Midterm Flashcards
1
Q
International Business
A
(1) a business (firm) that engages in international economic activities
(2) the action of doing business abroad
2
Q
Multinational Enterprise
A
firm that engages in foreign direct investment by directly investing in, controlling, and managing value-added activities in other countries
3
Q
Foreign direct investment
A
Investment in, controlling, and managing value-added activities in other countries
4
Q
Global Business includes
A
international and domestic business activities
5
Q
Global Mindset
A
Ability to connect the dots globally
6
Q
Institution-based view
A
- Formal and informal rules of the game
- Suggests that the success and failure of firms are enabled and constrained by institutions
7
Q
IBV - Formal Institutions
A
Laws, Regulations, Rules
8
Q
IBV - Informal Institutions
A
Cultures, Ethics, Norms
9
Q
Resource-based view
A
A Firm competitive advantage is based on its valuable, rare, inimitable, and non substitutable resources
10
Q
Liability of Foreignness
A
Inherent disadvantage that foreign firms experience in host countries due to nonnative status
11
Q
Globalization
A
the close integration of countries and peoples of the world
- Advocates argue it contributes to greater economic growth, higher standards of living, improved technology
- Critics argue it destroys jobs in rich countries, exploits workers in poor countries, grants MNEs too much power, degrades the environment
12
Q
Emerging economies (emerging markets)
A
fast growing developing economies
13
Q
Reverse Innovation
A
an innovation that is adopted first in emerging economies and then diffused around the world
14
Q
Risk Management
A
Identification and assessment of risks and the preparation to minimize the impact of high-risk events
15
Q
Black Swan Event
A
An unpredictable event that is beyond what is normally expected and that has severe consequences
16
Q
Semiglobalization
A
Suggests that barriers to market integration at borders are high, but not high enough to insulate countries from eachtoher
17
Q
Gross national product
A
GDP plus income from nonresident sources
18
Q
Purchasing Power Parity
A
A conversation that determines the equivalent amount of goods and services that different currencies can purchase
19
Q
Nongovernmental Organizations
A
an organization that is not affiliated with any government
20
Q
Deglobalization
A
The process of weakening economic interdependence among countries
21
Q
Global Value Chain
A
A chain of geographically dispersed and coordinated activities involved in the production of a good or service and its supply and distribution activities
22
Q
Regulatory Pillar
A
The coercive power of governments
23
Q
Normative Pillar
A
The mechanism through which norms influence individual and firms behaviour
24
Q
Norms
A
Values, beliefs, and actions of relevant players that influence the focal individual and firms
25
Cognitive Pillar
The internalized values and beliefs that guide individual and firm behaviour
26
Transaction cost
The cost of doing business
27
Transition Economy
Emerging economies, particularly those moving from central planning to market competition
28
Nonmarket strategy
Strategy that centers on leveraging political and social relationships
29
Geopolitics
International political relations
30
Civil Law
Uses statutes and codes
31
Common Law
Shaped by precedents and traditions from previous decisions
32
Economic System
Rules of the game on how a country is governed economically
33
Market Economy
An economy that is characterized by the "invisible hand" of market forces
34
Command Economy
An economy that is characterized by government ownership and control of factors of production
35
Mixed Economy
An economy that has elements of both a market economy and a command economy
36
Ethnocentrism
A self-centered mentality by a group of people who perceive their own culture, ethics, and norms as natural, rational, and morally right
37
Culture
The collective programming of the mind that distinguishes the members of one group or category of people from another
38
Lingua Franca
A global business language
39
Social Structure
The way a society broadly organizes its members
40
Social Structure - Social Stratification
The hierarchical arrangement of individuals into social categories such as classes, castes, and divisions within a society
41
Social Structure - Social Mobility
The degree to which members from a lower social category can rise to a higher status
42
Low-context culture
A culture in which communications is usually taken at face value without much reliance on unspoken context
43
High-context culture
A culture in which communication relies a lot on the underlying, unspoken content, which is as important as the words used
44
Cluster
Countries that share similar cultures
45
Power Distance
The extent to which less powerful members within a culture expect and accept that power is distributed unequally
46
Individualism
The idea that an individuals identity is fundamentally his or her own
47
Collectivism
The idea that an individual's identity is fundamentally tied to the identify of his or her collective group
48
Ethics
The principles, standards, and norms of conduct that govern individual and firm behaviour
49
Ethical relativism
A perspective that suggests that all ethical standards are relative
50
Ethical Imperialism
A perspective that suggests that "there is one set of Ethics and we have it"
51
Extraterritoriality
The reach of one country's laws to other countries
52
Cultural Distance
The difference between two cultures along identifiable dimensions
53
Institutional distance
The extent of similarity or dissimilarity between the regulator, normative, and cognitive institutions of two countries
54
Cultural intelligence
An individuals ability to understand and adjust to new cultures
55
Value Chain
A stream of activities from upstream to downstream that add value
56
Benchmarking
Examining whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors
57
Commoditization
A process of market competition through which unique products that command high prices and high margins gradually lose their ability to do so, thus becoming commodities
58
Outsourcing
Turning over an activity to an outside supplier that will perform it on behalf of the focal firm
59
Offshoring vs Onshoring
Offshoring - outsourcing to an international or foreign firm
Onshoring - outsourcing to a domestic firm
60
VRIO
Resource-based framework that focuses on the value, rarity, imitability, and organizational aspects of resources and capabilities
61
Complementary asset
The combination of numerous resources and assets that enable a firm to gain a competitive advantage
62
Business Process Outsourcing
Outsourcing business processes to third-party providers
63
Original equipment manufacturer
Firm that executes design blueprints provided by other firms and manufactures such products
64
Original design manufacturer
Firm that both designs and manufactures products
65
Original brand manufacturer
Firm that designs, manufactures, and markets branded prodcts
66
Reshoring
Moving formerly offshored activities back to the home country
67
Trade Surplus
An economic condition in which a nation exports more then it imports
Trade deficit is the opposite
68
Theory of mercantilism
A theory that suggests that the wealth of the world is fixed and that a nation that exports more and imports less will be richer
69
Free Trade
The idea that free market forces should determine how much to trade with little or no government intervention
70
Theory of Absolute Advantage
A theory that suggests that under free trade, a nation gains by specializing in economic activities in which it has an absolute advantage
71
Theory of Comparative Advantage
A theory that focuses on the relative advantage in one economic activity that one nation enjoys in comparison with other nations
72
Factor endowment theory
A theory that suggests that nations will develop comparative advantage based on their locally abundant factors
73
Strategic trade theory
A theory that suggests that strategic intervention by governments in certain industries can enhance their odds for international success
74
Theory of national competitive advantage of industries
A theory that suggests that the competitive advantage of certain industries in different nations depends on four aspects
- Firm strategy, structure, and rivalry
- Country factor endowments
- Domestic demand conditions
- Related and supporting industries
75
Subsidy
Government payment to domestic firms
76
Foreign Portfolio Investment
Investment in a portfolio of foreign securities such as stocks and bonds
77
Sovereign wealth fund
A state-owned investment fund composed of financial assets such as stocks, bonds, real estate, and other financial instruments
78
Horizontal FDI
A type of FDI in which a firm duplicates its home country-based activities at the same value-chain stage in a host country
79
Vertical FDI
A type of FDI in which a firm moves upstream or downstream at different value chain stages in a host country
80
Upstream vertical FDI
A type of vertical FDI in which a firm engages in an upstream stage of the value chain in a host country
81
Downstream vertical FDI
A type of vertical FDI in which a firm engages in a downstream stage of the value chain in a host country
82
FDI flow
Amount of FDI moving in a given period in a certain direction
83
FDI inflow
Inward FDI moving into a country in a given period
84
FDI outflow
Outward FDI moving out of a country in a given period
85
OLI Advantage
A firms question for ownership advantages, location advantages, and internalization advantages via FDI
86
OLI - Ownership
An MNE's possession and leveraging of certain valuable, rare, hard-to-imitate, and organizationally embedded assets overseas
87
OLI - Location
Advantage enjoyed by firms operating in a certain location
88
OLI - Internalization
The replacement of cross-border markets with one firm locating and operating in two or more countries
89
Dissemination Risk
Risk associated with unauthorized diffusion of firm-specific know-how
90
Agglomeration
Clustering of economic activities in certain locations
91
Knowledge Spillovers
Knowledge diffused from one firm to others among closely located firms
92
Oligopoly
Industry dominated by small number of players
93
Intrafirm trade
International transactions between two subsidaries in two countries controlled by the same MNE
94
Free market view
A political view that suggests that FDI unrestricted by government intervention is the best
95
Technology Spillover
Technology diffused from foreign firms to domestic firms
96
Institutional Void
Institutional conditions of a country lacking market-supporting infrastructure
97
Location-Specific Advantage
Benefits a firm reaps from the features specific to a place
98
First-Mover Advantage
benefits that accrue to firms that enter the market first and that late entrants do not enjoy
99
Late-Mover Advantage
Benefits that accrue to firms that enter the market later and that early entrants do not enjoy
100
Scale of entry
Amount of resources committed to entering a foreign market
101
Nonequity mode
Mode of entry that reflects relatively smaller commitments to overseas markets
102
Equity Mode
Mode of entry that indicates larger commitments to overseas markets
103
Entry Mode
A form of operation that a firm employs to enter foreign markets
104
Turnkey Project
a delivery method in which a contractor works with a project owner under a single contract to complete all project stages from detail engineering through construction
105
Build-Operate-Transfer agreement
A nonequity entry mode used to build a longer-term presence by first constructing and then operating a facility for a period of time before transferring operations to a domestic agency or firm
106
Research and Development Contract
outsourcing agreement in R&D between firms
107
Co-marketing
effors among a number of firms to jointly market their products and services
108
Joint Venture
A new corporate entity created and jointly owned by two or more parent companies
109
Wholly owned subsidary
A subsidiary located in a foreign country that is entirely owned by the parent multinational
110
Linkage, Leverage, and Learning advantages
A firms quest of linkage advantages, leverage advantages, and learning advantages, which are typically associated with multinationals from emerging economies
111
Country of origin effect
The positive or negative perception of firms and products from a certain country
112
Reciprocity
Informal agreement based on mutual exchange of gratifications
113
Strategic alliance
Voluntary agreement of cooperation between firms
114
Contractual alliance
Alliance between firms that is based on contracts and does not involve sharing of ownership
115
Equity-based alliance
Alliance based on ownership or financial interest between the firms
116
Strategic investment
One firm investing in another as a strategic investor
117
Cross-Shareholding
Both firms investing in eachother to become cross-shareholders
118
Acquisition
Transfer of the control of operations and management from one firm (target) to another (acquirer), the former becoming a unit of the latter
119
Merger
Combination of operations and management of two firms to establish a new legal entity
120
Due diligence
Investigation prior to signing contracts
121
Learning race
Race in which partners aim to outrun eachother by learning the "tricks" from the other side as fast as possible
122
Relational capability
Ability to manage interfirm relationships
123
Acquisition Premium
Difference between acquisition price and market value of target firms
124
Strategic Fit
Effective matching of complementary strategic capabilities
125
Organizational fit
The similarity in cultures, systems, and structures
126
Hubris
Overconfidence in ones capabilities
127
Managerial motive
Managers desire for power, prestige, and money. which may lead to decisions that do not benefit the firm overall in the long run
128
Expatriate
Person living outside their native country
129
Inpatriate
An employee who is transfered to a different country where the company headquarters is
130
Repatriate
Sending someone back to their home country
131
Opportunism
The act of self-interest seeking with guile
132
IBV two core propositions
1. Managers and firms rationally pursue their interests and make choices within the formal and informal constraints in a given institutional framework
2. While formal and informal institutions combine to govern firm behaviour, in situations where formal constraints are unclear or fail, informal constraints will play a larger role in reducing uncertainty and providing constancy to managers and firms
133
Bounded Rationality
The necessity of making rational decisions in the absence of complete information
134
Political Risk
Risk associated with political changes that may negatively impact domestic and foreign firms
135
3 ways to understand cultural differences
Context, Cluster, Dimensions
136
Approaches to managing ethics overseas
- Respect for human dignity and basic rights
- Respect for local traditions
- Respect for institutional context
137
Resource / Capability
The tangible and intangible assets a firm uses to choose and implement its strategies
138
Sensing
Abilities to discover opportunities
139
Seizing
Abilities to capture value from opportunities
140
Reconfiguration
Ability to remain flexible by redesigning business models, realigning assets, and revamping routines
141
SWOT analysis focuses
RBV: S and W
IBV: O and T
142
Casual ambiguity
Difficulty of identifying the actual cause of a firms successful performance
143
3 Pillars of IBV
Regulative
Normative
Cognitive
144
Classic Trade Theories
1. mercantilism
2. absolute advantage
3. comparative advantage
145
Key Question
What determines the success and failure of firms around the globe?
146
Formal Institutions Pillar
Regulatory
147
Intellectual Property Rights
Rights regarding ownership of intellectual property
148
Intellectual property
Intangible property that is the result of intellectual activity
149
Informal institutions pillars
Normative, Cognitive
150
Democracy
Citizens elect representatives
151
Totalitarianism (dictatorship)
One person or party exercises absolute political control over the population
152
Authoritarianism
Political plurality is undermined and concentrated government power is imposed
153
Dynamic capability
Ability to reconfigure its resources and capabilities
154
International Trade RBV
exports that are valuable, unique, hard to imitate
155
International Trade IBV
Different rules governing trade are designed to determine how gains are shared or not shared
156
Factor Endowment
Extent to which different countries possess various factors of production
157
Product Life cycle theory
theory that accounts for changes in the patterns of trade over time by focusing on product life cycles
158
Management control right
The right to appoint key managers and establish control mechanisms
159
Pragmatic nationalism
Political view that only approves FDI when its benefits outweigh its costs
160
FDI Benefits
Host country:
- Capital inflow
- Technology spillovers
- Job creation
Home country:
- Repatriated earnings
- Increased exports
- Learning via FDI
161
Expropriation
Government's confiscation of foreign assets
162
Obsolecing bargain
Deal struck by MNEs and host governments that change requirements after initial FDI entry
163
How MNEs negotiate with host governments
Common interests, Conflicting interests, Compromises
164
Integration-responsiveness framework
Framework of MNE management on how to simultaneously deal with the pressures for both global integration and local responsiveness
165
Local Responsiveness
The necessity to be responsive to different customer preferences around the world
166
Home Replication Strategy
Emphasizes the duplication of home country based competencies in foreign countries
167
Localization Strategy
Focuses on a number of foreign countries/regions, each of which is regarded as a stand-alone local market worthy of significant attention and adaptation
168
Global Standardization Strategy
Focuses on development and distribution of standardized products worldwide in order to reap the maximum benefits from low-cost advantages
169
Centre of Execllence
MNE subsidiary explicitly recognized as a source of important capabilities, with the intention that these capabilities be leveraged by, and/or disseminated to other subsidiaries
170
Worldwide mandate
charter to be responsible for one MNE function throughout the world
171
Transnational Strategy
Endeavours to be simulaneously cost-efficient, locally responsive, and learning driven around the world
172
International Division
Organizational structure that is typically set up when firms initially expand abroad
173
Geographic Area Structure
Organization structure that organizes the MNE according to different geographic areas
174
Country (regional) manager
Manager of Geographical area
175
Global product division structure
organizational structure that assigned global responsibilities to each produce division
176
Global Matrix
organizational structure used to alleviate the disadvantages associated with both geographic area and global product division structures
177
Organizational Culture
Collective programming of mind that distinguishes the members of one organization from another
178
Knowledge management
Structures, processes, and systems that actively develop, leverage, and transfer knowledge
179
Explicit Knowledge
Knowledge that is codifiable (can be written down and transferred without loss of richness)
180
Tacit Knowledge
Knowledge that is noncodifiable, whose acquisition and transfer require hands-on practice
181
Open Innovation
Use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation
182
Absorptive Capacity
Ability to recognize the value of new information, assimilate it, and apply it
183
Social Capacity
Informal benefits individuals and organizations derive from their social structures and networks
184
Micro-Macro Link
Micro, informal interpersonal relationships among managers of various units may greatly facilitate macro, intersubsidary cooperation among these units
185
Subsidiary initiative
Proactive and deliberate pursuit of new opportunities by a subsidary
186
Global Account structure
Customer focused dimension that supplies customers in a coordinated and consistent way across various countries
187
Solution based structure
Customer-focused solution in which a provider sells whatever combination of goods and services the customers prefer
188
Corporate Social Responsibility
Consideration of, and response to, issues beyond the narrow economic, technological, and legal requirements of the firm to accomplish social benefits along with the traditional economic gains that the firm seeks
189
Fiduciary duty
Duty by law
190
Global Sustainability
Ability to meet needs of the present without compromising the ability of future generations to meet their needs around the world
191
Primary stakeholder
Group of constituents on whom the firm relies on for continuous survival
192
Secondary stakeholder
Stakeholder who influence or affect, but are not engaged with transactions of the firm and are not essential for its survival
193
Corporate Social Performance
Social performance outcomes of firms CSR
194
ESG Performance
Performance yardstick consisting of environmental, social, and governance dimensions
195
Socially responsible investment
Investment in firms that have excellent environmental, social, and governance performance
196
Shareholder primacy
Places shareholders as the most important stakeholder group
197
Stakeholder capitalism
View of capitalism that suggests firms must respect stakeholder interests
198
Corporate Social Irresponsibility
Lack of CSR
199
Stakeholder primacy
Suggests that a firm needs to have a fundamental commitment to all stakeholders
200
Reactive strategy
Strategy that would only respond to CSR causes when required
201
Defensive strategy
Strategy that focuses on regulatory compliance but little commitment to CSR
202
Accommodative strategy
Strategy characterized by viewing CSR as worthwhile
203
Proactive strategy
Doing more that is required with CSR
204
Corporate philanthropy
Firms donation to social causes
