International business exam 2

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What are the 3 types of legal systems?
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Terms in this set (74)
trademarkShape, color design, phrase, abbreviations, or sound that stands for a company or its productCopyrightthe protection of the creative work of authors, composers, and artists.Top 3 patent applicationsUnited States, Germany, JapanWIPO (World Intellectual Property Organization) what do they do?Develop an intellectual property system that operates for every nations benefitKey differences of India and ChinaIndia: -service powerhouse -labor is .92$/ hour China: -manufacturing powerhouse -labor is $3.52 hourGDP (Gross Domestic Product)The total market value of all final goods and services produced annually in an economyGNI (Gross National Income)The total money produced by every resident of a given country, both foreign and not foreignPurchasing Power Parity (PPP)Adjusting the exchange rates for two currencies so the currencies have equivalent purchasing powerDeveloped economiesHigh income industrialized nations, which have high living standards and the most technically developed infrastructureDeveloping economiesLower income nation, less technically developed infrastructure and lower living standardsunderground economyunreported legal and illegal activities that do not show up in GDP statisticsKey differences among the three major country groupsAdvanced- 14% of the world (Canada, France, Japan) Developing- 25% of the world (Bolivia, Nigeria) Emerging- 61% of the world (Brazil, China, India)Population of US320 millionrural to urban shiftThe movement of a nations population from rural areas to citiesdisposable incomeafter-tax incomediscretionary incomethe money that remains after paying for taxes and necessitiesGini IndexMeasure of the degree to which family income within a country is distributed equallyOffer rateThe price at which a bank is willing to sell a currencyBid rateThe price to buy a currency.spreadDifference between the offer and bid priceWhat can increase the supply or demand of foreign currency?Relative price differences and PPP, interest rates and money supply, productivity and balance of payments, exchange rate policies, investor psychologyInternational fisher effectConcept that the interest rate differentials for any two currencies will reflect the expected change in their exchange ratesFree floating exchange ratesThis is all determined by Supply and Demand of that foreign moneyManaged floatingCurrency floats according to market forces, but governments actively intervenes to a larger extentConventional fixed pegA fixed rate relationship allows a currency exchange rate with one or a basket of currencies to fluctuate around a fixed rate within a narrow band of less than 1 percentcurrency hedgingminimizing exposure to exchange rate risk in all non-spot transactionsLead strategyAttempt to collect foreign currency receivables early when it is expected to depreciate and pay foreign currency payables before they are due when a currency is expected to appreciateLag strategyDelay collections of currency receivables if that currency is expected to appreciate and delay payables if the currency is expected to depreciateSpot transactionThe classic single-shot exchange of one currency for another.forward transactionparticipants buy and sell currencies now for future deliveryInternational strategyPlan on how and where to compete successfullycompetitive advantageAchieve and maintain a unique and valuable competitive position.. generating higher rates of profit than its competitorscore competenciesCreate value for which customers are willing to pay, are rare, are difficult to imitate or substitute foreconomies of scalefactors that cause a producer's average cost per unit to fall as output risesStep 1 of the global strategic planning processAnalyze external environment- cannot be controlled by the firm, analysis of environmental, social, economic, political, and business trends, also anticipate changes in key environmental forces in the futureStep 2Analyzing internal environment: can be controlled by the firm, self assessment of the firms value chain, value proposition, knowledge within the firm, and financial resourcesWhat key questions does a firm need to answer about their business?1) companies target customers? 2) what value does the company want to deliver to these customers? 3) how will this customer value be created?Step 3Define corporate mission, vision, and values statementStep 4Set corporate objectives, objectives direct the firms course of actionsStep 5Quantity objectivesStep 6Formulate competitive strategies, action plans to enable organizations to reach their objectivesStep 7Prepare tactical plans: spell out how objectives will be reachedValue Chain AnalysisAn assessment conducted on the chain of interlinked activities of an organization, intended to determine where and how what value is added to the final product or servicePressure for cost reductionsComes with more and more competitionPressure to be locally responsiveRequires the firm to adapt it products to meet local demands in each market, can raise cost.Tactical plans...Spell out the details of the big picturemission statementexpresses the purpose of the organizationVision StatementDescription of the companies desired future positionvalues statementA clear, concise description of the values, beliefs, and priorities expect of the organizations membersHome replication strategyAdvantage: easy to implement, leverages home country based advantages Disadvantage: lack of local responsiveness, may alienate foreign customersmultidomestic strategyAdvantage: maximize local responsiveness Disadvantage: high cost, too much local autonomyGlobal StandardizationAdvantage: leverages low cost advantages Disadvantage: lack of local responsiveness, too much centralized controltransnationalAdvantage: cost efficient while being locally responsive, engages in global learning and diffusion of innovations Disadvantage: organizationally complex, difficult to implementorganizational structureWay a firm is organized, determines the relationship (who does what where, who reports to whom, who makes what decisions)Organization designRefers to the process that determines how a company should be organized Objective: to ensure its worldwide business activities are integrated in an efficient and effective manner Typically the job of top management in a companyOrganizational structure of international businessWay an organization arranges it's domestic and international units and activitiesWhat was krafts problemSluggish growth, weak presence in emerging markets, not adepts in developing country specific products, new CEOHow did kraft fix the problem?Split company in 2, they reorganized the company to strategically focus on certain things. Decentralized the company. Country managers were encouraged to create new products that appealed to local cultures. Business had full profit and loss responsibilities.Factors that influence structure?Size of organization, complexity of its business operations, type of product and industry an organization is inInternational division structureSame level as domestic, responsible for all non-Home-country activitiesGlobal product division structureAn organizational structure that assigns global responsibilities to each product division.Geographic area structureallows the company to tailor products to regional differences and to achieve regional coordinationGlobal functional structureHigh degree of specialization, leads to barriers between different functionsmatrix structureDifficult to implement, confusion in terms of reporting and authority