41 terms

Chapter 4

Market entry strategy
an organizational strategy for entering a foreign market
an entry strategy in which the organization maintains its production facilities within its home country and transfers its products for sale in foreign countries
the barter of products for other products rather than their sale for currency
Global outsourcing
engaging in the international division of labor so as to obtain the cheapest sources of labor and supplies regardless of country; also called offshoring.
an entry strategy in which an organization in one country makes certain resources available to companies in another to participate in the production and sale of its products abroad
a form of licensing in which an organization provides its foreign franchisees with a complete package of materials and services
Direct invetsing
an entry strategy in which the organization is involved in managing its production facilities in a foreign country
Joint venture
a variation of direct investment in which an organization shares costs and risks with another firm to build a manufacturing facility, develop new products, or set up a sales and distribution network.
Wholly owned foreign affiliate
a foreign subsidiary over which an organization has complete control
Greenfield venture
the most risky type of direct investment, whereby a company builds a subsidiary from scratch in a foreign country.
International management
the management of business operations conducted in more than one country
a country's physical facilities that support economic activities.
Political risk
a company's risk of loss of assets, earning power, or managerial control due to politically based events or actions by host government
Political instability
events such as riots, revolutions, or government upheavals that affect the operations of an international company
Power distance
the degree to which people accept inequality in power among institutions, organizations and people
Uncertainty avoidance
a value characterized by people's intolerance for uncertainty and ambiguity and resulting support for beliefs that promise certainty and conformity
a preference for a loosely knit social framework in which individuals are expected to take care of themselves.
a preference for a tightly knit social framework in which individuals look after one another and organizations protect their members' interests
a cultural preference for achievement, heroism, assertiveness, work centrality, and material success
a cultural preference for relationships, cooperation, group decision making, and quality of life
Long-term orientation
a greater concern for the future and high value on thrift and perseverance
Short-term orientation
a concern with the past and present and a high value on meeting social obligations.
High-context culture
a culture in which communication is used to enhance personal relationships
Low-context culture
a culture in which communication is used to exchange facts and information
a cultural attitude marked by the tendency to regard one's own culture as superior to others.
a single European currency that replaced the currencies of 15 European nations
Multinational corporation (MNC)
An organization that receives more than 25 percent of its total sales revenues from operations outside the parent company's home country; also called global corporation or transnational corporations
Cultural intelligence (CQ)
a person's ability to use reasoning and observation skills to interpret unfamiliar gestures and situations and devise appropriate behavioral responses
Culture shock
feelings of confusion, disorientation, and anxiety that result from being immersed in a foreign culture.
employees who live and work in a country other than their own.
Domestic stage
Market potential is limited to the home country, with all production and marketing facilities located at home.
International stage
Exports increase, and the company usually adopts a multidomestic approach, meaning the competition is handled for each country indepependently.
Multinational stage
The company has marketing and production facilities located in many countries, with more than one-third of its sales outside the home country. These companies adopt a globalization approach, meaning they focus on delivering a similar product to multiple countries.
Global (or stateless) stage
Transcends any single home country. These corporations operate in true global fashion, making sales and acquiring resources in whatever country offers the best opportunities and lowest cost.
Economic environment
represents the economic conditions in the country where the international organization operates. This part of the environment includes such factors as economic development, resource and product markets, and exchange rates, each of which is discussed in the following sections.
Resource Market
When operating in another country, company managers must evaluate the market demand for their products. If market demand is high, managers may choose to export products to that country.
Exchange rate
the rate at which one country's currency is exchanged for another country's
Hofstede's Value Dimension
Four dimensions of national value systems that influence organizational and employee working relationships: Power distance; Uncertainty avoidance; Individualism and collectivism; Masculinity/femininity
Globe Project Value Dimensions
Identify nine dimensions that explain cultural differences, including those identified by Hofstede (1) Assertiveness (2) Future orientation (3) Uncertainty avoidance (4) Gender differentiation (5) Power distance (6) Societal collectivism (7) Individual collectivism (8) Performance orientation (9) Humane orientation
Polycentric companies
oriented toward the markets of individual foreign host countries
Geocentric companies
truly world oriented and favor no specific country