Unit 5- International Business Flashcards
What does International Business refer to?
International Business (IB) refers to business activities that involve the transfer of resources, goods, services, knowledge & skills, or information, across national borders
What are the 2 ways of conducting IB?
international trade refers to the exchange of capital, goods & services across international borders or territories and foreign direct investment is the practice of investing shareholder funds directly into another country, by building or buying physical facilities, or by buying a company
What are the modes of entry of IB?
modes of entry: Imports, Exports, Licensing, Franchising & Offshoring
What are international joint ventures?
International joint ventures (entry mode) is an alliance in which the partners agree to form separate, independent organisations for a specific business purpose
What are wholly owned subsidiaries?
Wholly owned subsidiary (entry mode) is a company whose common stock is 100% owned by another company (parent company)
What is the theory of absolute advantage?
by specialising in the production of goods which they can produce more cheaply, than other countries/nations, will increase their economic well-being
What is comparative advantage?
Comparative Advantage is the economy’s ability to produce goods & services at a lower opportunity cost than its trading partners
What is culture?
Culture is a system of values & norms that are shared among a group of people & that when taken together constitute a design for living (traditions, values, customs, habits)
What is low-context culture?
individualism, personal space in interaction, non-verbal communication less important, communication codified/rule guided, punctuality matters, proper planning
What is high-culture context?
Group thinking, little personal space, body contact in communication, punctuality less important, personal relations matter
What are 3 different ways to describe & compare culture?
Competing Values Framework (Quinn et all (2015)- Rational Goal, Internal Process, Human Relations & Open Systems), Four Cultural Types (Handy (1993)- Power, Role, Task & Person), Multiple Cultures (Martin (2002)- Integration, Differentiation & Fragmentation)
What are Hofstede’s 5 dimensions of culture?
power distance, uncertainty avoidance, individualism vs collectivism, masculinity vs femininity and long-term vs short-term orientation
What is organisational culture?
Organisational culture is a set of values, beliefs, norms and assumptions that are shared by a
group and that guide their interpretations of, and responses to, their environments
What are types of organisational culture?
power (small entrepreneurial organisations with one or more powerful figures), role (mechanistic, relies on rules and procedures), task (job or project orientated - flexible structures and teamwork) & person (the individual and his/her wishes is the main focus, minimalist structures)
What is the cultural web?
The cultural web is a useful tool for analysing assumptions surrounding a business or organisation. It can be used to highlight specific practices and beliefs, and to subsequently align with preferred culture and strategy
What does international management refer to?
International management refers to the practice of managing business operations in more than one country
What are examples of international management?
manager in another country, managing an international team, and managing in a global organisation whose employees, systems and structures are truly international in that they no longer reflect its original, national base
What are the environments affecting international management?
external (political, economic, social, technological, (natural) environmental and legal factors), competitive (customers, suppliers and competitors) & internal environment (people, culture, structure and technology)
What is Porter’s 5 forces analysis technique?
Porter’s five forces is an analysis technique that allows managers to gauge the level of competition within their industry, and assess current and potential lines of business. Ultimate goal is to help managers set their profitability expectations, because
profitability decreases as competition increases
What are Porter’s 5 forces?
threat of new entry, competitive rivalry, buyer power, threat of substitution & supplier power
What is globalisation?
Globalisation is the shift towards a more integrated and interdependent world economy
What are the 4 drivers of globalisation?
market drivers, cost drivers, competitive drivers & government drivers
What is the globalisation of markets?
The globalisation of markets - refers to the merging of historically distinct and separate national markets into one huge global marketplace
What is the globalisation of production?
The globalisation of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labour, energy, land, and capital)
What would economies of scale bring?
Economies of scale would bring competitive advantage - cost advantage due to scale of operation, with cost per unit of output decreasing with increasing scale
Why are institutions needed in IB?
institutions are needed to help manage, regulate, and police the global marketplace and to promote the establishment of multinational treaties to govern the global business system
What is corporate social responsibility?
CSR refers to the idea that business people should consider the social consequences of economic actions when making business decisions and that decisions should have both good economic and social consequences
What does internationalisation refer to?
Internationalisation refers to the “process of increasing involvement in international operations”
What are international new ventures?
International new ventures (INVs) are firms and business organisation that seek significant competitive advantage from the use of resources and the sale of outputs in multiple countries
What are industry factors influencing INV internationalisation?
structure & competition, knowledge intensity, industry globalisation, industry network dynamics, industry business models, local industry cluster internationalism, industry concentration & industry life cycle
What do spin-offs refer to?
spin-offs refer to new businesses created by one or more individuals through the exploitation of the knowledge and experiences acquired during their previous occupation
What are the conditions for a spin-off?
- an organisation from which to separate, 2. an entrepreneurial impulse from one or more people, who have easy access to methods, knowledge and relationships, 3. the presence of one or more customers who express the need to benefit from the products and/or services offered by the spin-off
What are 3 types of spin-offs?
university spin-offs, research based spin-offs & technology based spin-offs
Why do born global firms succeed internationally?
Born global firms succeed internationally due to high knowledge intensity, close relations with specified customers and scale of international exposure
