MidTerm Exam 1 International Marketing

What is the purpose of global economic integration?

To reduce trade and investment barriers around the globe.

What are the main areas covered by the World Trade Organization (WTO)?

Goods (GATT), Services (GATS), Dispute Settlement, Intellectual Property (TRIPS), and Trade Policy Reviews.

What does the European Union (EU) represent in the context of regional economic integration?

A political and economic union of member countries in Europe.

What is one political benefit of global economic integration?

Promotes peace by promoting trade and investment.

What is the principle of nondiscrimination in international trade?

A country cannot discriminate among its trading partners.

What was the primary goal of the European Coal and Steel Community (ECSC) established in 1951?

To foster economic cooperation among its founding countries.

What are the benefits of adopting the euro as a currency?

Reduces currency conversion costs and facilitates direct price comparisons.

What is the main challenge faced by the EU today regarding its political union?

Determining whether to become a political union and addressing internal divisions.

What does NAFTA stand for and what was its purpose?

North American Free Trade Agreement; aimed to eliminate trade barriers between the U.S., Canada, and Mexico.

What is the role of the Belt and Road Initiative (BRI)?

To invest in infrastructure and development in Africa, Asia, and Europe.

Who is Ren Zhengfei?

The founder of Huawei, a major telecommunications company.

What misconception often surrounds Emerging Market Multinational Corporations (EMNCs)?

The myth of liability of emergingness, which suggests they face unique risks and disadvantages.

What is Huawei’s major focus regarding research and development?

They dedicate 14% of annual revenue and 45% of their workforce to R&D.

What is the effect of U.S. export controls on Huawei?

It limits Huawei's access to advanced semiconductor technology and affects their supply chain.

What is Huawei’s wolf culture organizational philosophy?

A culture emphasizing tenacity, teamwork, and a competitive spirit.

What are the key stages for emerging market multinational companies (EMNCs) to build competitive advantage?

1. Building competitive advantage in home markets, 2. Internal maturation, 3. Strategic partnerships with developed-country firms.

What has been a significant challenge for Huawei in emerging markets?

Gaining market share and dealing with competitive pressures from established firms.

Global Competition

Competing on a worldwide scale in an increasingly integrated market.

MNCs

Multinational Corporations that operate in multiple countries and have strategies to compete globally.

Globaloney Gap

A misconception where people overestimate global business intensity and underestimate the constraints of distances and differences.

Convergence

The economic process where the economic performance of poorer countries catches up to that of wealthier countries.

Hyperglobalization

An accelerated period of global integration, typically marked by an increase in trade and investment flows.

Deglobalization

A process that describes a reduction in global interdependence, often characterized by increased trade barriers and localism.

Trade Openness

A measure of the extent to which a country allows trade with others, often calculated as the sum of imports and exports as a percentage of GDP.

Cultural Homogenization

The process by which local cultures adapt or assimilate to a dominant global culture, often resulting in a loss of diversity.

Brexit

The term used to describe the United Kingdom’s decision to leave the European Union, which has implications for international trade and relations.

Value Creation

The process by which companies increase the worth of their products or services, often discussed in the context of globalization.

What is the definition of institutional transition?

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

What does an institution-based view suggest in global business?

It suggests that the success and failure of firms are enabled and constrained by institutions.

Define formal institution.

An institution represented by laws, regulations, and rules.

What is a regulatory pillar?

The coercive power of governments acting as part of formal institutions.

How does a transaction cost relate to economics?

It refers to the cost associated with economic transactions or the cost of doing business.

What is bounded rationality?

The necessity of making rational decisions in the absence of complete information.

What is the role of political risk in international business?

It refers to the risk associated with political changes that may negatively impact domestic and foreign firms.

Differentiate between civil law and common law.

Civil law uses comprehensive statutes and codes for legal judgments while common law is shaped by precedents and traditions from previous judicial decisions.

What is the objective of a firm under private ownership?

To maximize profits for private owners and maximize shareholder value if publicly listed.

What defines a mixed economy?

An economy that has elements of both a market economy and a command economy.

What are the three core propositions of the institution-based view?

1) Managers act within institutional constraints; 2) Formal and informal institutions combine to govern behavior; 3) If formal constraints are unclear, informal constraints take precedence.

What is the AAA Triangle in management context?

A strategy map for managers focusing on adaptation, aggregation, and arbitrage in international business.

What does adaptation in globalization options aim for?

To achieve local relevance through national focus while exploiting some economies of scale.

Explain the term 'institutional work.'

Purposive action aimed at creating, maintaining, and disrupting institutions.

Where should operations be located according to globalization options?

In foreign countries that are similar to the home base, to limit the effects of cultural, administrative, geographic, and economic distance.

Define intellectual property rights (IPR).

Rights associated with the ownership of intellectual property.

What are the objectives of state-owned enterprises (SOEs)?

To protect jobs and minimize social unrest rather than solely maximize profits.

What is the definition of techno-nationalism?

An approach in governance linking a nation's technological capabilities and self-sufficiency to its state security, economic prosperity, and social stability.

What is ethnocentrism?

Ethnocentrism is a self-centered mentality by a group of people who perceive their own culture, ethics, and norms as natural, rational, and morally right.

What is a lingua franca?

a common language used for communication between speakers of different native languages, especially in business contexts.

Why is understanding religion important in international management?

Knowledge about religions is crucial for managing across cultures, as approximately 85% of the world's population possesses some religious belief.

Define social structure in a cultural context.

The way a society organizes its members, often characterized by social stratification and mobility.

What does cultural cluster theory focus on?

Categorizes countries that share similar cultures into clusters to understand cultural differences.

What are Hofstede's dimensions of culture?

Power distance, individualism vs collectivism, masculinity vs femininity, uncertainty avoidance, and long-term orientation.

Give an example of a cultural blunder.

Electrolux advertised its vacuum cleaners in the U.S. with the slogan 'Nothing sucks like an Electrolux!', which was interpreted negatively.

What is ethical relativism?

The perspective that suggests all ethical standards are relative and not universally applicable.

What actions are associated with ethical imperialism?

suggests that there is one set of universal ethical standards that should be upheld globally.

What are acceptable gifts according to Texas Instruments' guidelines in China?

Inexpensive items like calendars, coffee cups, and notepads, but gifts over RMB 200 require approval.

What is the Foreign Corrupt Practices Act (FCPA)?

a U.S. law enacted in 1977 that prohibits bribery of foreign officials.

How has the use of sanctions changed in the last 20 years?

The use of sanctions has increased significantly, with a 933% rise in net new designations from 2000 to 2021.

What is the significance of the CHIPS for America Act?

allocates funds to support domestic technology innovation, particularly in the semiconductor industry.

What are the characteristics of high-context cultures?

High-context cultures rely heavily on unspoken context and the underlying background of social interactions.

What does the term 'risk of decoupling' refer to in techno-nationalism?

refers to the challenges and costs associated with separating intertwined economies and technologies, particularly in high-market dependence scenarios.

What are some consequences of the new techno-nationalism for multinational enterprises (MNEs)?

Consequences include heightened institutional hardship, increased transaction costs, and promotion of retaliatory actions.

What does 'long-term orientation' emphasize in cultural dimensions?

emphasizes perseverance, savings, and planning for future betterment.

How does social mobility differ in various cultures?

The ability of individuals from lower social categories to rise to higher status, varies widely across cultures.

What is the purpose of SWOT analysis in understanding resources and capabilities?

Determines a firm's strengths, weaknesses, opportunities, and threats.

What focuses on internal strengths and weaknesses in the resource-based view?

Concentrates on internal strengths (S) and weaknesses (W) to identify sustainable competitive advantages.

What are tangible resources?

Assets that are observable and easily quantified.

Define dynamic capabilities in terms of firm capabilities.

Sensing (discovering opportunities), seizing (capturing value from opportunities), and reconfiguring (remaining flexible by redesigning business models and revamping routines).

What does VRIO stand for?

Valuable, Rare, Costly to Imitate, and Exploited by Organization.

How is national competitiveness defined?

Competitiveness depends on the productivity with which a nation uses its human, capital, and natural resources.

What is the aim of nations in terms of productivity?

Nations compete to offer the most productive environment for business.

What factors influence demand conditions in an industry?

Demand conditions are characterized by the nature and size of buyers' needs in the home market for the industry’s goods or services.

What is meant by 'resource curse'?

Refers to the phenomenon where countries with abundant natural resources experience less economic growth and worse development outcomes than countries with fewer natural resources.

What key area does China need to strengthen according to the Global Sustainable Competitiveness Index?

To enhance its Intellectual Capital and Innovation Index.

What are the two main types of trade activities defined in international trade?

Export (selling abroad) and Import (buying from abroad).

How is a trade deficit defined?

An economic condition in which a nation imports more than it exports.

What is the theory of comparative advantage?

A theory focusing on the relative advantage in one economic activity that one nation enjoys compared to others.

What does the CAGE model stand for in international business?

CAGE stands for Cultural, Administrative, Geographic, and Economic distances that affect international trade.

What is the core premise of the theory of mercantilism?

The wealth of the world is fixed, and a nation that exports more and imports less will be richer.

What are the three components of the Triple A Model in global strategy?

Aggregation, Adaptation, and Arbitrage.

What does protectionism mean in the context of international trade?

The idea that governments should actively protect domestic industries from imports and promote exports.

Which country has the comparative advantage in automobiles according to the given examples?

Germany.

What is a trade surplus?

An economic condition in which a nation exports more than it imports.

What impact does the theory of product life cycles have on trade?

It accounts for changes in trade patterns over time by focusing on product life cycles.

What is an import tariff?

A tax imposed on imports to discourage their entry into a country.

What is the definition of arbitrage in a global strategy context?

Exploiting differences across markets by transferring resources and capabilities to improve overall corporate margins.

What are non-tariff barriers (NTBs)?

To discourage imports, such as subsidies and import quotas.

What does absolute advantage refer to in international trade?

The economic advantage one nation enjoys that is superior to others in specific goods or services.

What is the significance of the balance of trade?

It is the aggregation of importing and exporting that leads to a country-level trade surplus or deficit.

What role do geographical factors play in the CAGE model?

Geographical factors like physical distance, climate, and land borders influence trade dynamics.

What do subsidies entail as a trade measure?

Government payments to domestic firms to reduce their costs relative to foreign competition.

What are the main topics covered in the agenda of the Internationalization of Emerging Market Firms lecture?

Foreign Direct Investment (FDI), Foreign Exchange, Internationalization of Emerging Market Firms.

What characterizes Horizontal FDI?

It is a type of FDI where a firm duplicates its home country-based activities at the same value-chain stage in a host country.

What is Vertical FDI?

A type of FDI where a firm moves upstream or downstream at different value-chain stages in a host country.

What does the OLI framework in FDI stand for?

Ownership advantages, Location advantages, Internalization advantages.

What is an Ownership advantage in the context of MNEs?

Possession and leveraging of certain valuable, rare, hard-to-imitate, and organizationally embedded assets overseas.

Why do firms prefer FDI to Licensing?

FDI reduces dissemination risks, provides tight control over foreign operations, and facilitates the transfer of tacit knowledge.

What is the principal benefit of Foreign Direct Investment (FDI) for host countries?

Capital inflow, technology transfer, management expertise, and job creation.

What is the obsolescing bargain concept?

The deal struck by MNEs and host governments that may change requirements after the initial FDI entry.

What are the effects of FDI on home countries?

Capital outflow, job loss abroad, and the earning of exports.

What is a balance of payments (BOP)?

A country's international transaction statement that includes merchandise trade, service trade, and capital movement.