September 19 Flashcards
Reasons to go international (8), (Damian)
- Bigger markets
- Higher revenues
- Higher recognition / brand awareness
- Potential customers / business partners
- Variation
- Decrease the costs
- Decrease taxes
- Labour markets, qualified personnel
Chances / Risk of going International
Chances:
- Economies of scale
- Make us of potential of foreign market
Riks
- Language differences
- Differences in marketing culture
- Political risks
- FX-Rates
- Business risk, localization risk
- ethical rates
- cultural risks
- regulation change
- corruption
Name the “Risiks in International Business” (exact Name)
- cross-cultural risk
- country risk
- currency (finanicial) risk
- commerical risk
Risks in Int.Bus.: cross-cultural risks (4)
- cultural differences
- negotiation patterns
- decision-making styles
- ethical practices
Risks in Int.Bus: Country Risk
- harmful or unstable political system
- laws and regulations unfavorable to foreign firms
- inadequate/underdeveloped legal system
- bureaucracy and red tape
- corruption (and other ethical blunders)
- government intervention, protectionism (trade, and investment barriers
- mismanagement or failure ot the national economy
Risks in Int.Bus: Commerical Risk
- weak partner
- operational problems
- timing of entry
- competitive intensity
- poor execution of strategy
Risks in Int.Bus: Currency (Financial) Risk
- currency exposure
- asset valuation
- foreign taxation
- inflationary and transfer pricing
Elements of international Business (6)
- Globalization of markets
- Foreign market entry strategies
- Participants (firms, intermediaries, facilitators, governments)
- International business risks
- International investments
- International trade
International Business vs. Domestic Business
International
business….
1.… is conducted across national borders.
2.… uses distinctive business methods.
3.… is in contact with countries that differ in terms of culture, language, political system, legal system , economic situation, infrastructure, and other factors.
–> Essentially, international business faces four unique types of risk
Reasons to go International (9), HS19
1. Growth opportunities through market diversification 2. Higher margins and profits 3. New ideas about products, services and business methods 4. Co location with international consumers 5. Proximity to supply sources, benefit from global sources advantages, or gain flexibility in product sourcing 6. Access to lower cost or better value factors of production 7. To develop economies of scale in sourcing, production, marketing and R&D 8. Effectively compete internationally or toward the growth of competition in the home market 9. Invest in a potentially rewarding relationship with a foreign partner
Begriffserklärung: Multinational Enterprises (MNE’s)
Firms that are headquartered in one country but have operations in one or more other countries
Begriffserklärung: Small & Medium (Int.) Enterprises (SM(I)E’s
- Smaller than MNE’s, but with an international presence, Usually suppliers for MNE’s
- Competitive advantage comes from innovation, technology, agility, talent and efficiency
Begriffserklärung: Born Global Firms
- young, entrepreneurial firms that undertake substantial international business at or near its founding
Begriffserklärung: Non-Government Organizations: NGO’s
-Pursue special causes and serve as advocates for social issues, politics, education, and research
Entry Modes: Pragmatic vs. Stategic Approach
Pragmatic Approach:
The manager uses a workable entry mode for
each foreign market, which means that the
manager use different entry modes depend on
the time stage or the business stage
Strategic Approach:
The manager systematically compares
all of the entry modes and evaluates the value
of each before any choice is made; requires
resources, capital and time
Ethical ABC
Is your decision, action, process, product, etc…
A
bove the Law?: Ethical behavior means more than just meeting
the letter of the law.
B
eyond the Bottom Line?: What are the environmental as well
as the profit impacts of the decision?
C
onsequent?: What the negative consequences are for all of the
stakeholders that may be affected by the decision?
Eight Tests of Ethics
1.
Legal test : Does the action violate the law?
2.
Duties test : Is the action contrary to accepted moral
obligations?
3.
Special obligations test : Will the action violate special
obligations unique to an industry?
4.
Motives test : Is the intent of the action harmful?
5.
Consequences test : What may be the major damages of the
actions
6.
Virtues test : Will the action reflect what the organization wants
to be?
7.
Rights test : Will the action infringe on customer rights?
8.
Justice test : Does the action leave a stakeholder worse off?
Political factors
3 Questions
How does it work in other countries?
How are politicians selected?
How often are laws changed?
Principal functions of a political system (3)
A political system is a set of formal institutions that constitute a government.
- To provide protection from external threats
- Establishing stability based on law
- Govern the allocation of valued resources among members of the society
Political System (Definition)
A political system is a set of formal institutions that constitute a government.
Political Systems (the 4 kind of systems)
- totalitarianism
- liberalism
- democracy
- socialism
Political Systems: How should decisions be made?
Totalitarianism vs. Democracy
Totalitarianism:
- The state seeks to control all aspects of life. Thorugh one-party system, secret police, state propaganda, regulation of free discussion and terror tactics
Democracy:
- The power lays mainly with the citizens. They have the right to choose their government and may even vote on different public referendums
Political Systems: How should welfare be distributed?
Socialism vs Liberalism
Socialism
- Capital and wealth should be vested in the state. The collective welfare of the people is seen to overweight the welfare of the individual
Liberalism
- The private property rights are essential and are protected. The government only performs essential functions that serve all citizens. The ideas of capitalism are predominant.
