diversification, correlation of returns, or product life cycle theory (introduction, growth, maturity, and decline-needs product elimination/PE)
112
3 key economic advantages that firms had for FDI to occur according to Dunning (ch8)
1 ownership advantages or firm-specific advantages (brand name, etc.)
2 location advantages or country-specific advantages
3 internalization advantages - mode of entry (license vs having full control of operations)
113
benefits of host country with regard to FDI (ch8)
```
1 new jobs
2 technologies
3 tax revenues
4 reduces poverty
5 accelerates economic development
```
114
cons of FDI in host country (ch8)
1 exploitation
2 environmental quality, health
3 social fabric disrupture
4 lack of social corporate responsibility
115
characteristics of a good host climate for FDI (ch8)
gov policies enable firms to invest profitably, create jobs, contribute to economic growth, and reduce poverty
116
mission statement def (ch9)
outlines why the company exists and what it strives to accomplish
*provides general guidelines for the company's strategy formulation and decision-making process
117
shareholder vs stakeholder model of strategy formulation def (ch9)
* shareholder - operates from the premise that the key strategic purpose of a business is to maximize financial returns for its owners/stakeholders
* stakeholder - business exist to benefit all stakeholders
118
short-term planning: operational and tactical plan def (ch9)
* operational - short-term (less that one year) plan formulated for implementing strategic goals
* tactical plans - one-to-three-year plans
119
4 long-term planning strategies for businesses (ch9)
1 prospectors - have basic strategic implementations involving extending their successes through global expansions and finding new market opportunities
2 defenders - implement basic market strategies of concentrating upon existing ops and defending home turf
3 reactors - strategic implementation processes that respond to strategic actions by competitors
4 alanyzers - take middle ground between being prospectors and defenders
120
2 types of knowledge that are important between global host country and investor (9)
1 tactic knowledge - informal and difficult to communicate
| 2 explicit - codifiable and easy to specify or write down
121
absorptive capacity def (ch9)
ability to recognize the value of new knowledge, as well as assimilate and apply it
*especially important to R&D
122
3 types of control systems in business ops (ch9)
1 bureaucratic controls - systems of rules and regs that are promulgated within global business (budgets, policies, etc)
2 interpersonal controls - exec not being fucking asshats
3 output controls and measurements - establish specific goals and measure to what extent they have been achieved at different points
*profits, growth, productivity, market share, quality control, and corporate social responsibilty/CSR
123
organizational culture def (ch+9)
"personality" of an organization
124
organizational change def (ch9)
implementation of a diff business or cultural path for an org
125
stateless corporation def (ch10)
global corp so well integrated into other countries that it is difficult to tell what their home country is
*represents the fourth stage of globalization
126
organization and organizational structure def (ch10)
* organization - tool people use to coordinate their actions to obtain something they seek
* org structure - formal system of task and authority relationships that control how people coordinate their actions and resources to achieve org goals
127
3 purposes of org structure (ch10)
1 division of labor
2 hierarchical supervision
3 defines boundaries and interaction with other orgs
128
organizational structure with international divisions (ch10)
```
1 R&D
2 manufacturing
3 internal divisions - countries - their manufacturing and sales divisions
4 marketing
5 sales - exports
6 finance
```
*managers in international divisions may feel less important if domestic managers are higher on hierarchy than them
129
division in which exports lands (ch10)
sales
130
4 organizational structures in business (ch10)
1 functional - grouped by similar positions (sales, finance, etc)
*promotes economies of scale since all manufacturing is done in the same spot, but is not always efficient
2 divisional - grouped by product, market/customer, or geographical region/area and managed as separate business
3 hybrid - matrix grouped simultaneously by function and by division, report to both managers
131
parent, host, and third country nationals def (ch11)
* parent - parent country employees sent to work overseas
* host - living in the host country and being employed by US
* third - from other country and employed by US company on foreign soil. These employees are known as expatriates
132
expatriate failure def (ch11)
when expatriate does not complete his assignment and returns home early (30% failure rate)
*drives trend toward shorter term expatriate assignments
133
repatriation def (ch11)
process when expatriate employee returns home
| *culture shock is a problem
134
training and development def (ch11)
* training - providing employees skills for job
| * development - preparing employees for future assignments or higher level positions
135
what does company training and development rely heavily on? (ch11)
the company's international strategic planning
136
an important consideration when determining compensation in another nation (ch11)
wage/cost of living standards in that country
| *employee must be able to live comparable in host country as they would in US
137
balance sheet approach def (ch11)
used to calculate compensation for expatriates
involves keeping expatriate on the home country's salary structure (balance sheet) and also providing various additional allowances so they can essentially maintain a home country standard of living while working abroad
138
NAALC purpose and limitations (ch11)
citizens can whistle blow unfair labor practices to any NAFTA nation to be investigated
*NAALC doesn't have authority to enforce changes
139
collective bargaining agreements def (ch11)
agreements of employee for employer, labor union agreement
140
US vs Canada an labor relations (ch11)
1 US - managed federally by National Labor Relations Board/NLRB
2 Canada - managed by each individual province
141
Labor/union trends in Germany (ch11)
1 multi-employer bargaining - number of employees join together to bargain with a given labor union**more common than in US
2 co-determination - allocates seats for employees on corporate boards of directors**most common
142
market and sales potential def (ch12)
* market - total number of units of a product that could possibly be sold by all companies doing business in a specific international market
* sales - percentage of a market potential that a specific company expects to sell in a specific international market
143
3 major markets within each foreign market that can purchase products and need to be analyzed (ch12)
1 consumer markets
2 industrial market
3 government market
144
7 demographics to consider when conducting research (ch12)
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1 population
2 income level/GDP
3 GDP per capita
4 age
5 ethnicity
6 rural/urban area
7 religion
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145
marketing research vs. marketing intelligence system/MIS (ch12)
* research - collects info at one time
| * MIS - info collected regularly over time
146
standardization vs adaption , and what approach most companies end up using (ch12)
* standardization - marketing is the same across the board
* adaption - strategies "adapt" to each location
* most companies use "glocalization" - standardize when possible, and adapt when necessary
147
4 options to consider when marketing a product overseas (ch12)
1 sell domestic product overseas
2 modify products for diff countries and regions
3 develop new products for foreign markets
4 incorporate all differences into one design and develop a global product, suitable for most world markets
148
steps to follow when developing new products for overseas markets (ch12)
1 decide what sources of new product ideas will be used
2 concept testing - idea presented to sample group
3 business analysis - projections of potential revenues and profits
4 product design
5 market testing - develop marketing mix
6 commercialization - product is manufactured and introduce to foreign market
149
reverse strategy def (ch12)
development of a new product first for emerging markets then selling it to developed markets
150
4 major methods that can be used to promote products and services in international markets (ch12)
1 advertising
2 personal selling - very effective in international markets, high cost per contact
3 sales promotion
4 publicity
151
vertical vs horizontal magazine publications (ch2)
* vertical - target specific industries
| * horizontal - specific jobs existing in a number of entries
152
2 major aspects of international distribution (ch12)
1 channels of distribution - indirect strategy (channels located in foreign markets) or direct strategy (bypass those channels and market product through offices they establish in foreign markets served)
*Indirect: uses agent (acts on behalf of company and makes commission) or distributor (purchases products and resells them in market)
2 physical distribution - storage and transportation ops used in moving products to foreign markets
153
freight forwarded def (ch12)
acts as agent for overseas shipment and coordinates movement
154
containerization (ch12)
using "cans" which are picked up from one transport to another and don't have to be unpacked
155
4 major aspects of a company's international pricing strategies (ch12)
1 developing pricing objectives for international markets
2 setting prices in international markets
3 addressing the issue of dumping (attempting to drive out competition by undercutting cost)
4 setting transfer prices - price company charges its overseas subsidiaries, typically must be an arms length price/what overseas markets are willing to pay
156
4 pricing objectives for international products (ch12)
1 performance
2 prevention - of new entrants in market/competitors
3 maintenance - pricing objectives to keep status quo
4 all three drive to survival objectives
157
importance of customer service (ch12)
service related issue makes customer 5x more likely to switch vendors than for price or product issue
158
production system, manufacturing system, and service system def (ch13)
* production - create the goods and services, or produce the products
* manufacturing - goods dominate value of product
* service - services dominate value of product
159
components vs raw materials (ch13)
component - products that are integrated by several goods or services
raw materials
160
production stages def (ch13)
steps in production
161
operations management def (ch13)
management of the direct resources that are involved in the production system of a business organization
*can be domestic or global
162
4 business functions of operations management (ch13)
1 procurement - acquisition of goods
2 production - transformations required by productions process
3 logistics - movement of materials in production system
4 R&D - design of new products
163
make-or-buy decision and 4 additional alternatives (ch13)
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deciding which raw materials should be produced in-house vs bought
1 make domestically
2 make globally (global production)
3 buy domestically
4 buy globally (global procurement)
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164
advantages of global procurement (ch13)
1 no investment for production
2 focus on components in production of most value added
3 allows flexibility in orders
4 economies of scale
165
disadvantages of global procurement (ch13)
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1 relying on provider
2 compete for vendor contract
3 some profits now go to provider
4 buyer may have power
5 supplier may become competitor
6 supplier may supply same goods to competition
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166
hollow corporations (ch13)
companies focus on product design only (core competency) and outsource production
167
insource def (ch13)
when a firm has been outsourcing production, and then moves production in-house
168
advantages of making in-house (ch13)
1 cost and knowledge/design integration of parts
2 quality control
3 greater control over deliveries
4 may be only option for highly specialized requirements
5 secures supply source
6 protects intellectual property
169
disadvantage of making (ch13)
1 requirement of production expertise
2 internal supplier may not have incentive to improve product (use dual sourcing to keep internal suppliers in competition with external)
3 no economies of scale
4 complexity of production could be problematic
5 firm will incur both fixed and variable costs instead of just variable
170
location decision def (ch13)
determining if making will be done at one or more production facilities, and if they should be in one or more countries
*one-versus-many production question
171
considerations of one-versus-many production (ch13)
1 fixed costs - high= one production facility is best, low= several may be justified
2 minimum efficient scale and balance with demand
3 value-to-weight ratio - consider transportation costs
4 Heckscher-Ohlin/H-O model - use country with best factors available
5 consider country's infrastructure
6 trade policies
7 financial risks
8 political consideration
172
considerations for locations of production facilities (ch13)
*same as considerations of raw materials, PLUS these items
1 if product is generic, producing in one country would be efficient, if customized, multiple facilities will be needed
2 proximity to markets
3 product image - value of "exotic" foreign made product
173
supply chain def (ch13)
all activities associated with flow and transformation of goods from raw materials to end user, including flows of monetary funds and information
*global supply chain - have locations in more than one country
174
supply-chain management def (ch13)
management of all supply chain activities in order to minimize cost and maximize value to end user
175
2 technologies that drive good supply-chain management (ch13)
1 telecommunication networks/"networks" - collections of computer hardware and software arranged to transmit info from one place to the other
2 internetworking - linking separate networks into an interconnected one while each remains independent
176
ERP system def (ch13)
software that integrates the majority of the business processes, executes transactions related to integration of them, stores each pieces of data only once in an enterprise-wide database, allows access to data and info in real time, and operates in a client-server environment
177
ERM system requirements for global (ch13)
1 multi-language
2 multi-national (diff accounting standards)
3 multi-currency
178
exchange rate risk def (ch14)
risk associated with one currency changing in value relative to another currency
179
2 short-term effects of currency movements (ch14)
1 transaction risk - how short-term changes in exchange rates can affect operating costs in international activities
2 translation risks - short-term effects of currency movements on the consolidated accounting statement of a firm
180
long-term risk of currency movements (ch14)
economic risk
181
Special Drawing Right/SDR def (ch14)
basket of currencies consisting of dollars, euros, pounds, and yen created by the IMF
182
hedging vs speculating def (ch14)
* hedging - using currency derivatives to reduce transaction, translation, and economic risk of currency movements
* speculating - opposite of hedging, attempt in currency derivatives to earn profits from trading them and help make prices efficient
183
currency futures contracts def (ch14)
agreement to buy or sell a specified amount of currency on a date in the future at a predetermined price
184
long vs short position in currency futures contract (ch14)
* long- buyer of currency (profit on increase in value)
| * short - seller (profit on decrease in value)
185
organized exchange def (ch14)
trading futures contracts in major currencies and offering price transparency and efficiency and guaranteed payments on contracts
186
common rules in trading currency futures contracts (ch14)
1 3rd Wed in Mar, Jun, Sep, and Dec are expiration dates for contracts
2 market-to-market daily - gains/losses are reconciled daily
3 buyers and sellers can close contract at any time prior to delivery date
4 contracts can be purchased for margin (small commitment fee), which is a low cost. If balance falls below maintenance margin at end of day, a margin call day occurs and customer must add money to account.
187
currency forward contracts def (ch14)
* forward contract for non-major currency
* arranged with large banks in the over-the-counter/OTC market
* are less standardized/more customizable
188
options contracts (ch14)
currency option contract that gives investor the right - but not obligation - to buy/call, or sell/put an amount of current at a date in the future at a predetermined price
*buyer (in long position) pays premium to seller (in short position) for this right
189
currency swap def (ch14)
firms exchange currencies at a previously agreed exchange rate as a way to hedge exchange rate movements
*helps hedge exchange fluctuations
190
plain vanilla currency swap def (ch14)
interest rate swap, often combined with a currency swap, if the interest being swapped is in different currencies
191
money center bank def (ch14)
large global banks, dominate international banking
192
CHIPS and SWIFT (ch14)
CHIPS - large, wholesale payments by businesses, banks, govs, are made this way (Clearing House blah blah)
SWIFT - provides secure communications that normally accompany cash payments
193
payment methods according to risk (ch14)
1 payment in advance - risk to importer (may do half down and half on delivery to mitigate risk)
2 commercial letter of credit/LC - offers payment protection to both parties. LC is used for financing and payment is legally required upon delivery
3 open account - agreement where exporter sends invoice with goods and importer pays when recd
194
syndicate def (ch14)
group of banks that get together to lend to a firm
195
bond ratings def (ch14)
Moody's and Standard and Poor's rating services which are important in assuring foreign investors of the credit quality of bond issues
196
3 types of bonds (ch14)
1 domestic - sold in country of home currency, not part of the international bond market
2 foreign - issued by foreign firms in another country in the home currency of that country
3 Eurobonds - sold in any country outside the home country, but in the home country's currency
197
stock vs bond investment (ch14)
bond - long-term
| stock - short-term
198
diversification def (ch14)
buying securities in a portfolio with price patterns over time that are different from one another, reduces volatility of the portfolio
199
home bias def (ch14)
only investing in securities of home country - does not truly diversify investments
200
contagion def (ch14)
when stock markets in many countries move down in concert with one another and thereby reduce international diversification benefits
201
Export-Import/Ex-Im Bank def (ch14)
US gov export finance agency seeking to level international competition by supporting US firms competing against exports of other countries that are gov supported
202
2 ways bank and gov loans can be used (ch14)
1 by exporters to finance working capital - called trade finance
2 by importers to cover the cost of major purchases - called term financing
203
Bank of International Cooperation (JBIC) (ch14)
Japanese bank supports exporters around the world that have at least 30% Japanese content
204
net present value def (ch14)
diff between present value of futures profits on an investment project minus initial investment cost
205
country risk def (ch14)
there is uncertainty in predicting political, economic, inflation, and tax risk
206
sensitivity analysis (ch14)
examination of optimistic, expected, and pessimistic scenarios to give a more complete picture of the risks and returns of investments abroad
207
cost of capital def (ch14)
required rate of return demanded by stock and bond investors
208
cost of debt def (ch14)
calculating a weighted average of diff interest rates paid by the firm on sources of long-term borrowings
209
cost of equity def (ch14)
the required rate of return by stockholders in a firm and is estimated by means of the Capital Asset Pricing Model/CAPM
210
beta risk def (ch14)
measurement of the general market risk of a stock in the Capital Asset Pricing Model/CAPM
* beta score less than one means it is lower risk than the market index
* lower score will mean firm has lower cost of equity
211
measuring equity global stock vs domestic (ch14)
* global - integrated market exists and CAPM won't work, use international CAPM(ICAPM) instead
* domestic - CAPM works
212
2 variables that improve CAPM and ICAPM cost of equity estimates (ch14)
1 size factor - whether firms is large or small and how that provides estimate to cost of equity
2 value factor - whether firm has growth or value and how it provides an estimate of cost of equity
213
exchange rate sensitivity def (ch14)
stock value measured with the coefficient obtained by regressing the stock's return on a currency's return over time
214
Accounting def (ch14=5)
the recording, summarizing, and reporting of the economic activities and events of an organization
215
4 most important financial statements for a corp (ch15)
1 income statement - income earned or lost in period
2 balance sheet - assets, liability, owner's equity
3 statement of retained earnings - stockholder equity generated from operations and kept for use in future operations
4 statement of cash flows - company's cash receipts and cash payments - inflows and outflows of cash
216
2 principle objectives of accounting information system/AIS (ch15)
1 provide all financial info needed internally - management accounting
2 provide financial info to external users - financial accounting
217
2 major categories of external users of accounting info with financial accounting (ch15)
1 organizations that require or expect info to be reported
*federal, state, and local gov agencies
2 organizations that receive info on an as-needed basis
*lenders, vendors
218
generally accepted accounting principles/GAAP (ch15)
provides guidelines by which financial statements are prepared
* In US, mostly developed by FASB
* every country has their own GAAP but an international GAAP is becoming accepted by more countries
219
statement of financial accounting standards/SFAS def (ch15)
Issued by FASB to provide he procedures for dealing with specific accounting matters
220
3 primary fields of work for accountants (ch15)
1 in the AIS of a business firm
2 in a public accounting firm
3 in the AIS of a gov entity or other nonprofit org
221
3 types of services offered by CPAs (ch15)
1 auditing
2 tax
3 consulting
222
key reason why International Financial Reporting Standards are diff from US GAAP (ch15)
IFRS are regarded as being more principles-based (general guidance) and US-GAAP is more rules-based (detailed guidance)
223
4 steps of an audit (ch15)
1 plan
2 obtain and evaluate evidence
3 arrive at an audit opinion
4 communicate audit results
224
internal vs external audits (ch15)
* internal - looking for efficiency and honesty
| * external - looking at financials
225
financial statement analysis def (ch15)
evaluation of the financial statements to identify significant trends or relationships among the items contained within them
226
financial ration def (ch15)
relationship of one number on a financial statement to another number
*assess diff aspects of firm's financial situation
227
Organization for Economic Cooperation and Development/OECD purpose (ch15)
30 countries that accept principles of representative democracy and free-market economy - good resource for looking up corporate tax rates
228
transfer pricing def (ch15)
pricing of goods that are transferred internationally between members of a corp family
