Study guide Flashcards
(98 cards)
1
Q
What is one of the key concepts for ethics and CSR?
A
Sustainability: Meeting present needs without compromising future generations—includes environmental impact, fair labor practices, and long-term planning
2
Q
What is one of the key concepts for ethics and CSR?
A
Business Ethics: Acting with integrity in all business practices
3
Q
What is a trade balance?
A
Exports - Imports
4
Q
What is one key factor that influences FDI?
A
Labor costs and skills
5
Q
What is one key driver of globalization?
A
Cost advantages (outsourcing to lower-cost regions)
6
Q
What is one of the key strategies of supply chain management?
A
Friend-shoring: Sourcing from politically friendly countries
7
Q
How does foreign currency come into play?
A
Currency fluctuations directly impact pricing, profitability, and repatriation of profits.
*Exchange Rate Risk: If the local currency depreciates, profits in the home currency fall.
oExample: Selling pies in Colombia – if the Colombian Peso weakens, profit margins erode once converted back to USD.
*Transaction Risk: Costs in USD vs. revenue in local currency can create mismatch.
*Mitigation Options:
oUse forward contracts or currency hedging instruments.
oPrice in USD for exports, but this may reduce competitiveness.
oStructure franchise royalties in local currency.
8
Q
What are tariffs?
A
Taxes on imports to protect domestic industries
9
Q
What is one way to Analyze the Scenario on culture
A
Communication Style: Latin American cultures often use indirect communication—so reading between the lines is important.
10
Q
What is tricky about government tools for intervention?
A
Protectionism may help local jobs but can raise consumer prices and provoke retaliation from trade partners (trade wars).
11
Q
What is free trade area?
A
Remove internal tariffs (e.g., NAFTA/USMCA)
12
Q
What is common market?
A
Free movement of labor and capital (e.g., EU pre-Euro)
13
Q
What is one key factor that influences FDI?
A
Market size & growth potential
14
Q
How does globalization implicate firms?
A
Opportunities: New markets, cheaper inputs, economies of scale
Challenges: Increased competition, cultural differences, political and economic risk
15
Q
What is a trade deficit?
A
Imports > (greater than) Exports
16
Q
What are the cons of cash in advance?
A
Buyer assumes all risk and May discourage potential buyers due to lack of trust or cash flow issues
17
Q
What is FDI flow?
A
Value of FDI moving into or out of a country in a given period
18
Q
What is one way foreign currency can significantly impact the firm’s profitability and pricing strategy in international markets
A
Understanding and planning for foreign currency risks will be essential for maintaining financial stability and profitability abroad.
19
Q
Define the different types of payment methods that can occur in international trade.
A
20
Q
What is one key driver of globalization?
A
Lower trade barriers (tariffs, regulations)
21
Q
What is one key factor that influences FDI?
A
Ease of doing business
22
Q
What real challenges might emerge from these cultural differences?
A
*Communication breakdown: The manager may be perceived as cold, overly blunt, or disrespectful if they use direct criticism or challenge hierarchy.
*Motivation issues: European managers who emphasize autonomy might not align with employees who expect closer guidance and prefer structured environments.
*Trust-building problems: Brazilians emphasize relationships and personal trust before business. A manager focusing only on efficiency may struggle to build rapport.
*Decision-making disconnects: Brazilians may consult informally or delay decisions to build consensus, while the manager might expect quick, data-driven conclusions.
*Operational friction: Processes from HQ may be rejected or slowly implemented if seen as culturally insensitive or misaligned with local values.
23
Q
What are the pros of open account?
A
Attractive to buyers (improves cash flow) and Helps build loyalty and repeat business
24
Q
What is cash in advance?
A
A payment method in international trade where the buyer pays the seller upfront, before the goods are shipped.
25
What are core competencies?
are the firm’s essential strengths—such as innovation, logistics, branding, or customer service—that provide value to customers, are difficult for competitors to imitate, and can be applied across global markets.
26
What is one way foreign currency can significantly impact the firm’s profitability and pricing strategy in international markets
If the firm enters into a joint venture, profits may be repatriated in the local currency, meaning the firm faces conversion risks.
27
What are local content requirements?
A portion of the product must be made domestically
28
Short case study: Modes of market entry, marketing and (some) supply chain issues.
In this short case study, an Orlando-based firm is looking to expand internationally (which should sound familiar by now). After conducting market research, the firm has decided to enter two specific countries. There are naturally several questions the firm needs to answer and issues it needs to take into consideration before the set their sails for these international destinations.
What is one of the potential entry strategies that this firm could feasibly consider for their planned expansion (we did exactly the same exercise in class for the Key West Key Lime Pie Company).
Exporting: The firm produces goods domestically and ships them abroad. This is a low-risk, low-investment strategy suitable for testing new markets with minimal commitment. It works well if transportation costs are manageable and demand exists.
29
Short case study: Modes of market entry, marketing and (some) supply chain issues.
In this short case study, an Orlando-based firm is looking to expand internationally (which should sound familiar by now). After conducting market research, the firm has decided to enter two specific countries. There are naturally several questions the firm needs to answer and issues it needs to take into consideration before the set their sails for these international destinations.
What is one of the potential entry strategies that this firm could feasibly consider for their planned expansion (we did exactly the same exercise in class for the Key West Key Lime Pie Company).
Joint Venture: The firm partners with a local company to create a shared business entity. This allows access to local market knowledge and shared risks but can involve complex coordination and potential cultural clashes.
30
What are the cons of letter of credit?
Costly: Banks charge fees for issuing and confirming LCs. Complex: Involves strict documentation; minor errors may delay or prevent payment. Time-consuming: Preparation, verification, and processing of documents may take time.
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What is one key factor that influences FDI?
Political and economic stability
32
What is one key driver of globalization?
Multinational corporations seeking growth
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What practical lessons can be drawn from this scenario?
*Cultural intelligence (CQ) is not just about knowing differences — it’s about adapting behavior accordingly. This includes showing empathy, humility, and flexibility.
*Expat preparation is essential: Pre-departure cultural training and local mentorship can improve expat success and reduce misalignment.
*Standardization vs. adaptation isn’t just about product — it’s also about management style.
Bottom Line: The scenario forces us to confront how even the most well-meaning managers can fail if they don't appreciate cultural undercurrents. It’s not about right or wrong — it’s about fit. Managing across cultures requires awareness, adjustment, and attunement.
34
What is one way foreign currency can significantly impact the firm’s profitability and pricing strategy in international markets?
Exchange rate fluctuations could lead to unpredictable costs or reduced revenue when converting foreign sales back to U.S. dollars.
35
Short case study: Modes of market entry, marketing and (some) supply chain issues.
In this short case study, an Orlando-based firm is looking to expand internationally (which should sound familiar by now). After conducting market research, the firm has decided to enter two specific countries. There are naturally several questions the firm needs to answer and issues it needs to take into consideration before the set their sails for these international destinations.
What is one of the potential entry strategies that this firm could feasibly consider for their planned expansion (we did exactly the same exercise in class for the Key West Key Lime Pie Company).
Licensing: The firm allows a foreign company to produce and sell its product in exchange for royalties or fees. Licensing provides access to local markets with low financial risk but results in less control over quality and brand image.
36
What is economic union?
Unified monetary and fiscal policies (e.g., EU with Euro)
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What is one of the key strategies of supply chain management?
Nearshoring: Moving operations closer to home
38
What are the key features of cash in advance?
Offers maximum security for the seller, Typically used when the buyer has low creditworthiness, or when the seller is entering a new or high-risk market, and Common in high-demand or custom-made goods
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What is one key characteristics of globalization?
Interconnected markets: Goods, services, capital and labor flow across borders
40
What is supply chain management?
The flow of goods, services, information, and finances from raw materials to end consumers.
41
What is an example of Mercosur?
South American trade bloc; customs union
42
What is a trade surplus?
Exports > (greater than) Imports
43
List the reasons why a joint venture is the most suitable entry strategy for the Orlando-based firm?
Provides access to local expertise and existing distribution networks. Helps navigate regulatory and cultural complexities. Allows for shared financial risk and operational costs. Facilitates a faster market entry than a greenfield investment.
44
What is customs union?
Common external tariff (e.g., Mercosur)
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What is one key driver of globalization?
Technological advancements (internet, logistics, communication)
46
What are the key features of open account?
Offers maximum convenience for the buyer, Often used in strong, trust-based relationships, and Popular in developed markets or among long-term partners
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1. Scenario on culture: The scenario (3 pages) describes the experience of a manager sent from headquarters to work in one of the firm’s subsidiaries in a Latin American country. This is a very realistic scenario, to which you need to apply the concepts and issues related to culture. To prepare, review the cultural concepts seen in class and understand how they play out in reality (implications). Also, make sure you understand where the European (in the slide) cultures and Latin American cultures (Brazil in the slides) rank along the key cultural dimensions (see slides). This just makes things easier for you to analyze the situation. This is a useful and practical exercise for anybody working with people from different countries in a professional context.
Apply Hofstede’s culture dimensions and other cross-cultural management concepts
48
What are the pros of cash in advance?
Seller avoids non-payment risk and Quick access to funds
49
What are the pros of letter of credit for a buyer?
Ensures the seller only gets paid if they fulfill their obligations (e.g., shipping on time, correct documentation). Can negotiate better terms with seller by offering secure payment method.
50
What is one way to Analyze the Scenario on culture
Time Orientation: Europeans may be punctual and focused on deadlines, while Latin cultures are more polychronic—flexible with time.
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5.Reflect on specific issues related to marketing which will become relevant for introducing the firm’s products in these two foreign markets. Our focus in class will be on the standardization vs. adaptation issue relating to the 4 Ps and this is what we want to apply to the scenario.
When entering two foreign markets, the firm must evaluate which elements of its marketing strategy to standardize and which to adapt:
Overall, the firm should consider a "global" approach—global strategy with local adaptation—to successfully position itself and resonate with target consumers in each country.
52
What is an example of cash in advance?
A small U.S. exporter asks a new distributor in Nigeria to pay the full invoice amount before shipping any goods, to avoid the risk of default.
53
What is competitive advantage?
is what sets a company apart from rivals—this can be through cost leadership (offering lower prices), differentiation (unique products or services), or focus/niche strategies (serving a specific market segment extremely well).
54
Short Case Study: Market Entry, Marketing, Supply Chain
The Orlando-based company is looking to expand to two countries. Here’s how to answer this in four sections:
a) What entry strategies could the firm consider?
These strategies range in control, risk, investment, and speed:
55
Short case study: Modes of market entry, marketing and (some) supply chain issues.
In this short case study, an Orlando-based firm is looking to expand internationally (which should sound familiar by now). After conducting market research, the firm has decided to enter two specific countries. There are naturally several questions the firm needs to answer and issues it needs to take into consideration before the set their sails for these international destinations.
What is one of the potential entry strategies that this firm could feasibly consider for their planned expansion (we did exactly the same exercise in class for the Key West Key Lime Pie Company).
Foreign Direct Investment can either use Greenfield Investment: The firm builds operations from scratch in the foreign country. Offers full control and brand integrity but is time-consuming and capital-intensive. Or Acquisition: The firm purchases an existing local business. This allows rapid market access and an existing customer base, but integration challenges and high initial investment are risks.
56
What is one way to Analyze the Scenario on culture
Show how the manager could adapt leadership, communication, and decision-making styles to align with cultural expectations
57
What is an example of an economic union?
Advanced integration, single currency (Euro), free movement
58
4.Briefly consider how the issue of foreign currency might come into play in this scenario (modes of market entry). We did this exercise in class.
Foreign currency can significantly impact the firm’s profitability and pricing strategy in international markets:
59
What are the cons of exporting?
Transportation costs, Tariffs and quotas, and Less control over local marketing/distribution
60
What are subsidies?
Government payments to local industries to increase competitiveness
61
What is one way to Analyze the Scenario on culture
Risk and Planning: Latin cultures often have high uncertainty avoidance—they may want clear instructions, thorough planning, and dislike ambiguity.
62
What is an example of ASEAN?
Southeast Asian group with growing integration
63
What are the pros of letter of credit for a seller?
Reduces the risk of non-payment, especially when dealing with unknown buyers or unfamiliar markets. Provides a guaranteed payment from a bank, assuming compliance with LC terms. Can use the LC as collateral for financing.
64
What is one way to Analyze the Scenario on culture
Adjusting to Hierarchy: The European manager may expect flatter hierarchies, but Latin American firms (like those in Brazil) often have high power distance—meaning respect for authority is critical.
65
What is one way foreign currency can significantly impact the firm’s profitability and pricing strategy in international markets
The firm might consider hedging strategies such as forward contracts to lock in exchange rates and protect against volatility.
66
What is a letter of credit?
is bank-issued and guarantees payment if terms are met—common in international trade to reduce risk.
67
What is one key characteristics of globalization?
Integration of economies: National economies are increasingly interdependent.
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What is one of the key strategies of supply chain management?
Onshoring: Bringing operations back to domestic territory
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3.Make a recommendation as to which mode of market entry makes (in your opinion) the most sense for the firm to pursue and why this is the case. You will also want to acknowledge the downsides of your proposal (Note: It is useful to have a basic idea about the pros and cons of the market entry strategies).
A joint venture is the most suitable entry strategy for the Orlando-based firm, especially if it is entering two diverse foreign markets. It strikes a balance between risk, control, and local market adaptation.
Despite its drawbacks, a joint venture is ideal for firms new to international markets and needing local support to mitigate risk while building brand recognition and customer trust.
70
Short case study: Modes of market entry, marketing and (some) supply chain issues.
In this short case study, an Orlando-based firm is looking to expand internationally (which should sound familiar by now). After conducting market research, the firm has decided to enter two specific countries. There are naturally several questions the firm needs to answer and issues it needs to take into consideration before the set their sails for these international destinations.
What is one of the potential entry strategies that this firm could feasibly consider for their planned expansion (we did exactly the same exercise in class for the Key West Key Lime Pie Company).
Franchising: Common for service-based or consumer-facing businesses. The firm allows a foreign operator to use its brand and business model. Franchising expands quickly with limited capital but requires strong support systems and consistency enforcement.
71
What are the pros of exporting?
Low investment, Rapid entry, and Good for testing markets
72
What is globalization?
process by which businesses and other organizations develop international influence or start operating on an international scale
73
What is FDI stock?
Total cumulative value of all foreign investments
74
What are the challenges when using supply chain management?
Disruptions (e.g., COVID, war, port strikes), Logistics delays, and Sustainability pressures
75
What are the cons to open account?
Seller carries the risk of non-payment or late payment and Risk increases in unstable markets or with new customers
76
How are fast-paced markets globalized?
firms must adapt these competencies to different cultural, economic, and regulatory environments while maintaining consistency and efficiency.
77
What is an open account?
A payment method where the seller ships the goods and gives the buyer a set period (typically 30, 60, or 90 days) to pay after delivery.
78
What is an example of an open account?
A German electronics company ships products to its longtime retail partner in France, giving them 60 days to pay after delivery.
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Why does ethics and CSR matter?
Consumers care more about sustainability and ethics
Affects brand reputation, legal compliance, and access to capital
80
What is one way foreign currency can significantly impact the firm’s profitability and pricing strategy in international markets
Currency misalignment may also affect competitive pricing, especially if local competitors produce and sell in the domestic currency.
81
What is the difference between developed and developing countries?
Developed countries: Attract high-tech and capital-intensive industries
Developing countries: Attract labor-intensive manufacturing due to low costs
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What are quotas?
Limits on quantity of imports
83
What is one key characteristics of globalization?
Cultural blending: Greater exposure to different cultural products, values, and lifestyles.
84
What do successful international strategies involve?
balancing global integration (efficiency) with local responsiveness (adaptation) to stay competitive and relevant in diverse markets.
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What are the cons of globalization?
local job loss and cultural homogenization
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How is supply chain management changed?
Globalized supply chains: sourcing and manufacturing from multiple countries, More complexity and longer lead times, and Reliance on real-time data and logistics
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What are the pros of globalization?
market access, economies of scale
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Key Hofstede Dimensions: Comparison Between European Cultures and Brazil
Let’s say the manager is from a Northern European country (e.g., Germany or Sweden), as is common in many global HQs. Here’s how they compare with Brazil:
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What are the benefits of regional economic integration?
Increased trade, Greater market access, Reduced transaction costs, and Political cooperation
90
What is one of the key concepts for ethics and CSR?
ESG (Environmental, Social, Governance): Non-financial performance indicators used by socially conscious investors
91
What is one of the key strategies of supply chain management?
Outsourcing: Hiring external suppliers
92
What is one of the key concepts for ethics and CSR?
CSR (Corporate Social Responsibility): Voluntarily doing good for society beyond what’s legally required (e.g., community programs, environmental efforts)
93
What is one way to Analyze the Scenario on culture
Relationship-Building: In Latin America, personal relationships and trust matter a lot in business; the manager should focus on building rapport, not just tasks.
94
What is an example of a letter of credit?
An Orlando-based firm exporting vending machines to a buyer in India requests a Letter of Credit to ensure payment. Once the machines are shipped and the seller submits the correct documents (like the shipping bill, invoice, certificate of origin), the bank releases payment—protecting both parties from default or fraud.
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Define responsibilities of buyer vs seller in international shipping
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What is strategy?
involves choosing how a firm will compete globally by leveraging its unique strengths to achieve sustainable success.
97
What is one of the key strategies of supply chain management?
Offshoring: Producing in low-cost countries
98
What is one key factor that influences FDI?
Infrastructure & logistics
