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level: Level 1

Questions and Answers List

level questions: Level 1

QuestionAnswer
entry is early when a firm enters a foreign market before other foreign firms and late when a firm enters after other international businesses have established themselvestiming of entry
advantages accruing to the first to enter a market ex. capture demand by establishing a strong brand namefirst-mover advantages
disadvantages associated with entering a foreign market before other international businessesfirst-mover disadvantages
the price an early entrant bears that later entrants avoid, such as the time and effort in learning the rules, failure due to ignorance, and the liability of being a foreigner.pioneering costs
sale of products produced in one country to residents of another countryexporting
a venture in which a firm agrees to set up an operating plant for a foreign client and hand over the "key" when the plant is fully operationalturnkey project
agreement in which a licensor grants the rights to intangible property to the licensee for a specified period and receives a royalty fee in returnlicensing agreement
a specialized form of licensing in which the franchiser sells intangible property to the franchisee and insists on rules to conduct the businessfranchising
a cooperative undertaking between two or more firmsjoint venture
a subsidiary in which the firm owns 100 percent of the stockwholly owned subsidiary
one company's purchase of the property and obligations of another companyacquisition
a firm building a subsidiary from the ground up in another countrygreenfield strategy
the most risky type of direct investment, whereby a company builds a subsidiary from scratch in a foreign countrygreenfield venture
Arrangement in which a company lincenses valuable intagible property to a foreign partner and receives a licence for the partner's valuable knowlwdge; reduces risk of licensingCross-licensing agreement
A decision that has a long-term impact and is difficult to reverse, such as entering a foreign market on a large scaleStrategic commitment
1. Exporting 2. Turnkey projects 3. Licensing 4. Franchising 5. Joint ventures 6. Wholly owned subsidiaryWhat are the six different modes to enter a foreign market?
1. Which markets to enter? 2. When to enter those markets? 3. On what scale?Three basic decisions a firm must contemplate before foreign expansion.
Firm skills that competitors cannot easily match or imitateCore Competence
Cost advantages associated with large-scale productionEconomies of Scale
Systematic production costs reductions that occur over the life of a productExperience Curve
When different stages of value chain are dispersed to those locations around the globe where value added is maximum or where costs of value creation are minimizedGlobal Web
Cost savings from learning by doingLearning Effects
Cost advantages from performing a value creation activity at the optimal location for that activityLocation economies
A ratio or rate of return conceptProfitability
Actions managers take to attain the firm's goalsStrategy
The percentage increase in net profits over timeProfit Growth
Performing activities that increase the value of goods or services to consumersValue Creation
Plan to exploit experience-based cost and location economies, transfer core competencies with the firm, and pay attention to local responsivnessTransnational Strategy
Needs that are the same all over the world, such as steel, bulk chemicals, and industrial electronicsUniversal Needs
Trying to create a value by transferring core competencies to foreign markets where indigenous competitors lack those comepetenciesInternational Strategy
cost advantages associated with using specialized competencies across different product lines and businessesEconomies of scope
The flow of skills and product offerings from foreign subsidiary to home country and from foreign subsidiary to foreign subsidiaryglobal learning
difference between Total revenues and total costsprofit
cooperative agreements between two or more firmsstrategic alliances
giving away a technological know-howand market access to its alliance partner in return for very littleDisadvantage of Strategic alliances
Partner selection, alliance structure, managing the allianceMaking Alliances work
Sites for fundamentals research located in regions where valuable scientifing knowledge is being created; where teams develop the basic technologies that become new productsBasic research centres
number of intermediaries that a product has to go through before it reaches the final consumerchannel length
A few retailers supply most of the marketconcentrated retail system
extent to which the place of manufacture influences product evaluationscountry of origin effect
when a small change in price produces a large change in demandelastic demand
distribution channel that outsiders find difficult to accessexclusive distribution channel
Many retailers, with no single one having a major share of the marketfragmented retail system
when a large change in price produces only a small change in demandInelastic demand
identyfing groups of consumers whose purchasing behaviour differs from others in important waysmarket segmentation
choices about product attributes, distribution strategy, communication strategy and pricing strategy that a firm offers its targeted marketsmarketing mix
occurs when a pricing strategy in one market may have an impact on a rival's pricing strategy in another marketmultipoint pricing
amount of other messages competing for a potential consumer's attentionnoise
reducing prices below fair market as a competitive weapon to drive weaker competitors out of the market ("fair" being cost plus some reasonable profit margins)predatory pricing
measure of how responsive demand for a product is to changes to priceprice elasticity of demand
market strategy emphasizing mass media as opposed to personal sellingpull strategy
marketing strategy emphasizing personal selling rather than mass media advertisingpush strategy
when the receiver of the message evaluates the message based on the status or image of the sendersource effect
pricing aimed at giving a company a competitive advantage over its rivalsstrategic pricing
A political system in which political power is monopolized by a party, group, or individual that governs according to religious principles.Theocratic Totalitarianism
A political system in which a party, group, or individual that represents the interests of a particular tribe (ethnic group) monopolizes political power.Tribal Totalitarianism
Bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource.Property Rights
The theft, piracy, blackmail, and the like by private individuals or groups.Private Action
The extortion of income or resources of property holders by public officials, such as politicians and government bureaucrats.Public Action
Grants the inventor of a new product or process exclusive rights to the manufacture, use, or sale of that inventionPatent
Exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit.Copyrights
designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products.Trademarks
International agreement to protect intellectual property, signed by 187 countriesParis Convention for the Protection of Industrial Property
Set certain safety standards to which a product must adhere.Product Safety Laws
Involves holding a firm and its officers responsible when a product causes injury, death, or damage.Product Liablity
Products of the mind, ideas (e.g., books, music, computer software, designs, technological know-how); intellectual property can be protected by patents, copyrights, and trademarks.Intellectual Property
U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions.Foreign Corrupt Practices Act
set of rules governing certain aspects of the making and performance of commercial contracts between sellers and buyers who have their places of businesses in different nations.United Nations Convention on Contracts for the International Sale of Goods (CIGS)
body of law that governs contract enforcement.Contract Law
A document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved.Contract
A system of law based on religious teachings.Theocratic Law
A system of law based on a very detailed set of written laws and codes.Civil Law
A system of law based on tradition, precedent, and custom; when law courts interpret common law, they do so with these characteristics.Common Law
System of rules that regulate behavior and the processes by which the laws of a country are enforced and through which redress the grievances is obtained.Legal System
economic system where the allocation of resources, including determination of what goods and services should be produced, and in what quantity, is planned by the government.Command Economy
An economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced.Market Economy
A political system in which political power is monopolized by a party, group, or individual that generally permits individual economic freedom but restricts individual political freedom, including free speech, often on the grounds that it would lead to the rise of communism.Right-Wing Totalitarianism
A version of collectivism advocating that socialism can be achieved only through a totalitarian dictatorship.Communist Totalitarianism
A political system in which citizens periodically elect individuals to represent them in government.Representative Democracy
Form of government in which one person or political party exercises absolute control over all spheres of human life and opposing political parties are prohibited.Totalitarianism
Political system in which government is by the people, exercised either directly or through elected representatives.Democracy
An emphasis on the importance of guaranteeing individual freedom and self-expression.Individualism
The sale of state-owned enterprises to private investors.Privatization
Those committed to achieving socialism by democratic means.Social Democrats
Those who believe socialism can be achieved only through revolution and totalitarian dictatorship.Communists
A political system that emphasizes collective goals as opposed to individual goals.Collectivism
Someone who believes in public ownership of the means of production for the common good of society.Socialist
System of government in a nation.Political System
political, economic, and legal systems of a country.Political Economy
Otherwise knowns as the Corruption of Foreign Officials Act that received Royal Assent on December 10, 1998. It is Canadian legislation that makes the bribery, or other business coruption "tool" of a foreign official by a Canadian business person, a criminal offenceBill S-21
removal of government restrictions concerning the conduct of businessDeregulation
likelyhood that events, including economic mismanagement,will cause drastic changes in a country's business environement that adversely affect the profit and other goals of a particular business enterpriseEconomic risk
advantages accruing to the first to enter a marketFirst-mover advantages
total income of all citizens of a country, including the income from factors of production used abroad. Since 2001, the World bank has used this measure of economimc activity instead of the previously used GNPGross national income (GNI)
Attempt by the United Nations to assess the impact of a number of factors on the quality of human life in a countryHuman Development Index (HDI)
development of new products, processes, organizations, management practises, and strategiesinnovation
handicap experienced by being a late entrant in a marketlate mover disadvantages
likelihood that a trading partner will opportunistically break a contract or expropriate intellectual property rightslegal risk
economic system wherein certain sectors are left to private ownership and free market organism, while others have significant goventment ownership and government planningmixed economy
Likelihood that political forces will cause drastic changes in a country's business environment that adversly affect the profit and other goals of a particular business enterprisepolitical risk
adjustment in gross domestic product per capita to reflect differences in the cost of livingpurchasing power parity (PPT)
system of social stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime.Caste System
A tendency for individuals to perceive themselves in terms of their class background. -Shapes their relationship with others.Class Consciousness
system of social stratification in which social status is determined by the family into which a person is born and by subsequent socioeconomic achievements. -Mobility between classes is possible.Class System
Theory that Confucian teachings affect attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors.Confucian Dynamism
Cultural beliefs about what is proper behavior and conduct.Ethical Systems
behaviour that is based on the belief in the superiority of one's own ethnic group or culture; often shows disregard or contempt for the culture of other countriesethnocentric behaviour
Routine conventions of everyday lifeFolkways
An association of two or more individuals who have shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other's behavior.Group
Theory focusing on the relationship between individual and his or her fellows. -In Individualistic societies: ties between individuals are loose, individual achievement is highly valued. -Collective societies: ties between individuals are tight, people are born into collectives (extended families) and everyone is supposed to look after the interests of his or her collective.Individualism vs. Collectivism
Japanesse term meaning to die from overworkkaroshi
Theory of the relationship between gender and work roles. -Masculine cultures: sex roles are sharply differentiated and traditional masculine values such as achievement and the effective exercise of power determine ideals. -Feminine Cultures: sex roles are less sharply defined, and little differentiation is made between men and women in the same job.Masculinity vs. Femininity
Norms seen as central to the functioning of a society and to its social life.Mores
Social rules and guidelines that prescribe appropriate behavior in particular situations.Norms
Theory of how a society deals with the fact that people are unequal in physical and intellectual capabilities. - High power distance cultures are found in countries that let inequalities grow over time into inequalities of power and wealth - Low power distance cultures are found in societies that try to play down such inequalities as much as possiblePower Distance
A system of shared beliefs and rituals concerned with the sacred. -Christianity -Islam -Hinduism -Buddhism -ConfucianismReligion
the extent to which individuals can move out of the social stratum into which they are born.Social Mobility
Hierarchical social categories often based on family background, occupation and incomeSocial Strata
Group of people who share a common set of values and normsSociety
he complex whole that includes knowledge, belief, art, morals, law, custom, and other capabilities acquired by a person as a member of society. -a system of values and norms that are shared among a group of people and that when taken together constitute a design for living.Culture
Understanding how the culture of a country affects the way business is practiced. -A relationship may exist between culture and the cost of doing business.Cross-Cultural Literacy
Abstract ideas about what a society (group) believes to be good, right, and desirable. -provide the context within which a society's norms are established and justified and form the bedrock of a culture.Values
The spoken and unspoken means of communications. -Countries with more than one language often have more than one culture. -English is the most widely spoken language. -Chinese is the mother tongue of the largest number of people. -English is becoming the language of international business.Language
The medium through which individuals learn many of the language, conceptual, and mathematical skills. -Important in determining a nation's competitive advantage. -General education levels can be good index of the kinds of products that might sell in a country.Education
-World's second largest religion -Extends the underlying roots of Christianity to an all embracing way of life that governs one's being. -Associated with militants, terrorists, and violent upheavals, but really teaches peace, justice, and tolerance. -People do not own property, but only act as stewards for God. -Supportive of business, but business is practiced as prescribed.Islam
Practiced primarily on the Indian sub-continent. -Focuses on the importance of achieving spiritual growth and development (may require material and physical self denial) -Valued by their spiritual rather than material achievements.Hinduism
-350 million followers -Stresses growth and the afterlife, rather than achievement in this world. -Does not support caste system -Does not emphasize wealth creation and entrepreneurial behaviorBuddhism
World's largest religion -Found throughout Europe, the Americas, and other countries settles by Europeans -Protestant Work Ethic (Max Weber 1804): hard work, wealth creation, and frugality is the driving force of capitalism.Christianity
Enter to which cultures socialize members to accept ambiguous situations and to tolerate uncertainty.Uncertainty Avoidance
Belief in the superiority of one's own ethnic group or culture.Ethnocentrism
theory that deals with virtue regardless of truth; values associated with long-term orientation are thrift and perseverance; values associated with short-term orientation are respect for tradition,fulfilling social obligations, and protecting one's "face"long-term vs. short-term orientation
Key skills (capabilities) of a corporation that evolve and become more valuable over timeDynamic Capabilities
Adjustable manufacturing technology in which a grouping of various machine types, a common materials handler, and a centralized cell controller produce a family of productsFlexible Machine Cells
Manufacturing technology designed to improve job scheduling, reduce setup time, and improve quality controlFlexible Manufacturing Technology (Lean Production)
Certification process that requires certain quality standards must be metISO 9000
Logistics systems designed to deliver parts to a production process as they are needed, not beforeJust-in-Time (JIT) Inventory
The procurement and physical transmission of material through the supply chain, from suppliers to customersLogistics
Ability of a company to use flexible manufacturing technology to achieve both low cost per unit and product customizationMass Customization
Statistically based methodology for improving product qualitySix Sigma
Management philosophy that takes as its central focus the need to improve the quality of a company's products and servicesTotal Quality Management (TQM)
Activities involved in creating a productProduction
Whether a firm should make or buy component partsMake-or-Buy Decisions (sourcing decisions)
An asset designed to perform a specific task, whose value is significantly reduced in its next-best useSpecialized Asset
The flow of skills and product offerings from foreign subsidiary to home country and from foreign subsidiary to foreign subsidiaryGlobal Learning
activity that controls the transmission of physical materials through the value chain, from procurement through production and into distributionmaterial management
whether the firm should make or buy components partssourcing decisions
coordinate the flow of materials in all phases in manufacturingelectronic data interchange (EDI)
Activities an organization conducts to use its human resources effectivelyHuman Resource Management (HRM)
A national of one country appointed to a management position in another countryexpatriate manager
strategy concerned with selecting employees for particular jobstaffing strategy
organization's norms and value systemscorporate culture
staffing approach within the MNE in which all key management positions are filled by parent-country nationalsethnocentric staffing policy
staffing policy in an MNE in which host country nationals are recruited to manage subsidiaries in their own country, while parent-country nationals occupy key positions at corporate headquarterspolycentric staffing policy
staffing policy where the best people are sought for key jobs throughout an MNE, regardless of nationalitygeocentric staffing policy
Global and transnational strategygeocentric staffing policy
Multidomestic strategypolycentric staffing policy
international strategyethnocentric staffing policy
premature return of an expatriate manager to the home countryexpatriate failure
Advantages: Overcomes lack of qualified managers in host nation Unified culture Helps transfer core competenciesethnocentric staffing policy
disadvantages: Produces resentment (rozhorceni) in host country Can lead to cultural myopiaethnocentric staffing policy
Advatages: Alleviates (zmirnit) cultural myopia Inexpensive to implementpolycentric staffing policy
disadvantages: Limits career mobility Isolate headquarters from foreing subsidiariespolycentric staffing policy
Advantages: Uses human resources efficiently Helps build strong culture and informal management networkgeocentric staffing policy
Disadvantages: National immigration policies may limit implementation Expensivegeocentric staffing policy
the firm’s failure to understand host-country cultural differences that require different approaches to marketing and management. The adaptation of expatriate managers can take a long time, during which they may make major mistakes.cultural myopia
programs are designed to increase the overall skill levels of managers through a mix of ongoing management education and rotations of managers through a number of jobs within the firm to give them varied experiences. They are attempts to improve the overall productivity and quality of the firm’s management resources.Management development programs
The "Swiss Made" label has leveraged several watch-making companies (for example, TAG Heuer) for decades now. This is an example of a ____ effect.country of origin effect