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International Business > Midterm > Flashcards

Midterm Flashcards

1
Q

International Business

A

(1) a business (firm) that engages in international economic activities
(2) the action of doing business abroad

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2
Q

Multinational Enterprise

A

firm that engages in foreign direct investment by directly investing in, controlling, and managing value-added activities in other countries

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3
Q

Foreign direct investment

A

Investment in, controlling, and managing value-added activities in other countries

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4
Q

Global Business includes

A

international and domestic business activities

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5
Q

Global Mindset

A

Ability to connect the dots globally

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6
Q

Institution-based view

A
  • Formal and informal rules of the game
  • Suggests that the success and failure of firms are enabled and constrained by institutions
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7
Q

IBV - Formal Institutions

A

Laws, Regulations, Rules

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8
Q

IBV - Informal Institutions

A

Cultures, Ethics, Norms

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9
Q

Resource-based view

A

A Firm competitive advantage is based on its valuable, rare, inimitable, and non substitutable resources

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10
Q

Liability of Foreignness

A

Inherent disadvantage that foreign firms experience in host countries due to nonnative status

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11
Q

Globalization

A

the close integration of countries and peoples of the world
- Advocates argue it contributes to greater economic growth, higher standards of living, improved technology
- Critics argue it destroys jobs in rich countries, exploits workers in poor countries, grants MNEs too much power, degrades the environment

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12
Q

Emerging economies (emerging markets)

A

fast growing developing economies

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13
Q

Reverse Innovation

A

an innovation that is adopted first in emerging economies and then diffused around the world

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14
Q

Risk Management

A

Identification and assessment of risks and the preparation to minimize the impact of high-risk events

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15
Q

Black Swan Event

A

An unpredictable event that is beyond what is normally expected and that has severe consequences

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16
Q

Semiglobalization

A

Suggests that barriers to market integration at borders are high, but not high enough to insulate countries from eachtoher

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17
Q

Gross national product

A

GDP plus income from nonresident sources

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18
Q

Purchasing Power Parity

A

A conversation that determines the equivalent amount of goods and services that different currencies can purchase

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19
Q

Nongovernmental Organizations

A

an organization that is not affiliated with any government

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20
Q

Deglobalization

A

The process of weakening economic interdependence among countries

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21
Q

Global Value Chain

A

A chain of geographically dispersed and coordinated activities involved in the production of a good or service and its supply and distribution activities

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22
Q

Regulatory Pillar

A

The coercive power of governments

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23
Q

Normative Pillar

A

The mechanism through which norms influence individual and firms behaviour

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24
Q

Norms

A

Values, beliefs, and actions of relevant players that influence the focal individual and firms

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25
Q

Cognitive Pillar

A

The internalized values and beliefs that guide individual and firm behaviour

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26
Q

Transaction cost

A

The cost of doing business

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27
Q

Transition Economy

A

Emerging economies, particularly those moving from central planning to market competition

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28
Q

Nonmarket strategy

A

Strategy that centers on leveraging political and social relationships

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29
Q

Geopolitics

A

International political relations

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30
Q

Civil Law

A

Uses statutes and codes

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31
Q

Common Law

A

Shaped by precedents and traditions from previous decisions

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32
Q

Economic System

A

Rules of the game on how a country is governed economically

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33
Q

Market Economy

A

An economy that is characterized by the “invisible hand” of market forces

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34
Q

Command Economy

A

An economy that is characterized by government ownership and control of factors of production

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35
Q

Mixed Economy

A

An economy that has elements of both a market economy and a command economy

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36
Q

Ethnocentrism

A

A self-centered mentality by a group of people who perceive their own culture, ethics, and norms as natural, rational, and morally right

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37
Q

Culture

A

The collective programming of the mind that distinguishes the members of one group or category of people from another

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38
Q

Lingua Franca

A

A global business language

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39
Q

Social Structure

A

The way a society broadly organizes its members

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40
Q

Social Structure - Social Stratification

A

The hierarchical arrangement of individuals into social categories such as classes, castes, and divisions within a society

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41
Q

Social Structure - Social Mobility

A

The degree to which members from a lower social category can rise to a higher status

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42
Q

Low-context culture

A

A culture in which communications is usually taken at face value without much reliance on unspoken context

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43
Q

High-context culture

A

A culture in which communication relies a lot on the underlying, unspoken content, which is as important as the words used

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44
Q

Cluster

A

Countries that share similar cultures

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45
Q

Power Distance

A

The extent to which less powerful members within a culture expect and accept that power is distributed unequally

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46
Q

Individualism

A

The idea that an individuals identity is fundamentally his or her own

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47
Q

Collectivism

A

The idea that an individual’s identity is fundamentally tied to the identify of his or her collective group

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48
Q

Ethics

A

The principles, standards, and norms of conduct that govern individual and firm behaviour

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49
Q

Ethical relativism

A

A perspective that suggests that all ethical standards are relative

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50
Q

Ethical Imperialism

A

A perspective that suggests that “there is one set of Ethics and we have it”

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51
Q

Extraterritoriality

A

The reach of one country’s laws to other countries

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52
Q

Cultural Distance

A

The difference between two cultures along identifiable dimensions

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53
Q

Institutional distance

A

The extent of similarity or dissimilarity between the regulator, normative, and cognitive institutions of two countries

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54
Q

Cultural intelligence

A

An individuals ability to understand and adjust to new cultures

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55
Q

Value Chain

A

A stream of activities from upstream to downstream that add value

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56
Q

Benchmarking

A

Examining whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors

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57
Q

Commoditization

A

A process of market competition through which unique products that command high prices and high margins gradually lose their ability to do so, thus becoming commodities

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58
Q

Outsourcing

A

Turning over an activity to an outside supplier that will perform it on behalf of the focal firm

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59
Q

Offshoring vs Onshoring

A

Offshoring - outsourcing to an international or foreign firm
Onshoring - outsourcing to a domestic firm

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60
Q

VRIO

A

Resource-based framework that focuses on the value, rarity, imitability, and organizational aspects of resources and capabilities

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61
Q

Complementary asset

A

The combination of numerous resources and assets that enable a firm to gain a competitive advantage

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62
Q

Business Process Outsourcing

A

Outsourcing business processes to third-party providers

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63
Q

Original equipment manufacturer

A

Firm that executes design blueprints provided by other firms and manufactures such products

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64
Q

Original design manufacturer

A

Firm that both designs and manufactures products

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65
Q

Original brand manufacturer

A

Firm that designs, manufactures, and markets branded prodcts

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66
Q

Reshoring

A

Moving formerly offshored activities back to the home country

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67
Q

Trade Surplus

A

An economic condition in which a nation exports more then it imports

Trade deficit is the opposite

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68
Q

Theory of mercantilism

A

A theory that suggests that the wealth of the world is fixed and that a nation that exports more and imports less will be richer

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69
Q

Free Trade

A

The idea that free market forces should determine how much to trade with little or no government intervention

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70
Q

Theory of Absolute Advantage

A

A theory that suggests that under free trade, a nation gains by specializing in economic activities in which it has an absolute advantage

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71
Q

Theory of Comparative Advantage

A

A theory that focuses on the relative advantage in one economic activity that one nation enjoys in comparison with other nations

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72
Q

Factor endowment theory

A

A theory that suggests that nations will develop comparative advantage based on their locally abundant factors

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73
Q

Strategic trade theory

A

A theory that suggests that strategic intervention by governments in certain industries can enhance their odds for international success

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74
Q

Theory of national competitive advantage of industries

A

A theory that suggests that the competitive advantage of certain industries in different nations depends on four aspects
- Firm strategy, structure, and rivalry
- Country factor endowments
- Domestic demand conditions
- Related and supporting industries

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75
Q

Subsidy

A

Government payment to domestic firms

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76
Q

Foreign Portfolio Investment

A

Investment in a portfolio of foreign securities such as stocks and bonds

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77
Q

Sovereign wealth fund

A

A state-owned investment fund composed of financial assets such as stocks, bonds, real estate, and other financial instruments

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78
Q

Horizontal FDI

A

A type of FDI in which a firm duplicates its home country-based activities at the same value-chain stage in a host country

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79
Q

Vertical FDI

A

A type of FDI in which a firm moves upstream or downstream at different value chain stages in a host country

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80
Q

Upstream vertical FDI

A

A type of vertical FDI in which a firm engages in an upstream stage of the value chain in a host country

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81
Q

Downstream vertical FDI

A

A type of vertical FDI in which a firm engages in a downstream stage of the value chain in a host country

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82
Q

FDI flow

A

Amount of FDI moving in a given period in a certain direction

83
Q

FDI inflow

A

Inward FDI moving into a country in a given period

84
Q

FDI outflow

A

Outward FDI moving out of a country in a given period

85
Q

OLI Advantage

A

A firms question for ownership advantages, location advantages, and internalization advantages via FDI

86
Q

OLI - Ownership

A

An MNE’s possession and leveraging of certain valuable, rare, hard-to-imitate, and organizationally embedded assets overseas

87
Q

OLI - Location

A

Advantage enjoyed by firms operating in a certain location

88
Q

OLI - Internalization

A

The replacement of cross-border markets with one firm locating and operating in two or more countries

89
Q

Dissemination Risk

A

Risk associated with unauthorized diffusion of firm-specific know-how

90
Q

Agglomeration

A

Clustering of economic activities in certain locations

91
Q

Knowledge Spillovers

A

Knowledge diffused from one firm to others among closely located firms

92
Q

Oligopoly

A

Industry dominated by small number of players

93
Q

Intrafirm trade

A

International transactions between two subsidaries in two countries controlled by the same MNE

94
Q

Free market view

A

A political view that suggests that FDI unrestricted by government intervention is the best

95
Q

Technology Spillover

A

Technology diffused from foreign firms to domestic firms

96
Q

Institutional Void

A

Institutional conditions of a country lacking market-supporting infrastructure

97
Q

Location-Specific Advantage

A

Benefits a firm reaps from the features specific to a place

98
Q

First-Mover Advantage

A

benefits that accrue to firms that enter the market first and that late entrants do not enjoy

99
Q

Late-Mover Advantage

A

Benefits that accrue to firms that enter the market later and that early entrants do not enjoy

100
Q

Scale of entry

A

Amount of resources committed to entering a foreign market

101
Q

Nonequity mode

A

Mode of entry that reflects relatively smaller commitments to overseas markets

102
Q

Equity Mode

A

Mode of entry that indicates larger commitments to overseas markets

103
Q

Entry Mode

A

A form of operation that a firm employs to enter foreign markets

104
Q

Turnkey Project

A

a delivery method in which a contractor works with a project owner under a single contract to complete all project stages from detail engineering through construction

105
Q

Build-Operate-Transfer agreement

A

A nonequity entry mode used to build a longer-term presence by first constructing and then operating a facility for a period of time before transferring operations to a domestic agency or firm

106
Q

Research and Development Contract

A

outsourcing agreement in R&D between firms

107
Q

Co-marketing

A

effors among a number of firms to jointly market their products and services

108
Q

Joint Venture

A

A new corporate entity created and jointly owned by two or more parent companies

109
Q

Wholly owned subsidary

A

A subsidiary located in a foreign country that is entirely owned by the parent multinational

110
Q

Linkage, Leverage, and Learning advantages

A

A firms quest of linkage advantages, leverage advantages, and learning advantages, which are typically associated with multinationals from emerging economies

111
Q

Country of origin effect

A

The positive or negative perception of firms and products from a certain country

112
Q

Reciprocity

A

Informal agreement based on mutual exchange of gratifications

113
Q

Strategic alliance

A

Voluntary agreement of cooperation between firms

114
Q

Contractual alliance

A

Alliance between firms that is based on contracts and does not involve sharing of ownership

115
Q

Equity-based alliance

A

Alliance based on ownership or financial interest between the firms

116
Q

Strategic investment

A

One firm investing in another as a strategic investor

117
Q

Cross-Shareholding

A

Both firms investing in eachother to become cross-shareholders

118
Q

Acquisition

A

Transfer of the control of operations and management from one firm (target) to another (acquirer), the former becoming a unit of the latter

119
Q

Merger

A

Combination of operations and management of two firms to establish a new legal entity

120
Q

Due diligence

A

Investigation prior to signing contracts

121
Q

Learning race

A

Race in which partners aim to outrun eachother by learning the “tricks” from the other side as fast as possible

122
Q

Relational capability

A

Ability to manage interfirm relationships

123
Q

Acquisition Premium

A

Difference between acquisition price and market value of target firms

124
Q

Strategic Fit

A

Effective matching of complementary strategic capabilities

125
Q

Organizational fit

A

The similarity in cultures, systems, and structures

126
Q

Hubris

A

Overconfidence in ones capabilities

127
Q

Managerial motive

A

Managers desire for power, prestige, and money. which may lead to decisions that do not benefit the firm overall in the long run

128
Q

Expatriate

A

Person living outside their native country

129
Q

Inpatriate

A

An employee who is transfered to a different country where the company headquarters is

130
Q

Repatriate

A

Sending someone back to their home country

131
Q

Opportunism

A

The act of self-interest seeking with guile

132
Q

IBV two core propositions

A
  1. Managers and firms rationally pursue their interests and make choices within the formal and informal constraints in a given institutional framework
  2. While formal and informal institutions combine to govern firm behaviour, in situations where formal constraints are unclear or fail, informal constraints will play a larger role in reducing uncertainty and providing constancy to managers and firms
133
Q

Bounded Rationality

A

The necessity of making rational decisions in the absence of complete information

134
Q

Political Risk

A

Risk associated with political changes that may negatively impact domestic and foreign firms

135
Q

3 ways to understand cultural differences

A

Context, Cluster, Dimensions

136
Q

Approaches to managing ethics overseas

A
  • Respect for human dignity and basic rights
  • Respect for local traditions
  • Respect for institutional context
137
Q

Resource / Capability

A

The tangible and intangible assets a firm uses to choose and implement its strategies

138
Q

Sensing

A

Abilities to discover opportunities

139
Q

Seizing

A

Abilities to capture value from opportunities

140
Q

Reconfiguration

A

Ability to remain flexible by redesigning business models, realigning assets, and revamping routines

141
Q

SWOT analysis focuses

A

RBV: S and W
IBV: O and T

142
Q

Casual ambiguity

A

Difficulty of identifying the actual cause of a firms successful performance

143
Q

3 Pillars of IBV

A

Regulative
Normative
Cognitive

144
Q

Classic Trade Theories

A
  1. mercantilism
  2. absolute advantage
  3. comparative advantage
145
Q

Key Question

A

What determines the success and failure of firms around the globe?

146
Q

Formal Institutions Pillar

A

Regulatory

147
Q

Intellectual Property Rights

A

Rights regarding ownership of intellectual property

148
Q

Intellectual property

A

Intangible property that is the result of intellectual activity

149
Q

Informal institutions pillars

A

Normative, Cognitive

150
Q

Democracy

A

Citizens elect representatives

151
Q

Totalitarianism (dictatorship)

A

One person or party exercises absolute political control over the population

152
Q

Authoritarianism

A

Political plurality is undermined and concentrated government power is imposed

153
Q

Dynamic capability

A

Ability to reconfigure its resources and capabilities

154
Q

International Trade RBV

A

exports that are valuable, unique, hard to imitate

155
Q

International Trade IBV

A

Different rules governing trade are designed to determine how gains are shared or not shared

156
Q

Factor Endowment

A

Extent to which different countries possess various factors of production

157
Q

Product Life cycle theory

A

theory that accounts for changes in the patterns of trade over time by focusing on product life cycles

158
Q

Management control right

A

The right to appoint key managers and establish control mechanisms

159
Q

Pragmatic nationalism

A

Political view that only approves FDI when its benefits outweigh its costs

160
Q

FDI Benefits

A

Host country:
- Capital inflow
- Technology spillovers
- Job creation

Home country:
- Repatriated earnings
- Increased exports
- Learning via FDI

161
Q

Expropriation

A

Government’s confiscation of foreign assets

162
Q

Obsolecing bargain

A

Deal struck by MNEs and host governments that change requirements after initial FDI entry

163
Q

How MNEs negotiate with host governments

A

Common interests, Conflicting interests, Compromises

164
Q

Integration-responsiveness framework

A

Framework of MNE management on how to simultaneously deal with the pressures for both global integration and local responsiveness

165
Q

Local Responsiveness

A

The necessity to be responsive to different customer preferences around the world

166
Q

Home Replication Strategy

A

Emphasizes the duplication of home country based competencies in foreign countries

167
Q

Localization Strategy

A

Focuses on a number of foreign countries/regions, each of which is regarded as a stand-alone local market worthy of significant attention and adaptation

168
Q

Global Standardization Strategy

A

Focuses on development and distribution of standardized products worldwide in order to reap the maximum benefits from low-cost advantages

169
Q

Centre of Execllence

A

MNE subsidiary explicitly recognized as a source of important capabilities, with the intention that these capabilities be leveraged by, and/or disseminated to other subsidiaries

170
Q

Worldwide mandate

A

charter to be responsible for one MNE function throughout the world

171
Q

Transnational Strategy

A

Endeavours to be simulaneously cost-efficient, locally responsive, and learning driven around the world

172
Q

International Division

A

Organizational structure that is typically set up when firms initially expand abroad

173
Q

Geographic Area Structure

A

Organization structure that organizes the MNE according to different geographic areas

174
Q

Country (regional) manager

A

Manager of Geographical area

175
Q

Global product division structure

A

organizational structure that assigned global responsibilities to each produce division

176
Q

Global Matrix

A

organizational structure used to alleviate the disadvantages associated with both geographic area and global product division structures

177
Q

Organizational Culture

A

Collective programming of mind that distinguishes the members of one organization from another

178
Q

Knowledge management

A

Structures, processes, and systems that actively develop, leverage, and transfer knowledge

179
Q

Explicit Knowledge

A

Knowledge that is codifiable (can be written down and transferred without loss of richness)

180
Q

Tacit Knowledge

A

Knowledge that is noncodifiable, whose acquisition and transfer require hands-on practice

181
Q

Open Innovation

A

Use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation

182
Q

Absorptive Capacity

A

Ability to recognize the value of new information, assimilate it, and apply it

183
Q

Social Capacity

A

Informal benefits individuals and organizations derive from their social structures and networks

184
Q

Micro-Macro Link

A

Micro, informal interpersonal relationships among managers of various units may greatly facilitate macro, intersubsidary cooperation among these units

185
Q

Subsidiary initiative

A

Proactive and deliberate pursuit of new opportunities by a subsidary

186
Q

Global Account structure

A

Customer focused dimension that supplies customers in a coordinated and consistent way across various countries

187
Q

Solution based structure

A

Customer-focused solution in which a provider sells whatever combination of goods and services the customers prefer

188
Q

Corporate Social Responsibility

A

Consideration of, and response to, issues beyond the narrow economic, technological, and legal requirements of the firm to accomplish social benefits along with the traditional economic gains that the firm seeks

189
Q

Fiduciary duty

A

Duty by law

190
Q

Global Sustainability

A

Ability to meet needs of the present without compromising the ability of future generations to meet their needs around the world

191
Q

Primary stakeholder

A

Group of constituents on whom the firm relies on for continuous survival

192
Q

Secondary stakeholder

A

Stakeholder who influence or affect, but are not engaged with transactions of the firm and are not essential for its survival

193
Q

Corporate Social Performance

A

Social performance outcomes of firms CSR

194
Q

ESG Performance

A

Performance yardstick consisting of environmental, social, and governance dimensions

195
Q

Socially responsible investment

A

Investment in firms that have excellent environmental, social, and governance performance

196
Q

Shareholder primacy

A

Places shareholders as the most important stakeholder group

197
Q

Stakeholder capitalism

A

View of capitalism that suggests firms must respect stakeholder interests

198
Q

Corporate Social Irresponsibility

A

Lack of CSR

199
Q

Stakeholder primacy

A

Suggests that a firm needs to have a fundamental commitment to all stakeholders

200
Q

Reactive strategy

A

Strategy that would only respond to CSR causes when required

201
Q

Defensive strategy

A

Strategy that focuses on regulatory compliance but little commitment to CSR

202
Q

Accommodative strategy

A

Strategy characterized by viewing CSR as worthwhile

203
Q

Proactive strategy

A

Doing more that is required with CSR

204
Q

Corporate philanthropy

A

Firms donation to social causes

International Business (3 decks)

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