Untitled Flashcards Set

• Exchange Rates:

  • The price of one currency in terms of another. Key terms:

    • Appreciation: Increase in currency value.

    • Depreciation: Decrease in currency value.

• Uses of Foreign Exchange Markets:

  • Currency Conversion: Businesses convert currencies for trade and operations.

  • Currency Hedging: Reduces risk by locking in rates.

  • Currency Arbitrage: Exploiting differences in rates.

  • Currency Speculation: Predicting rate changes for profit​.

8.2: International Capital Markets

• Definition and Components:

  • Capital markets transfer funds from those with surplus to those with a shortage.

  • Two main financing methods:

    • Debt: Borrowed funds to be repaid.

    • Equity: Ownership shares in exchange for investment.

• International Equity and Bond Markets:

  • Equity markets allow trading stocks outside the company's home country.

  • Bond markets include foreign, Euro, and global bonds​.

• Offshore Financial Centers:

  • Low-regulation zones, often criticized for enabling tax evasion and illicit activity​.

Chapter 9: Accounting and Finance in Global Business

• Role of Accounting:

  • Provides a system for financial communication to stakeholders.

  • International standards like IFRS and GAAP ensure consistency but vary globally.

  • Consolidated financial statements are essential for multinationals​.

• Capital Budgeting:

  • Evaluation of international investment decisions using tools like NPV and IRR.

  • Factors influencing decisions include currency risks, political stability, and market conditions​.

• Financing Options:

  • Equity: Raising funds via stocks.

  • Debt: Loans and bonds.

  • Specialized methods like intrafirm loans​.

• Government Role:

  • Regulations, tax incentives, and trade agreements influence decisions​.

Chapter 10: CAGE and PESTEL Frameworks

• CAGE Framework:

  • Evaluates "distance" between countries:

    • Cultural: Language, social norms.

    • Administrative: Legal, political differences.

    • Geographic: Physical distance and infrastructure.

    • Economic: Wealth, income levels​.

• PESTEL Analysis:

  • Examines external business environments:

    • Political, Economic, Sociocultural, Technological, Environmental, Legal factors​.

Chapter 11: Entry Modes for Global Expansion

• Traditional Entry Modes:

  • Exporting: Low risk and cost but limited control.

  • Licensing/Franchising: Fast entry but potential IP risks.

  • Partnerships/Alliances: Shared costs and risks.

  • Greenfield Ventures: High cost but maximum control​.

• Importing/Exporting:

  • Importing involves sourcing from other countries.

  • Exporting allows businesses to access global markets​.

Chapter 13: Entrepreneurship

• Who is an Entrepreneur?:

  • Someone who identifies opportunities and resources to create innovative ventures.

  • Myths include needing to be born an entrepreneur or requiring significant risk​.

• Entrepreneurial Process:

  • Opportunity Identification: Recognizing needs and solutions.

  • Planning: Developing strategies and business models.

  • Action: Implementing plans with available resources​.

• Global Startups:

  • Start with a global mindset to serve international markets​.

Chapter 15: Global Marketing and Supply Chains

• Marketing Fundamentals:

  • The 4 Ps (Product, Price, Promotion, Place) vary by market:

    • Product adaptation and pricing strategies for local affordability.

    • Customized promotions to align with cultural norms​.

• Global Sourcing and Supply Chain:

  • Sourcing components and services globally for cost efficiency.

  • Reverse innovation benefits both developing and developed markets​.