International business management final exam

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Globalization moves toward integration and interdependence among 5 levels, what are they?

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Globalization moves toward integration and interdependence among 5 levels, what are they?

Country, Global, Company, Industry, and Cultural level

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how to calculate FDI?

inflows or outflows as ratio (%) of GDP (so divided by GDP)

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Globalization at the country level means?

countries integrating into global economy at different percentages

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globalization at the global scale implies?

implies greater worldwide convergence of variables and economic dimensions

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what are foreign trade flow and foreign direct investment used to measure?

used to measure the degree of globalization of specific countries

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Foreign direct investment (FDI)

Investment by a MNC (or country) in a foreign country's economy.

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Foreign trade flow formula?

X + M as % of GDP (so over GDP)

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International Monetary Fund (IMF)

an international organization that acts as a lender of last resort, providing loans to troubled nations, and also works to promote trade through financial cooperation

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How much of the world's economy does Asia represent?

A major chunk

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What is the name of the fund that countries put $ into to help invest other countries

international monetary fund

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Globalization at the global level for companies means?

means you will see the same company across the world competing in their market, like Unilever

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Monsanto and patents?

Seeds can't be patented because they are naturally found, but genetically modified seeds can be patented

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Globalization at a company scale impleis?

implies a a company has extended its presence through a large amount of world markets

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Biggest beer company in the world?

Anheuser-Busch InBev

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how is globalization at the company level measured?

through firm's global sales orientation and Trans-Nationality Index (TNI)

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firm's global orientation takes into account?

where the company is selling its products-services and how much it is selling in each of the regions

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firms global sales orientation?

has 3 main regions (US/Europe/Asia) and has 4 classifications of orientation, home-region, bi-regional, host-region, and global oriented

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Global Sales Orientation, Home-region oriented?

at least 50% of sales in its home region

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Global Sales Orientation, Bi-regional oriented?

at least 20% of sales in each of the two regions, but less than 50% in one of them

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Global Sales Orientation, host-region oriented?

More than 50% of sales in a region different from the home region

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Global Sales Orientation, Global oriented?

At least 20% of sales in each of the three regions but less than 50% in one of them

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Trans-nationality index (TNI)

how much a company has extended its activities abroad considering 3 measures of activities: sales, employees, and assets

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TNI formula?

international sales/Total sales + Int. Employees/T employees + Int Assets/T Assets

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a larger TNI number means?

a company is more international

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how is a company an international company?

if they pay international employees

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Globalization at the industry level means?

means there is a large amount of the same company across the same industry across the world

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what are 3 drivers for globalization?

economy liberalization,

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What is the relationship between industries and competitive requirements?

different industries have different competitive requirements

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subsidiary

a company controlled by another company, think of a daughter company

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Before, the % of a country's population would be similar to their GDP output, what changed this?

industrial revolution

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economies of scale

a proportionate saving in costs gained by an increased level of production; cost advantages companies get when increasing their output

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Technological development from globalization has 2 components, what are they?

information and communication technologies (ICT) and evolution of transport systems

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trade liberalization?

the process of reducing barriers to trade

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what are the 3 components of economy liberalization ?

trade liberalization, liberalization of financial flows, and liberalization of FDI flows

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NAFTA?

North American Free Trade Agreement; allows open trade with US, Mexico, and Canada.

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ASEAN?

Association of Southeast Asian Nations, an alliance that promotes economic growth and peace in the region

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Mercosur

Pact among Argentina, Brazil, Paraguay, and Uruguay to establish a free trade area

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WTO

The World Trade Organization - an international body that enforces agreements that reduce barriers to international trade; successor to the GATT

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liberalization of financial flows

promoted through the establishment of Bretton woods (which IMF took over their role)

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Liberalization of FDI flows example?

FDI legalized in China in 1971 and India in 1991

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information and communication technology

basically the creation of phones, internet, and GPS

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evolution of transport systems

cheaper and better air travel, faster trains, and a more standardized container shipping system

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when did containerized shipping begin?

1956

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how many MNC are there? How many subsidiaries do they have?

around 65,000 with over 700,000 subsidiaries

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what are some downsides of global independence? give exmaples

the EverGiven ship stuck in Suez canal, financial crisis of 2008, Brexit, Covid, Ukraine, etc

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Financial Crisis of 2008

The worst financial crisis since the Great Depression of the 1930s during Bush's second term. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world.

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Sustainability?

meeting the needs of the present without compromising the ability of future generations to meet their own needs

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UN global compact initiative?

an initiative by the UN that set 10 points on which businesses should adhere to

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Maquiladora

Factories built by US companies in Mexico near the US border to take advantage of much lower labor costs in Mexico.

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Corruption Perception Index (CPI)

An annual list published by Transparency International that ranks countries by their perceived levels of corruption, as determined by expert assessments and opinion surveys

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Bribe Payers Index (BPI)

Annual list published by Transparency International that ranks countries in terms of the degree to which international companies with headquarters in those countries are likely to pay bribes to senior public officials in key emerging market economies

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What are the 4 main costs of corruption?

political, economic, social, and environmental

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Corporate Strategy

Guides direction of corporate growth

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Corporate Social Responsibility

balancing the needs of different stakeholders, thus fulfilling economic, social, and the environmental obligations

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respecting - and especially going beyond - all legal requirements is?

corporate ethical behavior

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what are the 4 costs to corruption?

political costs, economic costs, social costs, and environmental costs

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the development of the firm's main goals and plans to achieve them is called?

a firm's strategy

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strategy "as a plan" is called? Strategy "as a process of adaptation/learning"? is called?

as a plan is called deliberate strategy as a process if called emergent strategy

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what are three types of firm strategies?

from smalled to biggest, functional strategy, business strategy, and corporate strategy

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Ansoff Matrix

"A Matrix looking at growth potential of a firms products. It classifies strategies into market penetration, new product development, market development and diversification and measures the degree of risk associated with each strategy."

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Diversification strategy has 2 types, what are they?

related diversification strategy and unrelated diversification strategy

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related diversification strategy

A corporate-level strategy through which a company expands its operations into new areas that are related to its existing operations

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unrelated diversification strategy

A corporate-level strategy through which a company expands its operations into areas that have no relation (unrelated) to its existing operations

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adding new, but related products/services into the markets is called?

related diversification

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adding new but unrelated products/services into the markets is called?

unrelated diversification

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horizontal and vertical diversification both are a part of?

related diversification

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horizontal integration

a business strategy in which one company grows its operations at the same level in an industry

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horizontal integration aka?

horizontal diversification

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vertical integration

a strategy that allows a company to streamline (make more efficient) its operations by taking direct ownership of various stages of its production process rather than relying on external contractors or supplier

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Vertical diversification aka?

vertical integration

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backward integration?

occurs when a vendor attempts to acquire a company prior to it along the supply chain

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forward integration?

occurs when a vendor attempts to acquire a company further along the supply chain

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backyard and forward diversification (integration) are a part of?

vertical integration (diversification)

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any feature that helps a firm to be perceived as "better" than its competitors is called?

competitive advantage

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the five forces framework

identifies the five most common threats faced by firms in their local competitive environments and the conditions under which these threats are more or less likely to be present

  1. competition from competition

  2. competition from potential competition to the industry

  3. competition from producers of substitute products

  4. supplier bargaining power

  5. customer bargaining power

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value chain?

tool oriented towards describing the sources of competitive advantage

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functional analysis and strategic profile is useful for?

useful for describing resources and capabilities, value them, and compare them with competitors' ones

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analysis of resources and capabilities is useful for?

for assessing the potential resources and capabilities for creating (sustainable) competitive advantages

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what competes against and is combined with other corporate strategy (growth) options and requires having a broader scope and managing increased complexity?

international strategy

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international strategy involves the management processes through which companies?

assess the changing international environment and develop organizational responses in a way that they grow beyond the limits of home markets

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What are the 4 conditions of the Porter's Diamond Model?

-factor conditions -demand conditions -related and supporting industries -firm strategy, structure, and rivalry

and the fifth, the role of the government

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Porter's Diamond Model

recognizes that international trade occurs between firms in one country and firms of another country; integrates the theory of the firm with trade theory; four areas + chance + government; firm strategy, structure & rivalry; factor conditions; demand conditions; related & supporting industries

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what do factor disadvantages trigger?

innovation

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what are the 4 types of factors in Porter's diamond factor conditions?

basic, advanced, general, and specialized factors

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Porter's Diamond factor condition?

Basically is a country rich? Wealthy? Includes basic factors, advanced factors, and general factors

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Porter's Diamond demand condition?

How are the customers in the nation

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Porter's diamond related and supporting industries

  • Basically establishing links, and among, companies related

  • when local firms are competitive, firms enjoy more cost effectiveness and innovative inputs

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Porter's diamond role of the government?

Under this model, government should not create artificial competitive advantages (like import barriers) but they should stimulate the other 4 conditions

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how is porter's diamond as a system?

it is interactive and self-reinforcing

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why do firms go international?

conditions and drivers

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Porter's Diamond home market rivarly?

domestic rivalry forces innovation which triggers continuous learning and improvement

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the presence of strong local competitors force domestic firms to?

to seek for new markets, resulting in early internationalization

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threats in the home country that force the firms to find new markets abroad are called?

push factors

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opportunities in the destination countries that attract the firm to foreign markets is called?

pull factors

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conditions that create a climate and framework favorable to internationalization are called?

facilitating factors

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what are the three factors for the internationalization of a firm?

push, pull, and facilitating

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what are 4 types of pull drivers?

market-seeking, resource seeking, efficiency seeking, and strategic asset seeking

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opportunistic selection of international markets is part of what strategy?

emergent strategy

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systematic selection of international markets is part of what strategy?

deliberate strategy

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systematic selection of international markets includes 4 stages, what are they?

stage 1: preliminary screening stage 2: industry sales potential stage 3: company sales potential stage 4: identification of market opportunities

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