Chapter 1 international business

technological drivers:

-advances in computers and communications technology permit and increase flow of ideas and information across borders.

foreign direct investment (FDI) (definition)

-direct investments in equipment, structures, and organizations in a foreign country at a level sufficient to obtain significant management control. -does not include mere foreign investment in stock markets.

political drivers

-trends toward the unification and socialization of the global community. - preferential trading arrangements that group several national into a single market. -potential protects by host markets.

11 types of external forces:

1. competitive 2. distributive 3. economic 4. socioeconomic 5. financial 6. legal 7. physical 8. political 9. sociocultural 10. labor 11. technological

5 major kinds of drivers are leading international firms to internationalize their operations:

1. political 2. technological 3. market 4. cost 5. competitive

the international manager has 3 choices in deciding what to do with a concept or a technique employed in domestic operations:

1. transfer it intact 2. adapt it to local conditions 3. not use it overseas

international company (IC) (definition)

a company with operations in multiple nations.

environmental forces

all the forces influencing the life and development of the firm.

domestic environment (definition)

all the uncontrollable forces originating in the home country that surround and influence the life and development of the firm.

foreign environment (definition)

all the uncontrollable forces originating outside the home country that surround and influence the firm.

transnational corporation (definition)

an enterprise made up of entities in more than one nation, operating under a decision-making system that allows a common strategy and coherent policies.

international business (definition)

business that is carried out across national borders.

socioeconomic external forces:

characteristics and distribution of the human population.

labor external forces:

composition, skills, and attitudes of labor.

sociocultural external forces:

elements of culture (such as attitudes, beliefs, and opinions) important to international managers.

political external forces:

elements of nations' political climates such as nationalism, forms of government, and international organizations.

physical external forces:

elements of nature such as topography, climate, and natural forces.

market drivers:

firms may go abroad to protect business in their home market, so that foreign suppliers do not replace them with customers.

cost drivers (definition)

improved economies of scale, shared costs or research and development, investment incentives and so forth.

international environment (definition)

interaction between domestic and foreign environmental forces, as well as interactions between the foreign environmental forces of two countries.

controllable forces (definition)

internal forces that management administers to adapt to changes in the uncontrollable forces.

competitive external force:

kinds and numbers of competitors, their locations, and their activities.

distributive external forces:

national and international agencies available for distributing goods and services.

competitive drivers (definition)

new competitors from developing nations, entry of foreign firms into a company's home market, access to supplies, and entry into downstream activities to preserve markets for product.

uncontrollable forces

the external forces that management has no direct control over

legal external forces:

the many foreign and domestic laws governing how international firms must operate.

Foreign business (definition)

the operations of a company outside its home or domestic market.

technological external forces:

the technical skills and equipment that affect how resources are converted to products.

economic globalization (definition)

the tendency toward an international integration and interdependency of goods, technology, information, labor and capital, or the process of making this integration happen.

exporting (definition)

the transportation of any domestic good or service to a destination outside a country or region.

importing (definition)

the transportation of any good or service into a country or region, from a foreign origination point.

international managers (definition)

those who have discovered that there are differences in the environmental forces are better prepared to decide which opinion to follow.

self-reference criterion (definition)

unconscious reference to your own cultural values when judging behaviors of others in a new and different environment.

economic external forces:

variables (such as gross national income (GNI), unit labor cost, and personal consumption expenditure) that influence a firm's ability to do business.

financial external forces:

variables such as interest rates, inflation rates, and taxation.