Scales And Scope Flashcards
Why do companies engage in international business
- expand sales
- accessing resources
- lower costs
- reduce risk
Types of entry modes
-Export (non equity)
—direct
—indirect
-Licensing (non equity)
—franchising
—management contract
—Turnkey operations
- strategic alliance (equity/non equity)
- Investment (Equity)
-portfolio
-FDI
—-Greenfield Investment
—-Brownfield investment
—-mergers and acquisitions
—-joint ventures
—-horizontal FDI
—-Vertical FDI
Greenfield investment definition
A type of investment where a company builds its operations in a foreign country from the ground up
Greenfield advantage and disadvantages
Advantage - reduced taxes in developing countries - economic benefits of cheap labour Disadvantage - high risk of LOF
Brownfield definition
When a company purchases or rents an factory already built
Foreign Direct Investment
Is an investment made by a firm or individual in one country into business interests located in another country
Portfolio definition
An investment in which an investor merely purchases equaitits of foreign based companies
Turnkey Operation
A business that has already been set up by another company and built , that is ready to use immediately
Management contract definition
Where you pay another company in another countries to provide managerial expertise of that country
Indirect definition
You rely on an exporting trading company to find company and market your goods
Direct export definition
Where you sell your product directly to a consumer in another country
Factors affecting international business
- location
- political
- legal
- behavioural
- economic
Ways to measure the scale and scope of international business
Trade
- value
- volume
- sector
Capital inflow
- capital inflows/outflow
- stock inflow/outflow
- entry modes
Types of Globalisations
- globalisation of markets
- globalisation of supply chains
- globalisation of standards
