UNIT 1 Flashcards
any business activity that crosses national boundaries.
international business
Why do companies go international?
cheap labor
2. availability of resources
- raw materials
- labor/manpower
- management
- technology
3. market expansion/emergence of new markets
4. to compete (globally)
5. to maximize profits
6. foreign competition
7. global competition
8. tax incentives
9. avoiding exposure to competitors
the period in the 18th and 19th centuries which, in Western Eurpe, was characterized by rapid industrialization and the widespread mechanization of production processes.
Industrial Revolution
improved recording and bookkeeping; the use of commercial and investment papers
Commercial documents
fair practice by traders to protect the interests of the parties involved.
Commercial law
it is because of _____________ that goods are able to move at a faster pace from one nation to another than otherwise would be the case
commercial banks
it is simply a domestic port open to both foreign and coastwise trade.
Ports of Entry
doctrine which demand the minimum interference by the government in economic and political affairs.
Laissez faire
operate exclusively within a single country (home country)
domestic
operate within a geographically defined region that crosses national boundaries.
Regional Exporter/Exporter
manufacturing and assembly, marketing and sales are decentralized beyond the home region; however, key decisions are made and coordinated from a central office.
International
companies run independent and mainly self-sufficient subsidiaries in a range of countries; operations are standardized
multinational
highly decentralized organization operating across a broad range of countries.
Global
Almost all functions (R&D, manufacturing, marketing and sales) are performed in the location around the world.
Global
most common, most fundamental, largest type of international business
International trade
Visible physical goods or commodities move between countries as export or import
international trade
takes place when a licensor grants a foreign firm the right to use intangible or intellectual property for a specific period of time in return for a royalty.
licensing
an option in which a parent company grants another company or firm the right to do business in a prescribed manner.
franchising
there is movement of capital, personnel and other assets
direct investment
much greater level of control over the project or enterprise
direct investment
they are the principal instruments in the expansion of business on an international scale
Multinational Corporations
control production facilities in more than one country
multinational corporations
more than 25% of its profits are produced outside its home country
multinational corporations
firms that control operations in at least six countries
multinational corporations
it is a firm that is structured so that business is conducted or ownership is held across a number of countries or that is organized into global product divisions.
multinational corporations
T/F
Firms that participate in IB solely by exporting or licensing technology are not multinational
true
T/F
Foreign firms become global by establishing a presence in North America, Europe, and Asia.
True
T/F
Developing products exclusively for local markets is a key strategy for foreign firms seeking to go global.
False | not a key strategy
T/F
“Glocalization” refers to making global strategic decisions while allowing local units to manage tactical aspects like packaging and marketing.
True
T/F
Overcoming the “not invented here” syndrome is important for foreign firms in their global expansion efforts.
True
T/F
Opening senior positions only to local employees is a common strategy for foreign firms aiming to globalize.
False | also to foreign employees
T/F
When unable to penetrate certain markets, foreign firms often seek alliances with local companies.
True
Contributions of MNCs to host countries
- They contribute to output and employment
- They contribute to balance of payments
- Technology transfer
- Increased productivity and output
- Transfer of human capital
- Increased choice for locals
T/ F
Foreign firms contribute to output and employment in host countries.
True
T/F
Foreign firms have no impact on the balance of payments of the countries they operate in.
False | have impact
T/F
Technology transfer is one of the benefits of foreign firms entering a market.
True
T/F
Foreign firms facilitate the transfer of human capital to local populations.
True
T/F
Increased choice for locals is a benefit of foreign firms operating in their markets.
True
T/F
MNCs benefit from superior technical know-how in their operations.
True
T/F
The large size of MNCs does not provide any advantages related to economies of scale.
False | provides
T/F
MNCs often enjoy lower input costs compared to smaller firms.
True
T/F
Brand image and goodwill are disadvantages for MNCs in competitive markets.
False | Advantage
T/F
Access to low-cost financing is a benefit derived by MNCs.
True
T/F
Financial flexibility through transfer pricing is a strategy used by MNCs.
True
T/F
MNCs have an information disadvantage compared to local firms.
False | advantage
T/F
Management experience and expertise are benefits that MNCs typically possess.
True
T/F
Diversification of risk is not a benefit for MNCs operating in multiple markets.
False | indeed a benefit
The exchange rate is the price of a foreign currency that one dollar can buy.
Business Risk
Weaker currency makes importation expensive but stimulates exports.
Business Risks
Host country policies are very much different from their home country
Host country policies
government policies that restrict international trade to help domestic industries.
Protectionism
T/F
Host countries adopt protectionist policies to protect infant industries from foreign competition.
True
T/F
One reason for protectionist policies is to ensure the home market is shielded from international market pressures.
True
T/F
Keeping money at home, including local currency and foreign reserves, is not a concern for host countries.
False | indeed a concern
T/F
Protectionist measures can encourage capital accumulation within a host country.
True
T/F
Conservation of natural resources is often a rationale for implementing protectionist policies.
True
T/F
The industrialization of a low-wage nation is unrelated to the adoption of protectionist policies.
False | significant reason to the adoption
T/F
Host countries adopt protectionist policies to maintain employment and reduce unemployment levels.
True
T/F
National security is not a reason for implementing protectionist policies.
False | indeed a reason
T/F
Increasing the size of domestic businesses can be a motivation for protectionist measures.
True
T/F
Retaliation against foreign trade practices is a irrelevant reason for the adoption of protectionist policies.
False | irrelevant
a tax or duty imposed by a government on imported or exported goods.
tariff
typically levied as a percentage of the value of the goods being imported or exported, although it can also be a fixed amount per unit.
tariff
various purposes, including protecting domestic industries from foreign competition and generating revenue for the government
tariff
specific unit or peso limit applied to a particular type of good
quota
country imposes absolute restriction against the purchase and importation of certain goods from other countries.
boycott
refusal to sell to a specific country.
embargo
