MIDTERMS 1 & 2 - ADMN 4206 Flashcards
1
Q
International business
A
Commercial transaction that crosses the borders of two or more nations.
2
Q
Imports
A
Goods/services purchased abroad and brought into a country.
3
Q
Exports
A
Goods/services sold abroad and sent out of a country.
4
Q
Multinational Corporation (MNC)
A
has direct investments abroad in multiple countries. Generate significant jobs, investment, and tax revenue for the regions they enter.
5
Q
Born-global firms
A
Company that adopts a global perspective and engages in international business from its inception.
6
Q
Globalization
A
Trend toward greater economic, cultural, political. and technological interdependence among national institutions and economies. Characterized by denationalization.
7
Q
Globalization of markets
A
Convergence in buyer preferences in markets around the world.
8
Q
Developed markets
A
solidly middle class and people can consume almost any product desired.
9
Q
Emerging markets
A
racing to catch up to rich nations and are overloading infrastructures.
10
Q
Traditional markets
A
Mostly rural populations for whom poverty and corruption prevail.
11
Q
Benefits of market globalization
A
reduces marketing costs by standardizing activities, creates new market opportunities, levels uneven income streams for global seasonal products, catering to local buyers’ needs.
12
Q
Globalization of production
A
Dispersal of production activities worldwide to minimize costs or maximize quality.
13
Q
Benefits of production globalization
A
Access to lower-cost workers, access to technical expertise, access to production inputs.
14
Q
Forces driving globalization
A
falling barriers to trade and investment, tech innovation.
15
Q
Arguments against globalization
A
eliminates jobs in developed nations, lowers wages in developed nations, exploits workers in developing nations.
16
Q
Arguments for globalization
A
increases wealth and efficiency in all nations (raises output), generates labour market flexibility in developed nations, advances the economies of developing nations.
17
Q
Culture
A
Set of values, beliefs, rules and institutions held by a group of people.
18
Q
Subculture
A
group of people who share a unique way of life within a larger dominant culture.
19
Q
Ethnocentricity
A
The belief that one’s own ethic group or culture is superior to that of others.
20
Q
Cultural Literacy
A
Detailed knowledge about a culture that enables a person to work happily and effectively within it.
21
Q
Components of culture
A
Aesthetics, values & attitudes, manners & customs, social structure, education, religion, personal communication, physical environments.
22
Q
Values
A
Ideas, beliefs, and customs to which people are emotionally attached.
23
Q
Attitudes
A
reflect people’s underlying values. Are emotions, feelings, and tendencies that individuals harbour toward objects or concepts.
24
Q
Aesthetics
A
what a culture considers good taste in the arts, the imagery evoked by certain expressions and symbolism of certain colours.
25
Manners
appropriate ways of behaving, speaking and dressing in a culture.
26
Customs
Habits or ways of behaving in specific circumstances that are passed down through generations in a culture.
27
Folk custom
Behaviour, often dating back several generations, that is practiced by a homogenous group of people.
28
Popular custom
behaviour shared by a heterogeneous group or by several groups.
29
Social stratification
ranking people into social classes.
30
Social mobility
Ease with which individuals can move up or down a culture's social ladder.
31
Brain Drain phenomenon
Departure of highly educated people from one profession, geographic region, or nation to another.
32
Nuclear family
A person and their immediate relatives.
33
Major religions
christianity, islam, judaism, buddhism, sikhism, hinduism, confucianism, shinto
34
Lingua Franca
A link language that is understood by two parties who speak different languages.
35
Cultural diffusion
process whereby cultural traits spread from one culture to another.
36
Hofstede Framework
individualism vs collectivism, power distance, uncertainty avoidance, masculinity vs femininity, long-term orientation, indulgence vs restraint.
37
Kluckhohn-Strodbeck framework
relation to nature, time orientation, trust and control, material or spiritual, responsibility to others, public or private activities.
38
Political system
includes the structures, processes, and activities by which a nation governs itself.
39
Anarchism
a belief that only individuals and private groups should control a nation's political activities.
40
Totalitarianism
The belief that every aspect of people's lives must be controlled in order for a political system to be effective.
41
Imposed authority
Individual or groups form political system without approval of people.
42
Theocratic totalitarianism
political system under the control of totalitarian religious leaders.
43
Secular totalitarianism
Political system in which leaders rely on military and bureaucratic power.
44
Communist totalitarianism
Instituting socialism, a system in which the government owns and controls all economic activity.
45
Tribal totalitarianism
One ethnic group imposes its will on others with whom it shares a national identity.
46
Right-wing totalitarianism
Government endorses private ownership of property and a market-based economy but grants few political freedoms.
47
Pluralism
A belief that both private and public groups play important roles in a nation's political activities.
48
Representative Democracy
Citizens elect individuals from their groups to represent their political views.
49
Capitalism
Belief that ownership of the means of production belongs in the hands of individuals and private business.
50
Economic system
Consists of the structure and processes that a country uses to allocate its resources and conduct its commercial activities.
51
Centrally planned economy
A system in which the government owns a nation's land, factories and other economic resources. Goal is to achieve political, economic and social objectives through complete control of production and distribution of resources.
52
State capitalism
a system in which the state plays the tole of leading economic actor and uses markets for political gain.
53
Mixed economy
system in which land, factories, and other economic resources are equally split between private and government ownership.
54
Market economy
Most land, factories and economic resources are privately owned.
55
Legal system
set of laws and regulations and processes by which laws are enacted and enforced and ways in which parties are held accountable.
56
Common law
tradition: legal history
Precedent: past cases that have come before the courts
usage: how laws are applied in specific situations.
57
Civil law
based on a detailed set of written rules that constitute a legal code.
58
Theocratic law
based on religious teachings
59
Property rights
legal rights to resources and any income they generate.
60
Patent
a right granted to the inventor of a product or process that excludes others from making, using or selling the invention. Lats 20 yrs.
61
Trademark
words or symbols that distinguish a product and its manufacturer.
62
Copyrights
Give creators of original works the freedom to publish or dispose of them as they choose.
63
Product liability
holds manufacturers, sellers, and others including company officers responsible for damage, injury or death caused by defective products.
64
Consumption taxes
Indirect taxes that help pay for consequences of using a particular product and to make imports more expensive.
65
Value added tax (VAT)
Levied on each party that adds value to a product throughout its production and distribution.
66
Economic development
A measure for gauging the economic well-being of one nation's people compared to another. Reflects economic output, infrastructure, physical health and level of education and cultural, political, legal and economic differences.
67
Developed country
Highly industrialized, efficient, and high quality of life.
68
Newly industrialized country
recently increased the portion of national production and exports derived from industrial operations.
69
Emerging markets
Combination of newly industrialized country and those having potential to become and NIC.
70
Developing country
Poor infrastructure and extremely low personal income.
71
Technological dualism
Use of the latest technologies in some sectors of the economy coupled with the use of outdated tech in other sectors.
72
GDP
Value of all goods and services produced by a domestic economy over a one-year period.
73
GNP
Excludes a nation's income generated from exports, imports and the international operations of its companies.
74
GDP per capita
GDP divided by population to measure income per person.
75
Drawbacks of GDP and GNP
Uncounted transactions (unpaid work, illegal activities), Shadow economy (black market), Barter, currency differences.
76
Purchasing power parity
Relative ability of two countries' currencies to buy the same basket of goods in those two countries.
77
Purchasing power
Value of goods and services that can be purchased with one unit of a country's currency.
78
Human development index
Measures extent to which a people's needs are satisfied and the degree to which these needs are addressed equally across a population.
79
3 dimensions of HDI
Long and healthy life, education, decent standard of living.
80
economic transition
Changing a nation's fundamental economic organization and creating new free-market institutions.
81
Obstacles in economic transition
Managerial expertise, shortage of capital, cultural differences, sustainability.
82
Political risk
likelihood that a society will undergo political change that negatively affects local business activity.
83
Confiscation
Forced transfer of assets from company to government without compensation.
84
Expropriation
Forced transfer of assets from company to government with compensation.
85
Nationalization
Government takeover of an entire industry.
86
Why do governments intervene in trade
protect jobs, preserve national security, respond to unfair trade, gain influence, economic motives (protect infant industries), pursue strategic trade policy, cultural motives
87
Subsidies
financial assistance to domestic producers in the form of cash payments, low-interest loans, tax breaks, etc. to fend off international competitors.
88
Export financing
Help promote exports by government
89
Foreign trade zones
A designated geographic region trough which merchandise is allowed to pass with lower customs duties and/or fewer customs procedures.
90
Tariffs
Government tax levied on a product as it enters or leaves a country
91
Ad valorem tariff
Levied as a percentage of the stated price of an imported product
92
Compound tariff
Levied on an imported product and calculated partly as a percentage of its stated price and partly as a specific fee for each unit.
93
Quota
Restriction on the amount of a good that can enter or leave a country during a certain period of time. Maintains supply and protects domestic producers
94
Voluntary export restraint
Export quota at the request of an importing nation (making prices higher due to lower supply)
95
Tariff-quota
Lower tariff for certain quantity of imports and higher for quantities exceeding quota.
96
Embargo
Complete ban on trade of one or more products
97
Local content requirements
Laws stipulating that producers in the domestic market must supply a specific amount of good.
98
Administrative delays
Regulatory controls or bureaucratic rules designed to impair the rapid flow of goods into a country. Objective is protectionism.
99
Currency controls
Restrictions on the convertibility of a currency into other currencies.
100
Smoot-Hawley Act
in 1930, shift in US trade policy from free-trade to protectionism. Set off after competitive tariff increases among major trading nations
101
General agreement on tariffs and trade
Treaty designed to promote free trade by reducing both tariff and nontariff barriers to international trade. Formed in 1947 by 23 nations
102
WTO
International organization that regulates trade among nations
103
Principle of nondiscrimination
requirement that WTO members extend the same favourable terms of trade to all members
104
Dispute settlement in WTO
What sets it apart from GATT
105
Dumping
When a company exports a product at a price lower than the price charged in domestic market or lower than cost of production.
106
Regional Economic Integration
Process whereby countries in a geographic region cooperate to reduce or eliminate barriers to international flow of products, people, or capital.
107
Regional trading bloc
Group of nations in a geographic region undergoing economic integration.
108
Free trade area
Countries remove all barriers to trade among members and each country determines own barriers against nonmembers. Establish processes to resolve trade disputes among members.
109
Customs union
Countries remove all barriers to trade among members but erect a common trade policy among nonmembers. May also negotiate as a single entity with organizations such as WTO.
110
Common market
countries remove all barriers to trade and the movement of labour capital among themselves but erect common trade policy among nonmembers. Adds free movement of important factors of production.
111
Economic union
Countries remove barriers to trade and movement of labour and capital and erect a common trade policy and coordinate economic policies. Members must create common currency and harmonize tax, monetary and fiscal policies.
112
Political Union
Requires members to coordinate economic and political policies against nonmembers with a few exceptions.
113
Case for regional integration
Trade creation, greater consensus, political cooperation, employment opportunities, corporate savings
114
Case against regional integration
Trade diversion, shifts in employment, loss of national sovereignty.
115
European Integration
Began shortly after WWII among a small group of countries and few select industries. Treaty of Paris (Belgium, France, West Germany, Italy, Luxembourg, Netherlands) created European Coal and Steel Community to remove trade barriers. Then signed treaty of Rome creating European Economic Community and a future common market. Finally expanded to European Union.
116
Single European act
Remove remaining barriers, increase harmonization, and enhance competitiveness of EU companies.
117
Maastricht Treaty
created single, common currency, set monetary and fiscal targets for countries taking part, and proposed eventual political union including common foreign and defense policy and common citizenship.
118
Economic criteria of European Monetary Union
Inflation below 3.2, inflation not exceeding that of 3 best performing countries by more than 1.5, gov debt no higher than 60% of GDP, gov deficit no higher than 3& of GDP, interest rates on long term gov securities must not exceed the 3 lowest inflation rates by 2%.
119
Copenhagen criteria
has stable institutions, has a functioning market economy, is able to assume obligations of membership, has ability to adopt rules and regulations of community.
120
NAFTA
Seeks to eliminate most tariffs and non tariff trade barriers on most goods from NA. Calls for liberalized rules regarding gov procurement and granting of subsidies, and deals with intellectual property rights, standards of health, trade in services, safety and the environment.
121
Four criteria of NAFTA rules of origin
1. goods wholly produced / obtained in NAFTA region
2. goods containing non-originating inputs but meeting origin rules
3. goods produced in NAFTA region wholly from originating materials
4. unassembled goods with sufficient NA regional value content
122
Capital market
system that allocates financial resources in the form of debt and equity according to their most efficient uses.
123
Bond
Debt instruments specifying the timing of principal and interest payments
124
Equity
Part ownership of a company
125
Liquidity
Ease with which bondholders and shareholders may convert investments to cash
126
International capital market
Network of individuals, companies, financial institutions, and governments that invest and borrow across national boundaries. Expands money supply for borrowers. Benefits small companies that may not get financing under intense competition for capital. Reduces cost of money for borrow. Reduces risk for lenders.
127
Forces expanding international capital market
IT, deregulation, financial instruments
128
International bond market
market consisting of all bonds sold by issuing companies, governments, or other orgs outside their country
129
Eurobond
Bond issued outside the country whose currency it is denominated
130
Foreign bond
Bond sold outside the borrower's country and denominated in currency of country in which it is sold
131
Interest rates in international capital markets
A driving force
132
Quoting currencies
Quoted currency is numerator. Direct quote on numerator.
133
Conversion
to facilitate transactions, invest directly abroad or repatriate profits
134
Hedging
Insure against potential losses from adverse exchange rate changes
135
Arbitrage
Instant purchase and sale of currency in different markets for profit
136
Speculation
Sequential purchase and sale (vice-versa) of a currency for profit
137
Devaluation
intentional lowering of value of a currency by government. Gives domestic producers en edge on world markets but also reduces buying power
138
Revaluation
intentional raising of value of a currency. Increases prices of exports and reduces price of imports
139
Law of one price
Says an identical product must have an identical price in all countries when expressed in same currency.
140
Big Mac index
Uses law of one price to determine exchange rate that should exist between U.S. dollar and other major currencies. Big mac is similar in quality and content across the world.
141
International monetary system
collection of agreements and institutions that govern exchange rates
142
Fixed exchange rate system
System in which the exchange rate for converting one currency into another is fixed by international agreement
143
Gold Standard
international monetary system in which nations linked the value of their paper currencies to a specific value of gold. Par value- value expressed in terms of gold. Was a fixed exchange rate system.
144
National competitive advantage theory
states that a nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.
145
Porter Diamond model
states the basis of national competitiveness comprises:
1. factor conditions
2. demand conditions
3. related and supporting industries
4. firm strategy, structure and rivalry
146
Factors of production
Inputs necessary to compete in an industry (labour, land, resources, capital and infrastructure).
147
Basic factors
natural labour resources. Important in what a country produces and exports
148
Advanced factors
digital communication systems and highly educated workforce. Include skill levels of workforce and quality of technological infrastructure.
149
Demand conditions
Characterized by size and nature of buyers' needs in the home market for goods and services.
150
Related and supporting industries
Supporting industries provide inputs, forming clusters of related activities in the same region that reinforce productivity and competitiveness.
151
Frim strategy, structure and rivalry
Patterns of strategy, structure and rivalry among firms differ from nation to nation and foster growth for certain industries. The more intense the struggle to survive among domestic companies, the greater the competitiveness.
152
Screening process for potential markets and sites
1. identify basic appeal
2. assess the national business environment
3. measure market or site potential
4. select the market or site
153
Identify basic appeal
Managers determine basic product demand in markets and availability of resources in sites for operations. Exploring the general sustainability of a nation's climate.
154
Assess national business environment
Cultural forces, political and legal forces, economic and financial forces, other forces.
155
Measure market potential
market potential indicator: size, growth rate, intensity, consumption capacity, infrastructure, economic freedom, country risk, receptivity
156
Measure site potential
determining whether a site has adequate resources to carry out the proposed business activity. Important issues include: labour and management, productivity, wage levels, training needs, local infrastructure.
157
Select the market site
Field trips and competitor analysis. Should address number of competitors, market share of competitors, small or mass appeal, focus on high quality or low price, controlled channels of distribution, customer loyalty, threat of subs and new entries, control of key production inputs
158
Main sources of secondary data
International organizations, government agencies, industry trade associations, service organizations, internet
159
Problems with secondary research
availability of data and comparability of data
160
Common methods of primary research
Trade show, trade mission, focus group, consumer panel, survey, environmental scanning
161
Problems with primary research
cultural variables, language, literacy rates among local population
162
International corporate-level strategy
Focuses on the scope of the firm's operations trough product and geographic diversification.
163
Multi-domestic strategy
Assumes markets differ, decentralized to allow tailoring of products in each market, supports customization to local needs. Does not allow economies of scale and can be costly.
164
Global strategy
Firm offers standardized products across country markets with competitive strategy being dictated in the home office. Emphasizes economies of scale. Requires more resource sharing and coordination across country boundaries.
165
Transnational strategy
Seeks to achieve both global efficiency and local responsiveness. Requires organizational learning.
166
Exporting
Entry mode through which the firm sends products it produces in domestic market internationally. Least expensive and simple mode. Less control over marketing and distribution, transport costs and tariffs are a concern.
167
Advance payment
export/import financing in which an importer pays an exporter for merchandise before its shipped.
168
Documentary collection
Export/import financing in which a bank acts as an intermediary without accepting financial risk.
169
Draft (bill of exchange)
Document ordering an importer to pay an exporter a specified amount of $ at a specific time.
170
Bill of lading
Contract between an exporter and shipper that specifies merchandise destination and shipping costs.
171
Letter of credit
Export/import financing in which the importer's bank issues a document stating that the bank will pay the exporter when the exporter fulfills the terms of the document. Irrevocable and confirmed.
172
Open account
Export/import financing in which an exporter ships merchandise and later bills the importer for its value.
173
Licensing
Entry mode in which an agreement is formed that allows a foreign company to purchase the right to manufacture and sell a firm's products within a host country's market. Least costly form of international diversification but least returns.
174
Strategic alliance
Involves a firm collaborating with another in a different setting to enter one or more international markets. Firms share risk and resources.
175
Acquisitions
An entry mode through which a firm from one country acquires a stake in or purchases all of a firm located in another country. Quickest mean of entry into international market.
176
Greenfield venture
An entry mode through which a firm invests directly in another country or market by establishing a new wholly owned subsidiary. Most expensive and risky means of entering internationally.
177
Criteria for choosing entry mode
focus on:
industry's competitive conditions
country's situation and gov policy
firm's unique set of resources, capabilities, and core competencies
178
Management problems are exacerbated by:
-trade barriers
-logistical costs
-cultural diversity
-access to raw materials
-differences in employee skill
-differences in host countries' gov policies and practices
