Chapter 6 Flashcards
(20 cards)
Globalization
Establishing your business in new areas of the world
Declining Trade Barriers
Tariffs have been declining, many countries are now free trade markets
Technology Enablement
Advancements in air travel, communication, etc. have enabled the spread of information
Rise of Multinational Enterprises (MNEs)
More trade experience + sharing best practices
Global Institutions
World Trade Organization, World Bank
Global Standard
Keep products the same throughout international stores/markets (helps establish consistency + brand image)
Local customization
Products/services modified to tailor to individual markets (caters to tastes of the country)
Combination
Some countries stay the same (more similar ones), some are changed
Entry Strategy
How a company plans to enter their market of choice
Export
Ship the products into the foreign market
License
Sell the rights to a third party to make/sell the businesses’ products/services
Franchise
Authorize a business partner to use the trademarks/patents and provide guidance for how to successfully operate the business
Joint Venture
Set up a formal arrangement with a business partner to conduct business together in a foreign country
Strategic Alliance
Less formal arrangement where one business provides an aspect (i.e. tools/resources) and the other provides smth different(i.e. local manufacturing, sales and support)
Political economy of a region
Political climate, economic conditions, legal system
World Bank and World Trade Organization
Establish international trade rules, oversee international commercial activities, help developing countries build infrastructure to support international trade
Political climate
Country’s government –> does it support free trade? (low tariffs, minimize difficulty to import/export goods)
Economic conditions
Is the country’s economy flourishing? Is the country’s economy large enough to enable successful sales/profits?
Legal system
Will business assets be protected? Does the government’s laws favor domestic businesses over foreign?
Finding the right entry strategy:
-Management preferences regarding direct control
-How many suitable businesses/targets are available
-Legal factors, including foreign ownership restrictions, that may prevent a certain option
-Nature of products/services
-Time/risks required for a certain option to work
