International Business
International Business
International Business
Set of flashcards Details
| Flashcards | 172 |
|---|---|
| Students | 15 |
| Language | Deutsch |
| Category | Micro-Economics |
| Level | University |
| Created / Updated | 18.06.2016 / 22.01.2023 |
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Tell me some reasons why to internationalize.
- Seek opportunities for growth through market diversification
- Earning higher margins and profits
- Gaining new ideas about products, services and business methods
- Better serve key customers that have relocated abroad
- Being closer to supply sources, benefit from global sources advantages
- Gaining access to lower-cost or better-value factors of production
- Develop economies of scale in sourcing, production, marketing and R&D
- Confront international competitors more effectively or to avoid the high competition in the home market
- Invest in potentially rewarding relationships with a foreign partner
Which are the 4 risks in international business
- Country Risks
- Currency (Financial) Risks
- Cross cultural risks
- Commercial risks
Can you specify cross-cultural risks?
- Cultural differences
- Different negotiaton patterns
Can you specify commercial risks?
- Weak partner
- Competitive intensity
- Timing of entry
Can you specify currency (financial) risks?
- Inflationary and transfer pricing
- Foreign taxation
- Losses because of exchange rates
Can you specify country risks?
- Unstable political system
- Bureaucracy
- Unfavourable laws and regulations for foreign firms
- Corruption
- Government intervention
What is the Uppsala Model?
What is the Network Model?
What is the Springboard Model?
What is the international entrepreneurship (born global) model?
Which kind of players have the biggest share in international business?
Multinational Entreprises (MNE)
What is the main difference between domestic and international business?
Increased risk exposure of internationally operating companies.
What's the part of SME's (small and medium sized enterprises) in international business?
They often function as the backbone of large MNE's efficiently providing goods and services, efficiently providing goods and services that are integrated into the production process of larger MNE's.
What are the drivers of market globalization?
- Reduction of barriers to trade and investment
- Industrialization, economic development and modernization
- Integration of world financial markets
- Advances in technology
What are dimensions of market globalization?
- Interdependence (gegenseitige Abhängigkeit) of national economies
- Growth of global investments and financial flows
- Convergence of buyers lifestyle and preferences
- Globalization of production activities
- Globalization of services
Which are the societal consequences of market globalization?
- Rapid spread of financial or monetary crisis from one country to another.
- Offshoring and the flight of jobs
- Effect on the poor
- Effect on natural environment
- Effect on natural culture
Which are the firm level consequences of market globalization?
- New business opportunities for internationalizing firms
- New risk and intense rivalry from foreign competitors
- More demanding buyers who source from suppliers worldwide
- Internationalization of firms value chain
Why do nations trade?
- Absolute advantage principle
- Comparative advantage principle
- New trade theory
What is new in the new trade theory compared to the absolute advantage theory and comparative theory?
Trade will not only arise from countries which are different but als from countries which are identical through
- economies of scale
- increased product variety and lower prices
How can nations enhance their comparative advantage?
- Michael Porters Diamond Model
- Theory of competitive advantage of nations
According to Porters Diamond competitive advantage is attributable to which factors and moderators?
- F1 Factor endowments (Ausstattung) also called Factor conditions
- F2 Demand conditions
- F3 related and supporting industries
- F4 Firm strategy, structure and intensity of rivalry
- M1 Government
- M2 Chance
Factor conditions
Explain the two kinds of factors
Basic factors:
- Natural ressources
- Climate
- Geographic location
- Demographics
Advanced Factors:
- Communications
- Skilled labour
- Research
- Technology
- Education
How can advanced factors be created?
Through mechanism such as public and private educational institutions
Where do nations succeed?
In industries where they're good in creating and upgrading the necessary factors
Demand Conditions:
The nature of home demand for domestic products and services are determined by what?
- Mixture of customer needs and wants
What are the important aspects for demand conditions?
Size of home markets - Large home market leads to large home demand which leads companies to strive for economies of scale
Sophistication of consumers - Higher sophistication forces companies to meet higher standards, upgrade and meet tough challenges
The more demanding the consumers, the higher the pressure on firms to constantly innovate.
Tell me some examples for industries where countries are good because of high demand!
German car (no speed limit)
French wine
Swiss watch
British whiskey
Related and supporting industries: Explain the term to me
It is about if there are related and supporting industries in your country or region. For example good banks, innovative technology firms and so on.
What do we mean by cluster when we talk about related and supporting industries? What should governments do?
Focus firms that are surrounded by a big network of suppliers and distributors which mutually benefit from each other and increase the competitiveness for all of them
Governments should implement policies which foster the creation of internationally competitive clusters
When local industries are more competitive, firms enjoy more cost-effective and innovative inputs (effect is even stronger if suppliers are also strong global competitors
Firm strategy structure and rivalry: Explain it to me!
The conditions in the nation governing how companies are created, organized and managed and the nature of domestic rivalry. The more localized the rivalry the higher the the competition. Intense domestic rivalry improves the competitiveness of domestic firms worldwide.
Government should act as what?
- Catalyst
-Challenger
There are two types for government to support industries, explain it to me.
direct (subsidies, temporary protection)
indirect (creating favourable economic conditions, ensuring high competition etc.)
What's the part of chance in the model?
Chance accounts for the fact that not all succesful industries conform to the predictions of the basis model
Where should companies export where import?
Export - in industries where all four factors are favourable
Import - in industries where the factors are not favourable
What do you think about free trade who profits?
Free trade is in the best interests of a country but not necessarily for a individual firm
From what is comparative advantage derived in a country?
Typically from an abundance (Überfluss) in a country of:
- Valuable natural ressources
- Arable or buildable land
- Favourable climate
- Low cost labour
- Skilled labour
- Inexpensive capital
Competitive advantage in an individual firm is derived from....
an abundance of:
- specific knowledge
- specific capabilities
- certain types of skills
- superior strategies
- Strong relationships with key members of the firms value chain
- other assets that allow the firm to compete effectively
Explain the term national competitive advantage to me
When a nation has a comparative advantage in a given industry and the firms in that industry collectively have an abundant competitive advantage the nation has a NATIONAL COMPETITIVE ADVANTAGE in that particular industry.
When do international companies use the foreign exchange markets?
- When payments are received in a foreign currency
- When paying a foreign company and they are forced to pay in the currency of the supplier
- Currency speculation
- Invest in money market with spare cash
To which questions must an international operating company have an answer?
- What are the short and long term determinants of foreign exchange rate? How do foreign exchange markets function?
- What currency exchange risks do we face?
- What hedging or exchange risk management should we employ?
- Which of the various tools and techniques of the foreign exchange market should we use (futures, options etc.)?
