BUSA4000 Midterm Review terms, concepts and definitions

BUSA4000 Global Business - Midterm Exam Review Challenges 1 - 5: A list of key concepts, terms, and definitions. Challenge 1. The Context of International Business Globalization of Markets: Ongoing economic integration and growing interdependency of countries worldwide. International Trade: Exchange of products and services across national borders through exporting and importing. Can lead to surplus and deficit. Example: India exporting inorganic chemicals, oilseeds, raw ores to a country like China. Exporting: The sale of products or services to customers located abroad, from a base in the home country or a third country. Importing or Global Sourcing: Procurement of products or services from suppliers located abroad for consumption in the home country or a third country. International Investment: Transfer of assets to another country or the acquisition of assets in that country. Also known as 'foreign direct investment' (FDI) International Portfolio Investment: Passive owner-ship of foreign securities such as stocks and bonds, in order to generate returns. Drivers of market globalization: Worldwide reduction of barriers to trade and investment. Transition to market-based economies and adoption of free trade in China, former Soviet Union countries, and elsewhere. Industrialization, economic development, and modernization. Integration of world financial markets. Advances in technology Dimensions of market globalization: Integration and interdependence of national economies. Rise of regional economic integration blocs. Growth of global investment and financial flows. Convergence of buyer lifestyles and preferences. Globalization of production activities. Globalization of services Societal consequences: Contagion; Rapid spread of financial or monetary crises from one country to another. Loss of national sovereignty. Offshoring and the flight of jobs. Effect on the poor. Effect on the natural environment. Effect on national culture. Firm- Level Consequences: Countless new business opportunities for internationalizing firms. New risks and intense rivalry from foreign competitors. More demanding buyers who source from suppliers worldwide. Greater emphasis on proactive internati onalization. Internationalization of firm's value chain Culture: The values, beliefs, customs, arts, and other products of human thought and work that characterize the people of a given society.
Cross-cultural risk: A situation or event where a cultural miscommunication puts some human value at stake. It arises in environments comprised of unfamiliar languages, and unique values, beliefs, and behaviors. Socialization: The process of learning the rules and behavioral patterns appropriate to one's society. Acculturation: The process of adjusting and adapting to a culture other than one's own; commonly experienced by expatriate workers. High and low context cultures: High context cultures such as Chinese, Korean, and Japanese establish social trust first, negotiations are slow and ritualistic, and agreements emphasize trust. Low context cultures such as German, Swiss, and North American get down to business first, negotiations are as efficient as possible, and agreements emphasize specific, legalistic contract. Challenge 2. Building & Sustaining a Competitive Advantage Efficiency - Lower the cost of the firm's operations and activities on a global scale. Flexibility - The agility to manage diverse country-specific risks and opportunities by tapping resources in individual countries and exploiting local opportunities. Learning - Develop the firm's products, technologies, capabilities, and skills by internalizing knowledge gained from international ventures. Global team - An internationally distributed group of employees charged with a specific problem-solving or best practice mandate that affects the entire firm. Global information systems - Global IT infrastructure, together with tools like intranets and electronic data interchange, provides virtual interconnectedness within the international firm. Multi-Domestic Industry - An industry in which competition takes place on a country-by- country basis. Global Industry - An industry in which competition is on a regional or worldwide scale. Global Integration - Coord ination of the firm's value -chain activities across multiple countries to achieve worldwide efficiency, synergy, and cross-fertilization, to take advantage of similarities between countries. Seek cost reduction thru economies of scale - Concentrating manufacturing in a few advantageous locations achieves economies of mass production.
Capitalize on converging consumer trends and universal needs - Offer products that appeal to customers everywhere. Provide uniform service to global customers - Services are easiest to standardize when firms centralize their creation and delivery. Home Replication Strategy - The firm views international business as separate from, and secondary to, its domestic business. Expansion abroad is an opportunity to generate incremental sales for domestic product lines. Multi domestic Strategy - The firm develops subsidiaries or affiliates in each of its foreign markets and appoints local managers to operate independently and be locally responsive. Global Strategy - Headquarters seeks substantial control over all country operations in order to minimize redundancy, and achieve maximum efficiency, learning, and integration worldwide. Transnational Strategy - A coordinated approach to internationalization in which the firm strives to be more responsive to local needs while retaining sufficient central control of operations to ensure efficiency and learning. Challenge 3. Assessing International Business Opportunities Simple trend analysis examines aggregate production for the industry as a whole. Monitoring key industry-specific indicators examines unique industry drivers of market demand. Monitoring key competitors to estimate their sales levels provide an estimate of market potential. Following key customers around the world can provide an estimate of likely sales in an industry that the firm supplies. Tapping into supplier networks can offer valuable information for assessing sales and competitor activity. Attending international trade fairs facilitates learning about market characteristics and sales potential. Licensing partners are independent businesses that apply intellectual property to produce products in their own country. Franchising partners are franchisees - independent businesses abroad that acquires rights and skills from the focal firm to conduct local operations.
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