Untitled Flashcards Set

Primary Market

-New Securities are Issues
- Company issues a security and gets directly funded

Secondary Market

-Where previous Securities are traded
-Where most transactions take plane
-Stocks, Options, Bonds, Futures

International Equity markets

All stocks trades outside of the issuing companies home country

International bond market

- Most common use of debt
-All bonds sold outside of home country

Eurocurrency Markets

-Governments deposited USD into eurpoean banks
Cheap and for short term financing

Eurodollar

US currency held in banks in a European bank

Offshore Centers

-Country or center where there are few rules governing financial sector with lower taxes
-Where Business will create subsidiaries to hind their wealth

Role Of accounting standards

-Communicate companies financial positions to others
-Shows financial health and whether to invest or not
-Ensure compliance and payment of taxes

International accounting standards

-Private agency that approves different accounting standards
- Adherence is voluntary
-Used because standards from different countries can be so different

International Financing

Where business can get external capital internationally

Raising in international equity markets

- Some may list on stock market
- Some may list on various stock exchanges to lower cost of capital becoming available to global investors

Capital Budgeting

the process a firm uses to evaluate long-term investment proposals

Government in international investing

=Pass laws and policies that can limit or help companies
-They can provide infrastructure
-They can provide capital
-Provide various incentives to invest in their country

CAGE

- Cultural Distance
-Administrative Distance
-Geographic Distance
-Economic Distance

PESTEL

Political
Economic
Sociocultural
Technological
Ecological
Legal

Entry Methods

- Exporting
-Licensing Agreements
-Partnerships
-Aquisition's
-Subsidiaries

Brownfield Venture

Purchase or lease existing infrastructure

Greenfield Venture

Building new subsidiaries or infrastructure

Exporting Advantages

- Fast Entry
- Low Risk

Licensing and Franchising advantages

Fast entry, low cost, low risk

Licensing and Franchising disadvantages

less control, licensee may become a competitor, legal and regulatory environment must be sound

Partnerships and alliance advantages

-Shared Costs reduce investments needed, reduces risk and seen as a local entity

Partnerships and alliance disadvantages

-Higher cost
-Intergration problems between corporate cultures

Mergers and Aquisition Advantages

-Fast Entry
-Established Operations

Mergers and Aquisition Disadvantages

-High Cost
-Intergration Issues
-Finding the right partner who wont become a competitor

Greenfield Disdvantages

- high Cost
- High risk due to unknowns
-Slow entry

Brownfield advantages

- Most potential for above average returns
-Lower cost and risk

Exporting and Brand

- Easiest way to participate in global trade
-Spread brand worldwide

Entrepreneurship

The recognition of opportunities (needs, wants, problems, and challenges) and the creation thoughtfully planned ventures.
Most are not aggressive risk takers

What do entrepreneurs do

They look at a market and see what needs to be
- Eliminated
-Reduced
-Created
-Raised
-Kept the same

Low End Distributuion

Targets Low-End Customers
-Helps gain foothold to move into an attractive marker once product improves
-Can make current technology obsolete once it improves

New Market Disruption

Targets non-customers creating a new market that was previously ignored by the dominant players of the existing market.

Hybrid Disruption

A combination of new-market and low-end disruption strategies.
Identify new markets then get resources and exploit it

Bootstrapping

Exploiting a new business opportunity with limited funds

Four ps of marketing

Product, Price, Place, Promotion

Straight Product Extension (Standardized Product) Advantages

Save on research and development and manufacturing

Straight Product Extension (Standardized Product) Disadvantages

- Products may not be well suited for local needs
-Products may be more costly because high cost in the US
- Customer needs differ across countries

Product Adaptation (Customized Product)

refers to modifying a company's existing product in a way that makes it fit better with local needs or for a specific distribution channel

Product Adaptation (Customized Product) Disdvantages

Higher costs due to increased R&D, production, and marketing expenses.
-Requires really understanding the nuances of local market and the customer needs
-Operational challenges due to multiple products

Hypbrid approach of product in new markets

- combining standardized brand elements with customized features tailored to local markets
-

Reverse Innovation

Designing a product for a developing country and bringing back to home country

EX: GE Healthcare completely reinvented a $10,000 medical-imaging device to create a $500 portable imaging device for the Indian market. In the process, GE realized it had created a new product for its home market as well.

Reverse innovation benefits

Cost-Effective Innovation: Products designed for affordability in developing markets can be repurposed for cost-conscious segments in developed markets.

Access to Untapped Markets: Allows companies to explore and address needs in emerging economies.

Stimulus for Creativity: Encourages radical thinking and novel approaches to product development.

Global Relevance: Innovations can lead to products that meet diverse needs, improving global competitiveness.

Global Sourcing

Global sourcing involves buying materials/components from around the world, for use in the company's products.

Global Sourcing Advantages

-Lower Cost
-Higher quality
-Tap into specialized resources that may not be available domestically

Three Distribution Strategies

—to engage in a joint venture,
to acquire a local company, or to build its own distribution network from scratch

Supply Chain Management

planning and management of all activities involved in sourcing and procurement, conversion, and logistics

Coordination Across Boarders

Requires collaboration with international suppliers, logistics providers, and intermediaries.

Supply and demand in supply chain management

Balancing global production with market demand to minimize stock-outs or overproduction.

Manufacture in home country then export

•Lowest-investment production strategy
•Used in situations where total opportunity does not justify opening a plant
Disadvantages include shipping costs, importation delays, local import duties, risks due to exchange-rate fluctuations, and isolation from local knowledge.

Global components with local assembly

uses out of country suppliers but local assembly
•Can allow for customized assembly, local customization, better customer response, and potentially tax/tariff incentives from local assembly
•Challenges include increased supplier-coordination issues and concerns about supplier quality, local assembly can harm a product.

Six basic steps of scenario planning

Choose target issue, scope, and time frame the scenario will explore
Brainstorm key drivers and decision factors that influence the scenario
Define the two dimensions of greatest uncertainty
Detail the four quadrants of the scenarios with stories
Identify indicators that could signal which scenario is unfolding
Assess the strategic implication of each scenario

Mastered (10)

You've been getting these terms right!

Select these 10

Transactional financing

Seeking Capital

Transactional Investment

Investing Capital

Exporting Disadvantages

low control, low local knowledge, potential negative environmental impact of transportation

Greenfield Advantages

- Gain Local Market Knowledge
-Can be seen as an insider who employs locals

Global Sourcing

purchasing materials or labor from around the world (Governments can impose regulations to control)

Advantages of outsourcing

- Reduce cost by moving labor to a lower cost country
-Allows to fund projects where it would've been unaffordable

Entreprenurial Process - Triangle

1. Identify Oppurtunites
2. Plan and prepare the venture
3. Resourcing the venture and taking action

Straight Product Extension (Standardized Product)

Selling a product elsewhere without changing it

Product Adaptation (Customized Product) Advantages

-competitive advantage to enter a new market or expand a market share in an existing one
-Tailored promotions resonate more with local people, as customized promotions use images and wording that reflect local culture

Place in distribution

the location at which a company offers its products for sale. Could be a kiosk, store, or online website.