Chapter 1: The Challenging Context of International Business
Foreign direct investment (FDI)
Direct investments in equipment, structures, and organizations in a foreign country at a level that is sufficient to obtain significant management control; does not include mere foreign investment in stock markets
Technological Driver
Select the driving force for each description or implication for business below. (Competitive, Technological, Market, Political, or Cost) As microprocessors get faster and cheaper, and as telecommunications bandwidth increases, work processes that can be digitized can be done anywhere in the world.
Cost Driver
Select the driving force for each description or implication for business below. (Competitive, Technological, Market, Political, or Cost) Companies are exporting or producing overseas to capitalize on economies of scale in R&D, production, inventory costs, and so on.
Cost Driver
Select the driving force for each description or implication for business below. (Competitive, Technological, Market, Political, or Cost) Companies can move production or other parts of the value chain to countries where costs are lower.
Market Driver
Select the driving force for each description or implication for business below. (Competitive, Technological, Market, Political, or Cost) Companies expand abroad to protect their home market by establishing operations where key customers are located or by following large customers into new markets.
Competitive Driver
Select the driving force for each description or implication for business below. (Competitive, Technological, Market, Political, or Cost) Competition continues to increase in intensity with new firms entering global markets.
Market Driver
Select the driving force for each description or implication for business below. (Competitive, Technological, Market, Political, or Cost) Firms build a direct presence in foreign markets.
Political Driver
Select the driving force for each description or implication for business below. (Competitive, Technological, Market, Political, or Cost) Many firms have moved to gain access to combined markets by exporting to or producing in the area.
Technological Driver
Select the driving force for each description or implication for business below. (Competitive, Technological, Market, Political, or Cost) Microprocessors, telecommunications advances, and the Internet have fueled changes.
Competitive Driver
Select the driving force for each description or implication for business below. (Competitive, Technological, Market, Political, or Cost) The rush to globalization has resulted in explosive growth in international business.
Political Driver
Select the driving force for each description or implication for business below. (Competitive, Technological, Market, Political, or Cost) There is a trend toward the unification and socialization of the global community leading to the formation of arrangements such as the North American Free Trade Agreement and the European Union.
Cost
Select the most appropriate driver of globalization for the general characteristics listed below. (Competitive, Technological, Political, Market, or Cost) Economies of scale to reduce costs per unit
Market
Select the most appropriate driver of globalization for the general characteristics listed below. (Competitive, Technological, Political, Market, or Cost) Finding that the home market is saturated
Competitive
Select the most appropriate driver of globalization for the general characteristics listed below. (Competitive, Technological, Political, Market, or Cost) New entrants, many from newly industrialized and developing countries, have entered world markets.
Political
Select the most appropriate driver of globalization for the general characteristics listed below. (Competitive, Technological, Political, Market, or Cost) Preferential trade agreements such as the North American Free Trade Agreement and the European Union
Political
Select the most appropriate driver of globalization for the general characteristics listed below. (Competitive, Technological, Political, Market, or Cost) Privatization of much of the industry in formerly communist nations
Technological
Select the most appropriate driver of globalization for the general characteristics listed below. (Competitive, Technological, Political, Market, or Cost) The Internet and network computing facilitate the rapid flow of information, regardless of physical location, which enables companies to compete globally.
international company (IC)
a company with operations in multiple nations
environment
all the forces influencing the life and development of the firm
Socioeconomic
characteristics and distribution of the human population
Labor
composition, skills, and attitudes of workers
Sociocultural
elements of culture (such as attitudes, beliefs, and opinions) important to international managers
Political
elements of nations' political climates such as nationalism, forms of government , and international organizations
Physical
elements of nature such as topography, climate and natural resources
uncontrollable forces
external forces over which management has no direct control, although it can exert an influence
domestic environment
forces originating in the home country that surround and influence the firm's life and development
foreign environment
forces originating outside the home country that surround and influence the firm
Controllable forces
internal forces over which management does have some control and can manage in response to changes in uncontrollable forces, such as human resources, finance, production, and marketing
Competitive
kinds and numbers of competitors, their locations, and their activities
Distributive
national and international agencies that distribute goods and services
Foreign business
operations of a company outside its home or domestic market
Legal
the many foreign and domestic laws governing how international firms must operate
Technological
the technical skills and equipment that affect how resources are converted to products
self-reference criterion
unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions
Economic
variables (such as gross national income [GNI], unit labor cost, and personal consumption expenditure) that influence a firm's ability to do business
Financial
variables such as interest rates, inflation rates, and taxation
External Forces include:
1. Competitive 2. Distributive 3. Economic 4. Socioeconomic 5. Financial 6. Legal 7. Physical 8. Political
Transnational Corporation
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
Business that is carried out across national borders
international environment
Interaction between domestic and foreign environmental forces or between sets of foreign environmental forces
Labor and labor standards
Match each argument for or against globalization below with the corresponding issue. (Environment and Health, Results across nations and people, Labor and labor standards, Jobs, Socioeconomic Development) Developed nations with more rigorous labor standards become disadvantaged as jobs move to developing nations with lower standards.
Socioeconomic Development
Match each argument for or against globalization below with the corresponding issue. (Environment and Health, Results across nations and people, Labor and labor standards, Jobs, Socioeconomic Development) Free trade is the best strategy for advancing the world's economic development.
Results across nations and people
Match each argument for or against globalization below with the corresponding issue. (Environment and Health, Results across nations and people, Labor and labor standards, Jobs, Socioeconomic Development) The promise of export-led growth has failed to materialize in some parts of the world, especially in parts of Latin America and sub-Saharan Africa.
Environment and Health
Match each argument for or against globalization below with the corresponding issue. (Environment and Health, Results across nations and people, Labor and labor standards, Jobs, Socioeconomic Development) To comply with NAFTA's rules on trade in services, the Bush administration waived U.S. clean air standards which allowed trucks based in Mexico to haul freight on U.S. highways.
Jobs
Match each argument for or against globalization below with the corresponding issue. (Environment and Health, Results across nations and people, Labor and labor standards, Jobs, Socioeconomic Development) Trade creates new jobs, and these tend to be better than the old ones.
economic globalization
The tendency toward an international integration of goods, technology, information, labor and capital, or the process of making this integration happen
Exporting
The transportation of any domestic good or service to a destination outside a country or region
importing
The transportation of any good or service into a country or region, from a foreign origination point
