Globalization and International Business Strategies

A set of vocabulary flashcards covering key concepts in globalization and international business strategies.

Globalization

The integration and exchange between countries due to lower trade barriers, better technology, and cheaper transportation.

Multinational Enterprise (MNE)

A company operating in at least two countries.

Foreign Direct Investment (FDI)

Investing directly in operations (factories, offices) in another country.

Economies of Scale

More production leads to a lower cost per unit.

Economies of Scope

Using the same resources to produce multiple products.

Liability of Foreignness

Disadvantages firms face when operating in a foreign country.

CAGE Framework

Helps firms decide which countries to enter by analyzing cultural, administrative, geographic, and economic distances.

Cultural Distance

Differences in values, beliefs, language, and religion.

Local Responsiveness

The need to adapt products to local markets.

Transnational Strategy

A strategy that balances high cost pressure and high responsiveness; ‘think globally, act locally’.

Licensing

Allowing another firm to use your intellectual property with low investment and risk of copying.

Agglomeration

Firms clustering in the same location to reduce transportation costs and share resources.

Porter’s Diamond

Explains why countries dominate certain industries based on factors like resources, demand conditions, competitive intensity, and related industries.