Globalization

Question 1

What are the reasons a firm may elect to outsource the production of a subassembly?

Answer 1

1. To improve the quality of the subassembly

2. To reduce time needed to have the subassembly available.

Question 2

Describe a foreign direct investment.

Answer 2

producing goods in facilities owned or controlled by US companies but located in foreign countries.

Question 3

Describe the Eurodollar market

Answer 3

US dollars maintained outside th US. Investors holding these Eurodollars offer short-term and intermediate-term commercial loans denominated in US dollars. generally carry a lower cost of borrowing than conventional bank loans.

Question 4

What does the globalization of capital markets allow?

Answer 4

permits reduced investment portfolio risk by increasing diversification options.
permits lower cost of capital by increasing sources of capital.

Question 5

Foreign Licensing

Answer 5

granting a foreign entity the right to use an asset
-patent
-trademark
-formula
Licensee makes royalty pmts to licensor.
Generally avoids trade barrier restricitions

Question 6

Foreign Franchising

Answer 6

Special form of licensing in which the franchisor typically mandates strict operating procedures

Question 7

Foreign subsidiary

Answer 7

Entity acquires or establishes a foreign sub - a controlled, but legally separate entity.

Question 8

Greenfield Venture

Answer 8

establishing a new foreign subsidiary. Parent entity is breaking new ground

Question 9

What are the 3 generic strategies identified by Michael Porter

Answer 9

Focus, Cost leadership, and differentiation

Question 10

PEST

Answer 10

political, economic, social, technological.

a form or macro-environmental analysis and is primarlily concerned with where an entity should operate

Question 11

SWOT

Answer 11

form of micro-environmental analysis and is primarily concerned how an entity should operate

Question 12

What is the first step in the strategic planning process

Answer 12

Formulating a mission statement. provides an expression of its purpose and range of activities.

Question 13

What is Porter’s five forces used for?

Answer 13

Determining the nature, operating attractiveness, and probable long-run profitability of a competitive industry.

Question 14

Macro-environmental analysis

Answer 14

Concerned with the analysis of the characteristics of a country or a region. Specifically, the broad political, economic, social, and tech characteristics of a country or a region.

Question 15

PESTEL Analysis

Answer 15

Political
Economic
Social
Tech
Ecological
Legal