International Business Strategy

A collection of flashcards covering key terms and definitions related to international business strategy.

International strategy

A strategy through which the firm sells its goods or services outside its domestic market.

Licensing agreement

Allows a foreign company to purchase the right to manufacture and sell a firm’s products within a host country’s market.

Global integration

An increase in global integration caused by wholly-owned subsidiary.

Modes of entry

The choices a firm has for entering the international market, including exporting, licensing, strategic alliances, acquisitions, and wholly-owned subsidiaries.

International corporate level strategy

Focuses on increasing market size, economies of scale, and location advantages.

Multidomestic strategy

Targets domestic needs with local responsiveness, exemplified by Unilever.

Transnational strategy

Combines global integration with local responsiveness, as seen with Mondelez.

Global strategy

Focuses on global needs, illustrated by IKEA.

Factors of production

Inputs necessary to compete in any industry, including labor, land, capital, infrastructure, and natural resources.

Regional strategies

Focusing on a specific region for better understanding of local culture, legal, and social norms.

Political and economic factors

Key considerations that complicate the implementation of an international diversification strategy.

Corporate strategy

Includes diversifying alliances, synergies, and franchise models.

Complementary strategic alliances

Include vertical and horizontal types.

Vertical alliance

Between firms that agree to use skills in different stages of the value chain.

Horizontal alliance

Between partners in the same stage of the value chain.

Non-equity alliance

Involves a contractual relationship between firms to share resources.

Equity alliance

Partners own different shares of equity in a company they formed together.

Joint venture

A legally independent company created by two or more firms sharing resources.

Cost minimization

Strategy aimed at developing contracts to minimize costs and control partner behavior.

Opportunity maximization

Strategy focused on maximizing partnership value-creation opportunities.

Tacit collusion

Firms indirectly coordinate production and pricing without direct agreements.

Explicit collusion

When firms directly negotiate production and pricing to reduce competition, which is illegal.

Mutual forbearance

A form of tacit collusion where firms avoid competition against rivals in multiple markets.

Franchising

A strategic method used by companies such as McDonald's.

Strategic alliances

Collaborative strategies used to gain competitive advantages, with varying speeds of cycle.

Cooperative strategies

Strategies that involve collaboration with other companies to expand operations.

Ownership concentration

Relative amounts of stock owned by individual shareholders and institutional investors.

Agency relationship

The relationship between shareholders (principals) and managers (agents) in firms.

Agency cost

Costs incurred by principals due to governance mechanisms not fully ensuring compliance by agents.

Insider

Members of the firm's executive team, including the CEO.

Related outsider

Individuals not involved in day-to-day operations but have a relationship with the firm.

Outsider

Individuals independent of the firm in terms of daily operations.

Green mail

Repurchasing target firm's shares at a premium to prevent takeover.

Poison pill

Defensive action taken to make a company's stock less attractive to acquirers.

Stand still agreement

Contract that prevents an acquirer from purchasing additional shares for a specified period.