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111 terms

bus 303 midterm 2

STUDY
PLAY
total product
What the customer buys, including the physical product, brand name, accessories, after-sales service, warranty, instructions for use, company image, and package.
Promotion
Any form of communication between a firm and its publics
Advertising
Paid, nonpersonal presentation of ideas, goods, or services by an identified sponsor
programmed management approach
A middle-ground advertising strategy between globally standardized and entirely local programs
sales promotion
Any of various selling aids, including displays, premiums, contests, and gifts.
public relations
Various methods of communicating with the firm's publics to secure a favorable impression
foreign national pricing
Local pricing in another country
International pricing
Setting prices of goods for export for both unrelated and related firms
transfer price
Intracorporate price, or the price of a good or service sold by one affiliate to another, the home office to an affiliate, or vice versa
market screening
A version of environmental scanning in which the firm identifies desirable markets by using the environmental forces to eliminate the less desirable markets
Environmental scanning
A procedure in which a firm scans the world for changes in the environmental forces that might affect it
country screening
using countries as the basis for market selection
segment screening
Using market segments as the basis for market selection
Market indicators
Economic data used to measure relative market strengths of countries or geographic areas
market factors
Economic data that correlate highly with market demand for a product
estimation analogy
Process of using a market factor that is successful in one market to estimate demand in a similar market
trend analysis
Statistical technique by which successive observations of a variable at regular time intervals are analyzed to establish regular patterns that are used for establishing future values
cluster analysis
Statistical technique that divides objects into groups so that te objects within each group are similar
trade mission
A group of business people and/or government officials (state or federal) that visits a market in search of business opportunities
Trade fair
A large exhibition, generally held at the same place and time periodically, at which companies maintain booths to promote the sale of their products
social desirability bias
The custom of politeness toward everyone that can cause respondents to give answers calculated to please the interviewer rather than to reflect the respondent's true beliefs or feelings
global mind-set
combines an openness to and an awareness of diversity across markets and cultures with a propensity and ability to synthesize across this diversity
ethnocentric
related to hiring and promoting employees on the basis of the parent company's home-country frame of reference
Polycentric
related to hiring and promoting employees on the basis of the specific local context in which the subsidiary operates
Regiocentric
related to hiring and promoting employees on the basis of the specific regional context in which the subsidiary operates
Geocentric
related to hiring and promoting employees on the basis of ability and experience without considering race or citizenship
home-country nationals
sane as parent-country national
parent-country national (PCN)
Employee who is a citizen of the nation in which the parent company is headquartered; also called home-country national
Host-country national (HCN)
Employee who is a citizen of the nation in which the subsidiary is operating, which is different from the parent company's home nation
Third-country national (TCN)
Employee who is a citizen of neither the parent company nor the host country
expatriates
A person living outside his or her country of citizenship
culture shock
The anxiety people often experience when they move from a culture that they are familiar with to one that is entirely different
Allowances
Employee compensation payments added to the base salaries because of higher expenses encountered when living abroad
bonuses
Expatriate employee compensation payments in addition to base salaries and allowances because of hardship, inconvenience, or danger
compensation packages
For expatriate employees, packages that can incorporate many types of payments or reimbursements and must take into consideration exchange rates and inflation
International status
Entitles the expatriate employee to all the allowances and bonuses applicable to the place of residence and employment
consolidation
process of translating subsidiary results and aggregating them into 1 financial report
current rate method
an approach in foreign currency translation in which assets and liabilities are valued at current spot rates
temporal method
an approach in foreign currency translation in which monetary acts are valued at the spot rate and accounts carried at historical costs are translated at their historic exchange rates
functional currency
primary currency of a business
triple bottom line (3bl)
a result or impact report on the environmental, social and financial impacts of the bus
american depository receipts (adrs)
foreign shares held by a custodian, usually a US bank, in the issuers home market and traded in dollars on the US exchange
off shore financial center
location that specializes in financing nonresidents, with low taxes and few banking regulations
fronting loan
a loan made thru an intermediary from parent company to subsidiary
transfer pricing
bookkeeping cost of goods transferred from one unit of a bus to another in another country
multilateral netting
strategy in which subsidiaries transfer net intracompany cash flows thru a centralized clearing center
leading and lagging
timing pmts early (lead) or late (lag) deepening on anticipated currency movements so that they have the most favorable impact for company
transaction exposure
change in the value of a financial position created by foreign currency changes between the establishment and settlement of a contract
hedging
a process to reduce or eliminate financial risk
forward market hedge
foreign currency contract sold or bought forward in order to protect against foreign currency movement
currency option hedge
a method to hedge foreign currency exposure by borrowing and lending in the domestic and foreign money market
swapping
a spot sale/purchase of an asset against a future purchase/sale of an equal amount in order to hedge a financial position
translation exposure
potential changes in the value of a company's financial position due to exposure created during the consolidation process
economic exposure
the potential for the value of future cash flows to be affected by unanticipated exchange rate movements
income tax
direct tax levied on earnings
value added tax (vat)
indirect tax collected from the parties as they add value to the product
withholding tax
indirect tax paid by the payor; usually on passive income
branch
legal extension of the parent company
subsidiary
separate legal entity owned by the parent company
Gold Standard
The use of gold at an established number of units per currency
Bretton Woods System
Monetary system from 1945 to 1971
Used a par value based on gold and the U.S. dollar. Supported huge international trade growth
Fixed Exchange Rate
Specific currency exchange equivalence upheld by government
par value
stated value
floating currency exchange rates
rates that are allowed to float against other currencies and are determine by market forces
jamaica agreement
1976 IMF agreement that allows flexible exchange rates among members
banks for international settlements
institution for central bankers, operates as their bank
central reserve asset
asset, usually current, held by a govts central bank
vehicle currency
a currency used as a vehicle for international trade/inv
intervention currency
currency used by a country to intervene in the foreign currency exchange markets, often to buy its own currency
spot rate
the exchange rates between two currencies for delivery within 2 bus days
forward urgency market
trading market for currency contracts deliverable for 30, 60, 90 or 180 days in the future
forward rate
the exchange rate between two currencies for delivery in the future, usually 30, 60, 90 or 180 days
monetary policies
govt policies that control the amount of money in circulation and its growth rate
fiscal policies
policies that address the collecting and spending of money by the govt
law of one price
concept that in an efficient market like products will have like prices
arbitrage
the process of buying and selling instatneously to make profit with no risk
fisher effect
the relationship between real and nominal interest rates: the real interest rate will be the nominal interest rate minus the expected rate of inflation
international fisher effect
concept that the interest rate differentials for any 2 currencies will reflect the expected change in their exchange rates
purchasing power parity (ppp)
shows that the number of units of a currency required to buy the same basket of goods/services in the foreign market that one dollar would buy in the US or home market
efficient market approach
assumption that current market prices fully reflect all available relevant info
random walk hypothesis
assumption that the unpredictability of factors suggests that the best predictor of tomorrow's prices is todays prices
fundamental approach
exchange rate prediction based on econometric models that attempt to capture the variables and their correct relationships
technical analysis
an approach that analyzes data for trends and then projects these trends forward
balance of payments (bop)
record of a country's transactions with the rest of the world
What is the importance of the international monetary system's evolution to IB
-simplicity of the gold standard was its appeal
-trade imbalances were corrected by flow of gold toward the surplus
-money only created if backed by gold
Causes of exchange rate movement
-market forces establish floating currency values and ease of convertibility
-monetary policies: govt decisions that control amt of money in circulation and growth rate
-fiscal policies: address govt's collecting/spending of money
BOP shows glodemand for country's currency
-global demand for country's currency
-used to predict economic changes in a target country
periodic updating
changes in market data/other related events demand that bus./ marketing plans be updated to reflect the impact of these changes
entry barriers
import restrictions, local participation requirements, local content restrictions, govt owned competition
profit remittance barriers
undue restrictions on the repatriation of earnings, limits to FDI, inability to provide foreign exchange
policy stability
political climate, govt stability, public unrest -sociocultural factors
-competitive forces
Field trip
spend enough time in the market to learn, experience, & "get a feel" for it
trade mission
a group of businessppl and/or govt official (state/federal) that visits a market in search of business opps
trade fair
a large exhibition, generally held at the same place / same time periodically, @ which companies maintain booths to promote the sale of their products.
The international marketing manager's question
Can we standardize worldwide, should we make some changes, or should we formulate a completely different marketing mix?"
marketing mix
a set of strategy decisions about: product, price, promotion, distribution
Sociocultural Forces
different cultural patterns often require changes in brand name, color, label translations, package size & price
Legal Forces
impact every aspect of marketing mix - such as pollution, consumer protection & operator safety legislation
Economic Forces
income differences impact consumer's ability to pay, requiring quantity and price changes
Physical Forces
climate, terrain, altitude, etc., may demand product alteration
Promotion
Communication that secures understanding between a firm and its publics to bring favorable buying action and long-term confidence in the firm and its products or services
Glocal advertising
neither purely global nor purely local
Best way to handle international advertising
Personal selling
importance depends on
relative cost of advertising
funds available for advertising
available media
type of product
international standardization
overseas saels force, sales presentations, training similar to home country
pricing strategies
affect other corporate functions
directly determine gross revenue
are a major determinant of profits
international human resource management( IHRM)
home country national or parent country national
host country national
third country national
Inpatriates
Employees hired in the host country
Flexpatriates
home or third-country employees on short term assignments
Work Context
job clarity, role conflict, discretion in job completion
Adjustment to General Environment
Differences in housing, food, education, health, safety, transportation
Interaction with Local Nationals
Differences with behavioral norms, communication patterns