OA - Business Decision Making in the Global Environment Flashcards
(32 cards)
Competitor Analysis
The process of anticipating rivals’ actions to revise a firm’s plans and prepare responses. Example: A tech company evaluates competitors’ likely moves before launching a new product.
Antidumping Duties
Tariffs placed on foreign imports sold below cost to protect domestic industries. Example: A country imposes duties on imported steel sold below production cost.
FDI Cost to Host Country
A primary cost is the potential loss of economic sovereignty. Example: A host country loses control when key industries are owned by foreign firms.
Globalization - New Force Perspective
Views globalization as trade integration with both benefits and downsides. Example: Opens markets but can displace local workers.
FDI vs Licensing
Firms prefer FDI because it grants direct ownership of foreign assets. Example: A carmaker sets up a factory abroad instead of licensing its brand.
Licensing
A non-equity strategic alliance where a firm allows another to use its brand/tech. Example: Disney licenses characters to toy manufacturers.
Clean Floating Exchange Rate
Exchange rate is determined solely by supply and demand. Example: The U.S. dollar’s value changes without direct government control.
Resource-Based View
Focuses on internal strengths of a firm. Example: A company leverages its proprietary tech to compete globally.
Antidumping Laws
Prevent foreign firms from selling below cost to eliminate competition. Example: Blocking underpriced foreign goods to protect local industries.
Import Quotas
Restrictions on the quantity of imports. Example: Limiting the number of foreign cars entering the country annually.
First-Mover Advantage
Includes shaping industry standards and resolving uncertainty. Example: Netflix establishing dominance in streaming before competitors entered.
Free-Market View of FDI
Supports unrestricted FDI to maximize comparative advantages. Example: Letting market forces decide where firms invest internationally.
Trade Deficit
When a country imports more than it exports. Example: The U.S. consistently runs a trade deficit with China.
FDI Strategy - Resource-Based View
Firms offset foreignness with strong capabilities. Example: Amazon uses brand recognition and tech strength in new markets.
Institution-Based View
Emphasizes understanding host country’s laws and values. Example: A firm adapts its HR policies to comply with local labor laws.
Scale of Entry
Refers to the amount of resources committed to a foreign market. Example: A firm opens multiple stores in a new country instead of just one.
Pendulum View of Globalization
Sees globalization as shifting—sometimes expanding, sometimes retreating. Example: Post-WWII expansion vs. recent protectionist trends.
Equity Modes of Entry
High commitment and risk, hard to reverse. Example: Joint ventures or acquisitions.
Strategic Hedging
Spreading operations across currency zones to offset risks. Example: A firm operates in Europe and Asia to balance currency fluctuations.
Comparative Advantage Theory
Classical theory where countries specialize in goods with the lowest opportunity cost. Example: India exports IT services while importing machinery.
FDI Cost to Home Country
Includes capital outflow and job loss. Example: A U.S. company opening factories abroad may reduce domestic employment.
Turnkey Projects
Non-equity entry mode where a firm builds and hands over a ready-to-operate facility. Example: A construction company completes a factory abroad and transfers ownership.
Cross-Market Retaliation
Striking back in another market if a rival attacks your home market. Example: Coca-Cola retaliates against Pepsi in Asia after losing U.S. market share.
Mercantilism
Classical theory viewing trade as zero-sum; countries hoard wealth. Example: Exporting more than importing to accumulate gold reserves.
