International Business: External Factors, Entry Modes, and Poverty Strategies

What are three reasons companies go international?

To increase sales, acquire new resources and knowledge, and reduce risk.

What are the four external factors in international business?

Political, Economic, Sociocultural, Technological.

What is the purpose of PEST Analysis?

To examine Political, Economic, Sociocultural, and Technological factors to gain insight into a company's environment.

What does the 'Political' factor in PEST Analysis include?

Labour laws, property rights, patent processes, tax rates, tariffs, and government efficiency.

What does the 'Economic' factor in PEST Analysis encompass?

Market strength, stability of trade cycles, industry conditions, customer preferences, and government economic policies.

What does the 'Sociocultural' factor in PEST Analysis refer to?

Communication methods, religions, values, ideologies, education standards, and social structure.

What is meant by 'Technological' factors in PEST Analysis?

Technological infrastructure, intellectual infrastructure, investments, information systems, and consumer access to technology.

What is a 'Host country'?

A country in which an international business operates.

What are the internal management factors to consider for international business?

Country entry mode, overall strategy, organizational structure, and leadership capabilities.

What is exporting in the context of international business?

Sending goods or services out of the company's home country.

What is importing?

Purchasing goods or services from another country to sell in the home market.

What is a turnkey project?

A foreign company hires a local company to build them a building, plant, or machine.

What does licensing involve?

One company allows another to use its trademarks, patents, copyrights, or expertise.

What is franchising?

Similar to licensing but requires a higher level of commitment from both parties.

What is a joint venture?

Two or more companies jointly own a third, separate company.

What is a wholly owned subsidiary?

A foreign operation wholly owned by the multinational company.

What is the World Bank's definition of extreme poverty?

Living on less than $2.15 per day.

What are some problems with foreign aid?

It can create dependence, be wasted or lost to corruption, or serve donor interests.

How do multilateral aid agencies differ from government aid agencies?

Multilateral agencies pool resources from many countries, while government agencies give aid from one country's government.

What does Fair Trade mean?

Paying producers in developing countries a fair price or wage for goods.

What is Corporate Social Responsibility (CSR)?

A form of corporate self-regulation used to further social good beyond legal requirements.

What is the goal of CSR?

To maximize long-term profitability through cost-benefit analysis while benefiting society.

What is microfinance?

A source of financial services for entrepreneurs and small businesses lacking access to banking.

What is reverse innovation?

Taking innovations developed in emerging markets and repackaging them for developed markets.

What is the significance of the Base of the Pyramid (BoP) strategies?

They target the majority of the world's population, representing over $5 trillion of consumption potential.

What is the traditional response to poverty?

Poverty programs and foreign aid, often through nonprofits and foundations.