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MGMT 450 Exam One All
Terms in this set (150)
Consists of business transactions between parties from more than one country.
The shift toward a more integrated and interdependent world economy.
The inexorable integration of markets, nation-states, and technologies...in a way that is enabling individuals, corporations and nation-states to reach around the world farther, faster, deeper, and cheaper than ever before.
Boundaries, Currencies, Legal Systems, Availability of Resources, Skills and Knowledge
How does international business differ from domestic business? (Five)
Globalization of Markets
Facet of globalization that emphasizes spreading from the corporations domestic borders and increasing market share.
Globalization of Production
Facet of globalization that emphasizes utilizing the cheap labor, more available resources (natural and intellectual), etc. of foreign markets and creating products there instead of domestically.
Just-In-Time (JIT) Systems
Suppliers are expected to deliver necessary inputs just as they are needed.
The factors that affect the markets in one country affect the economies of all other countries.
Globalization of Production - Services
Not just call centers, but also tax returns, legal briefs, and radiologists. Brings up the issues of social responsibility, quality, vulnerability of sensitive information, and the supply-chain.
Period of extended peace from 27 BC to 180 AD
For your career, to compete with peers and competitors, stay on top of the latest business techniques and tools, obtain cultural literacy
Why study international business?
Common coinage, created roadways that were protected by the military, markets, and standardized weights and measures.
How did the Romans encourage prosperous trade and international business?
1870-1914, Colonization, British Pound Sterling, Transportation and Communication.
First Period of Globalization
1990 onward, Collapse of the USSR, US Dollar, Opening up of China and other countries, Technology and Transportation
Second Period of Globalization
The selling of one's own products made in one's own country for use or resale in other countries.
The buying of products made in other countries for use or resale in one's own country.
Trade in goods
Trade in services
Leverage Core Competencies, acquire resources and supplies, Seek New Markets, better compete with rivals
Strategic Imperatives (Four)
Leverage Core Competencies
Strategic Imperatives: A distinctive strength or advantage that is central to a firm's operations. By using it in a new market, the firm is able to increase revenues and profits.
To acquire resources and supplies
Strategic Imperatives: to get materials, labor, capital, or technology. In some cases, organizations must go to foreign sources because certain products or services are scarce or unavailable locally.
Seek new markets
Strategic Imperatives: When a firm's domestic market matures, it becomes increasingly difficult to generate high revenue and profit growth.
Better compete with rivals
Strategic Imperatives: As Coca-Cola expands around the world, Pespi must follow suit or fall behind. Prevent competitors from getting a stranglehold in any country.
Political Environment and Technological Changes
The Environmental Causes Globalization (Two)
Transportation, Information Processing, Communications Technology
Changes in the Technological Environment (3)
Gross Domestic Product (GDP)
Total monetary value of goods produced and services provided by a country in a year.
China, EU (Europenan Union), USA, India, Japan
2014 Ranking GDP Estimates: Top Five
2014 Ranking GDP Estimates: USA's GDP
219.6, 187.6, 13.5 (2013 figures)
Exports of Goods and Services as a Percentage of GDP: Hong Kong, Singapore, and USA
Foreign Direct Investment (FDI), Foreign Portfolio Investments (FPI)
Capital supplied by residents of one country to residents of another.
The country in which the parent company's headquarters is located is the ....
Any other country in which a company operates is known as the ....
Foreign Direct Investment (FDI)
Supply of investment capital for the purpose of active control
Foreign Portfolio Investments (FPI)
Supply of investment capital for a purpose other than control
Accumulation of flows over the years
Capital from only that time period, (i.e. just this year)
Flow of FDI Abroad
Capital from the US to other countries, just this year.
Flow of FDI at Home
Capital from other countries to the US, just this year
Stock of FDI Abroad
Cumulative US Dollar value of all investments in foreign counties, made directly by residents --primarily companies -- of the home country. Excludes investments through the purchase of shares.
Stock of FDI at home
Cumulative US Dollar value of all investments in the home country, made directly by residents --primarily companies -- of other countries. Excludes investments through the purchase of shares.
Countries whose recent growth or prospects for future growth exceed that of traditional markets.
BRIC, Big Ten, Non-High Income Countries
Brazil, Russia, India, China
Argentina, Brazil, China, India, Indonesia, Mexico, Poland, South Africa, South Korea, and Turkey
Method of FDI: Build from scratch and hire everyone
Acquisition Strategy/Brownfield Strategy
Method of FDI: Buy out and existing company
Method of FDI: Two companies work together
A contractual arrangement in which a firm in one country gives out the use of it intellectual property (patents, trademarks, brand names, copyrights, or trade secrets) to a firm in a second country in return for a royalty payment.
A specialized form of international licensing, occurs when a firm in one country authorizes a firm in a second country to use its operating systems as well as its brand names, trademarks, and logos in return for a royalty payment. The fast-food industry.
the franchisor, the franchisee
A specialized form of international licensing, a firm in one country (__________) authorizes a firm in a second country (_________) to use its operating systems as well as its brand names, trademarks, and logos in return for a royalty payment. The fast-food industry.
International Management Contract
An arrangement wherein a firm in one country agrees to operate facilities or provide other management services to a firm in another country for an agreed on fee. The hotel industry.
Multinational Corporation (MNC)
Firms that have extensive involvement in international business.
#1 MNC for 2015:
Multinational Enterprise (MNE)
Businesses (that are not corporations) that have extensive involvement in international business.
Multinational Organization (MNO)
Non-profits that have extensive involvement in international business.
Third largest population in the world
Largest economy in nominal terms
China (post 2009), Canada
United States' biggest import partner? Export?
Currency in which the sale of goods and services is denominated.
Money sent out of a politically or economically unstable country to one perceived as safe.
27% of the world's 500 largest corporations are headquartered in the United States. (T/F)
Exports are vital to the Canadian economy: 29% of its 2011 GDP. (T/F)
Canada most important exports are its rich natural resources. (T/F)
The world's most populous Spanish speaking nation:
The EU comprises of ____ countries. ___ of which use the Euro.
Economically, _______ is the EU's most important member.
Politically, ________ exerts strong leadership within the EU.
The United Kingdom
________ is a major international finance center in the EU.
A small to medium-sized, family-owned enterprise, often located in a small town or city. They are the backbone of the German manufacturing sector. Compete on quality, innovation, reliability, and craftsmanship, not price.
The Mittlestand accounts for 52% of Germany's economic output and 39% of corporate sales.
Iceland, Norway, and Switzerland, postage stamp countries (Andorra, Monaco, Liechtenstein)
High Income European Countries
Middle Income European Countries
Norway, Switzerland, Liechtenstein, Iceland
European Free Trade Association (EFTA) Members
EU plus Norway, Liechtenstein, and Iceland
European Economic Area (EEA) Members
Latvia, Lithuania, Estonia
The Baltic States (3)
Georgia, Armenia, Azerbaijan
The Caucasus (3)
Kazakhstan, Uzbekistan, Tajikistan, Turkmenistan, and Kyrgyzstan
The 5 Central Asian Republics: Fossil Fuel reserves, Russian influence, lang/religion, scarce arable land, low per capita income.
The world's second largest oil producer and exporter.
Largest land mass
A family of interrelated companies with a bank at its center. Have stock ownership amongst each other.
A large trading company that other companies buy an sell through.
Japanese value meaning "Endurance with dignity"
Education, Military Background, and Gaman
Post WWII, these three values helped Japan get back on its feet.
Slow economic growth since the 90s, trade practices, demographic crisis
South Korea, Taiwan, Singapore, Hong Kong
The Four Tigers
Family centered conglomerates (unrelated diversification). Very cosy relationship with the South Korean government. What the government wants - it gets. Low interest or unpaid loans.
Lee Kuan Yew
Singapore's Prime Minister 1959-1990. Credited with building up Singapore. His son is Lee Hsein and he is the current PM.
Dialect in Hong Kong? China?
China-Europe Black Train
Longest Railway in the World:
Strait of Malacca, Singapore; Strait of Hormuz; Suez Canal, Egypt; Bab el Mandab (Piracy); Panama Canal
Straits and Canals (5)
Sovereign Wealth Fund
Pools of money governments invest for profit. Often this money is used to invest in foreign corporations.
Law that is based in the cumulative wisdom of judges' decisions on individual cases throughout history. Creates legal precedents and grows organically.
Law based on codification, or detailed listing, of what is and is not permissible. Originated in biblical times with the Romans.
Law based on the officially established rules governing the faith and practice of a particular religion.
The head of state is also the head of the religion.
In Islamic teachings - that which is NOT permissible. Interest on a loan.
In Islamic teachings - that which is permissible.
Legal system in communist countries and in dictatorships. Law is whatever the current leader says that it is regardless of the formal law of the land. Contract can be ignored or broken on a whim depending upon the current ruling party.
Domestic operations, international competitiveness of domestic firms, foreign firms operating outside the country's borders.
Domestically oriented laws impact... (3)
Restraints against commerce with a country. Can sell to A, B, C, but not X, Y, Z. Cannot sell product to Business 1 in A, B, C.
Comprehensive sanction against all commerce within a country.
Regulating business activities that are conducted outside their borders.
Unpopular act against Cuba to punish them for capturing American assets. Actions are taken against any company that uses the seized assets.
In Arab Nations, boycott any companies that do business with Israel. US - if you adhere to it, we will take you to court.
Assets taken by national government with compensation.
Assets taken by national government without compensation.
Take capital earned in another country back to home country.
Transferring ownership of resources from private to public.
The conversion of state-owned property to privately owned property.
Principle of Comity
A country will honor and enforce within its own territory the judgements and decisions of foreign courts with certain limitations. 1) Reciprocity 2) Notice 3) Legality
Take technology from one country to another. FDI and Business requirements.
Is the US first-to-invent or first-to-file?
Use it or lose it
Id you have filed for intellectual property protection in a country that you are not active it that country can revoke it .
Acquire a smaller foreign firm at a premium in a tax haven (i.e. Ireland) and set up the joint firm's new HQ in that country. Get great tax breaks. 12.5% v 35%.
Risks associated with the host country's government taking away assets or personal wealth
Risk associated with potential war, vandalism, kidnapping, or tariffs in a host country.
The risk that capital earned abroad may have limited or no transferability.
Affects all firms in a country (civil wars).
Affects only one firm or firms within an industry.
Overseas Private Investment Corporation (OPIC)
Insures US overseas investments against nationalization, insurrections/revolutions, and foreign exchange inconvertibility.
Multilateral Investment Guarantee Agency (MIGA)
Subsidiary of the World Bank, this provides insurance against risk associated with international business.
The collection of values, beliefs, behaviors, customs, and attitudes that distinguish one society from another. It is a way of life of a people.
Portions of culture that must be taught.
Long term learned behavior - grandparents and kids.
A senior teaching a freshman about traditions.
Learned, interrelated, adaptive, shared
Characteristics of culture
Belief that one's own culture is the best and the only culture.
Social Structure, Language, Communication, Religion, Values and Attitudes
Elements of Culture
The Higher the stratification the _____ the social mobility.
No, Sound, Meaning, Dual
Four Adaptions firms can take.
Translate a foreign language version back to the original language by a different person than then one who made the first translation.
Third or link language that is understood by two parties who speak different native languages. English is most common.
Time, Age, Education, and Status
Values and Attitudes (Elements of culture)
Low: Germany, High: China
High and Low Context Countries (the Extremes)
Individualism: USA, Collectivism: Panama
Social Orientation Countries
The relative importance of the interests of the individual versus the interests of the group.
Japanese Concept of social harmony
Respect: Panama, Tolerant: Israel
Power Orientation Countries
Belief about the appropriateness of power/authority within organizations.
Managers get and deserve extra special treatment and status because of their power.
In an organization, individuals asses authority in view of its perceived rightness or their own personal interests.
Avoidance: Japan & France v. Acceptance
Uncertainty Orientation Countries
Emotional response to ambiguity and change.
Aggressive: Japan (95), US (62), Passive: Sweden, Netherlands.
Goal Orientation Countries
What motivates people to achieve different goals.
Long-term: Japan, Short-term: Pakistan
Time Orientation Countries
The extent to which members of a culture adopt a long term or a short-term outlook on work and life.
The process of adjusting and adapting to a specific culture other than one's own. Key to international business operations.
An understanding of how cultural differences across and within nations can affect the way in which business is practiced.
THIS SET IS OFTEN IN FOLDERS WITH...
MGMT 450 Exam One Chapter 1
MGMT 450 Exam One Chapter Two
MGMT 450 Exam One Chapter 3
MGMT 450 Exam One Chapter 4
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