Abaeian Mgmt 80 Midterm

International Business

a business (firm) that engages in international (cross-border) economic activities and/or (2) the action of doing business abroad.

FDI

investment in, controlling, and managing value-added activities in other countries. Note that global business also addresses domestic firms competing and/or collaborating with foreign entrants in their markets

Multinational Enterprise

a firm that engages in foreign direct investment

Emerging Economies

a term that has gradually replaced the term "developing country" since the 1990s

BRIC

Brazil, Russia, India, and China

BRICS

Brazil, Russia, India, China, and South Africa

Triad

North America, Western Europe, and Japan

Great Transformation

transformation of the global economy that is embodied by the tremendous shift in economic weight and engines of growth toward emerging economies in general and BRIC(S) in particular

Reverse Innovation

an innovation that is adopted first in emerging economies and is then diffused around the world

Why Study Global Business

•Enhance your employability and advance your career in the global economy

•Better preparation for possible expatriate assignments abroad

•Stronger competence in interacting with foreign suppliers, partners, and competitors, and in working for foreign-owned employers in your own country

International Premium

a significant pay raise when working overseas

Expatriate Manager

a manager who works abroad

Institution Based View (Success of IB)

An institution-based view suggests that the success and failure of firms are enabled and constrained by institutions (the rules of the game)

Resource Based View (Success of IB)

A resource-based view focuses on a firm's internal resources and capabilities, liability of foreignness -the inherent disadvantage that foreign firms experience in host countries because of their nonnative status

Vocation for Business Leaders

1. See ones work as a gift and as a vocation in addressing important emerging issues in their field of expertise
2. Judge what preparations are needed to collaborate with others in contributing to the dignity of persons and the common good
3. To act and to provide important products and services needed by humankind in an effective way based on foundational business disciplines

Skills Needed for International Business

1. The disciplined mind that thinks critically, analytically, historically, and artistically
2. The synthesizing mind that knits ideas from different disciplines into a coherent whole and to communicate that integration to oneself and to others.
3. The creating mind that seeks new ideas and innovation of which have value and merit
4. The respectful mind that truthfully regards human beings and human groups
5. The ethical mind that fulfills ones responsibilities as a worker and as a citizen.

Entrepreneurship

the identification and exploitation of previously unexplored opportunities

Entrepreneur

a founder and/or owner of a new business or a manager of existing firms, who identifies and exploits new opportunities

Small and medium-sized enterprise (SME)

a firm with fewer than 500 employees in the United States, or with fewer than 250 employees in the European Union

International Entrepreneurship

a combination of innovative, proactive, and risk-seeking behavior that crosses national borders and is intended to create wealth in organizations

Institution Based View (Entrepreneurship)

Formal Institution and Informal institutions

•The development of entrepreneurship around the globe is uneven

•Depends on how easy it is to set up new firms in terms of registration, licensing, and incorporation

Resource Based View (Entrepreneurship)

Create value

Be rare

Be inimitable

Be organizationally embedded

3 characteristics for growing an entrepreneurial firm

•Growth: The growth of an entrepreneurial firm can be viewed as an attempt to more fully use currently underutilized resources and capabilities

•Innovation: Owners, managers, and employees at entrepreneurial firms tend to be more innovative and risk-taking than those at large firms

•Financing

•venture capitalist (VC)

\- an investor who provides risk capital for early-stage ventures

•microfinance-

a practice to provide microloans (U S$50-$300) used to start small businesses with the intention of ultimately lifting the entrepreneurs out of poverty

•Internationalization:

born global firm (international new venture) - a start-up company that attempts to do business abroad from inception

International Strategies for Entering Foreign Markets

•Direct exports

•Franchising/licensing

•Foreign direct investment (through strategic alliances, greenfield wholly-owned subsidiaries, and/or foreign acquisitions)

International Strategies for Staying in Domestic Markets

•Indirect exports (through export intermediaries)

•Supplier of foreign firms

•Franchisee/licensee of foreign brands

•Alliance partner of foreign direct investors

•Harvest and exit (through sell-off to foreign entrants)

Direct Export

the sale of products made by firms in their home country to customers in other countries

Letter of Credit (L/C)

a financial contract that states that the importer's bank will pay a specific sum of money to the exporter upon delivery of the merchandise

Franchising

Firm A's agreement to give Firm B the rights to use A's proprietary assets for a royalty fee paid to A by B; this is typically done in service industries.

FDI - Adv and Dis

•Advantages:

•More commitment to serving foreign markets

•Better able to control how its proprietary technology is used

•Drawbacks:

•Requires a nontrivial sum of capital

•Requires a significant management commitment

Indirect Exports

a way to reach overseas customers by exporting through domestic-based export intermediaries

Export Intermediary

a firm that performs an important middleman function by linking domestic sellers and foreign buyers that otherwise would not have been connected

Why Silicon Valley Needs Jesuit Values (O'Brien)

Silicon Valley has a unique business culture. Fast moving, entrepreneurial, innovation driven, wired, hectic and internationally linked, Silicon Valley is a frenzied intersection of engineering, science, business acumen and entrepreneurship.

At its worst the Valley can be a destructive stew laced with greed, opportunism , and domineering behavior (often rationalized under the rubric of the need of speed and first mover advantage). At its best the Valley is a place that unleashes the human spirit through a culture of decentralization, empowerment and creative subsidiarity.

Exactly because of its intensity Silicon Valley can be a dangerous place for the spiritually confused. Without a spiritual compass the unaware will lead a life of increasing stress and a state of brokenness.

See new technologies, ideas and disruption in Silicon Valley as means to lift up people in which through discernment we would know why we disrupt things.

Judge that without understanding the foreseeable consequences of innovations in Silicon Valley, there could be negative impacts and costs on employment, the environment, and misuses of new technology by others.

Take action by applying Jesuit values to Silicon Valley to ensure disruption can be for good and lifts up people rather than simply break things.

Institutional Transitions

fundamental and comprehensive changes introduced to the formal and informal rules of the game that affect firms as players

Institution Based View

a leading perspective in global business that suggests the success and failure of firms are enabled and constrained by institutions

Institutional Framework

formal and informal institutions that govern individual and firm behavior

Institution

formal and informal rules of the game

Formal Institution

institution represented by laws, regulations, and rules

Regulatory Pillar

the coercive power of governments

Informal Institution

institution represented by cultures, ethics, and norms

Normative Pillar

the mechanism through which norms influence individual and firm behavior

Norms

values, beliefs, and actions of relevant players that influence the focal individuals and firms

Cognitive Pillar

the internalized (or taken for-granted) values and beliefs that guide individual and firm behavior

Transaction Cost

the cost associated with economic transactions or, more broadly, the costs of doing business

Opportunism

the act of seeking self-interest with guile

Transition Economies

a subset of emerging economies, particularly those moving from central planning to market competition (such as China, Poland, Russia, and Vietnam)

Two Propositions of Institute Based View

1. Managers and firms rationally pursue their interests and make choices within the formal and informal constraints in a given institutional framework

2. While formal and informal institutions combine to govern firm behavior, in situations where formal constraints are unclear or fail, informal constraints will play a larger role in reducing uncertainty and providing constancy to managers and firms

Political System

the rules of the game on how a country is governed politically

Political Risk

risk associated with political changes that may negatively impact domestic and foreign firms

Democracy

a political system in which citizens elect representatives to govern the country on their behalf

Totalitarianism (Dictatorship)

a political system in which one person or party exercises absolute political control over the population

Communist Totalitarianism

centers on a communist party

Right Wing Totalitarianism

is characterized by its intense hatred against communism

Theocratic Totalitarianism

refers to the monopolization of political power in the hands of one religious party or group

Tribal Totalitarianism

refers to one tribe or ethnic group (which may or may not be the majority of the population) monopolizing political power and oppressing other tribes or ethnic groups

Civil Law

a legal tradition that uses comprehensive statutes and codes as a primary means to form legal judgments

Common Law

a legal tradition that is shaped by precedents and traditions from previous judicial decisions It has spread to all English-speaking countries and their (former) colonies.

Theocratic

a legal system based on religious teachings

Property Right

the legal right to use an economic property (resource) and to derive income and benefits from it

Intellectual Property

intangible property that is the result of intellectual activity.

discoveries and inventions; artistic, musical, and literary works; and words, phrases, symbols, and designs.

Intellectual Property Right

right associated with ownership of intellectual property

•patent-exclusive legal rights of inventors of new products or processes to derive income from such inventions

•copyright-exclusive legal rights of authors and publishers to publish and disseminate their work

•trademark-exclusive legal rights of firms to use specific names, brands, and designs to differentiate their products from others

Piracy

unauthorized use of intellectual property

Market Economy

an economy characterized by the "invisible hand" of market forces; the government takes a hands-off approach known as laissez faire

Command Economy

an economy characterized by government ownership and control of factors of production

Mixed Economy

an economy that has elements of both a market economy and a command economy

Origin on Informal Institutions

* Socially transmitted information

* Part of heritage-People within a society tend to be ethnocentric

Ethnocentrism 1

a self-centered mentality by a group of people who perceive their own culture, ethics, and norms as natural, rational, and morally right (Peng, 2016)

Ethnocentrism 2

An attribute of individuals and collectives who have a strong sense of positive self-regard, but does not inevitably imply superiority over and/or negativity toward other individuals or collectives (Michailova et al., 2017)

Culture

the collective programming of the mind that distinguishes the members of one group or category of people from another. Language, Religion, Social Structure, Education

Language

lingua franca-a global business language

•English-speaking countries contribute the largest share of global output

•Recent globalization has called for the use of one common language

Religion

•Religion is a major manifestation of culture

•Knowledge about religions is crucial, even for non-religious managers

Social Structure

the way a society broadly organizes its members

•social stratification -the hierarchical arrangement of individuals into social categories (strata) such as classes, castes, or divisions within a society