International Business and Trade

An economic and business method for analyzing the attractiveness of making a foreign direct investment (FDI).

eclectic paradigm

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The OLI framework

ownership, location, internalization

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Firms can reduce the problems associated with Acquisitions through

due diligence

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A business acquires a complementary business in another country relevant to its existing business

vertical FDI

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One of the theories why companies engaged in FDI

remove market imperfections

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The average threshold of foreign direct investment in the Philippines

40%

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Foreign direct investment drivers

international mergers & acquisition

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A company establishes the same type of business operation in a foreign country as it operates in its home country

horizontal FDI

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A company invests in a foreign business that is unrelated to its core business.

conglomerate

The purchase of physical assets or significant amount of the ownership(stock) of a company in another country to gain level of management control

foreign direct investment (FDI)

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An agreement between groups of countries in a geographic region to reduce and ultimately remove tariff and non-tariff to the free flow of goods services, and factors of production.

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regional economic integration

One of the benefits of regional economic integration

employment opportunities

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One of the Cost of regional economic integration

loss of national sovereignty

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A central political apparatus which coordinates the economic, social, and foreign policies of the member states

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political union

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Economic integration whereby countries remove all barriers to trade among themselves and set a common trade policy against nonmembers.

custom union

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Process of identifying and selecting an organization’s objectives and deciding how the organization will achieve goals.

planning

Set of planned actions taken by managers to help company meet its goals.

strategy

Defined organization's purpose of meeting customer needs or providing solutions for them.

customer oriented mission statement

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Process of dividing a company’s activities into primary and support activities to identify those that create value for customers.

value chain analysis

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Process that outlines that outlines a measurable and concrete course of action to achieve certain strategic objectives or overcome specific challenges.

Strategy formulation

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Written statement of why a company exists and what it plans to accomplish.

mission statement

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Strategy in which a company focuses on serving the needs of a narrowly defined market segment by being the low cost leader, by differentiating its product, or both.

focus strategy

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Composed of employees who work at similar levels in different functional departments.

cross functional team

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A special ability of a company that competitors find extremely difficult or impossible to compete or matched.

core competency

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Company unique product design throughout the industry that can lead to customer loyalty and pricing advantage.

differentiation

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This involves researching the local market to understand the culture, customs, preferences, and purchasing habits of consumers. This research helps businesses identify the basic needs and desires of consumers and how they can be fulfilled through products or services.

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determine basic demand

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This variable estimates the wealth or buying power of a market from the expenditures of both individuals and businesses.

market intensity

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This variable attempts to assess channels of distribution and communication. Variables include the number of telephones, televisions, fax machines, or personal computers per capita; the density of paved roads, or number of vehicles per capita, and the population per retail outlet

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commercial infrastructure

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an assessment of competitors’ products, services and sales tactics, evaluating their strengths and weaknesses versus your own.

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competitors analysis

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Global Bond Market consists of all bonds sold by issued companies, governments and other firms.

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outside their own contributes

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Hedging is used by companies to:

Decrease the variability of expected cash flows

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Which of the following is true of foreign exchange markets?

The futures market is mainly used by speculators while the forward market is mainly used for hedging.

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Purchasing goods from a foreign country is called

import

Suppose that the Japanese yen is selling at a forward discount in the forward-exchange market. This implies that most likely

interest rates are higher in Japan than in the United States.

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The forward market is especially well-suited to offer hedging protection against

transactions risk exposure