GBS EXAM 4

tacit collusion

collective attempts o reduce competition

explicit collusion

firms directly negotiate output and pricing and divide markets

competition policy

determines the institutional mix of competition and cooperation that gives rise to the market system

concentration ratio

measures the market share controlled by the largest firms in an industry

price leaders

types of alliances

strategic alliance, contractual alliance, equity based alliance

strategic alliance

voluntary agreement between firms involving exchange, sharing, or co-developing of products, technologies, or services

contractual alliances

associations between firms that are based on contracts and do not involve the sharing of ownership

equity based alliances

alliances based on ownership or financial interest between the firms

mergers

combination of operations and management of two firms to establish a new legal entity

acquisitions

transfer of the control of operations and management from one firm to another, the former being a unit of the latter

real options

an investment in real operations as opposed to financial capital

market premium

supply chain

flow of products, services, finances, and information that passes through a set of entities from a source to the customer

4 p’s of marketing

product, price, promotion, place

market segmentation

identifying groups of consumers who differ from others in purchasing behavior and who will respond to the marketing mix in a similar fashion

price elasticity

how demand changes when price changes

country-of-origin effect

the positive or negative perception of firms and products from a certain country

HCN

host country national; employees from the host country/locals

PCN

employees from the parent country of the mutlinational enterprise who work at its local subsidiary

TCN

employees from neither the parent country nor the host country

expatriate assignments

individuals working in a foreign country

ethnocentric approach

emphasizes the norms and practices of the parent company by relying on PCNs

geocentric approach

focuses on finding the most suitable managers; geocentric approach is color blind; the color of a manager’s passport does not matter

polycentric approach

focuses on the norms and practices of the host country

corporate governance

the relationship among various participants in determining the direction and performance of corporations

two types of financing

equity: stock in a firm; debt: a loan the firm must pay

agency costs

principals’ cost of monitoring and controlling agents; agents’ costs of bonding

principal

owners or those who delegate authority

agent

managers or those whom authority is delegated