| A | B |
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| Globalization | the flow of goods and services, capital, and knowledge across country borders. We are currently in the third stage of globalization according to Friedman "next-door neighbors and competitors". (1st stage: internationalization of countries. 2nd Stage: companies moving into international markets. 3rd stage: individuals collaborating and competing on a global basis. |
| Danone in China | "A colorful figure, brilliant marketer and active blogger, Mr. Zong argued that the original agreements made with Danone were outdated and unfair, written when he was a regional player and Danone was one of the world's largest companies. The lack of law enforcement in China has been a big issue for many firms, the laws are set in place, but they are rarely enforced. |
| In Fed We Trust | a book about the federal reserve. Explains that due to globalization, we can no longer effectively control our economy by adjusting interest rate with the Federal Reserve |
| Outsourcing | Many companies are outsourcing to save on labor costs and offer lower prices to compete with competitors. |
| American Medical Association (AMA) | The strongest union on Earth, has noticed a drop in membership because foreign students are now starting to return home after getting their medical educations in America |
| Medical Tourism | Many insurance companies are offering incentives for clients to go abroad for planned surgeries to save on costs without forgoing any quality. |
| China's Purchase of T-Bills | China has essentially bought the United State's debt. Chinese hold higher value in the dollar and enjoy the zero default risk offered by the US. This also ensure that US T bill rates will be very low. The lowering of interest rates allows us to have a higher standard of living |
| Purchasing Power Parity (PPP) | This is essentially what your dollar can buy in other countries |
| Organization for Economic Cooperation and Development (OECD) | An organization comprised of many countries whose goal is to ensure economic fairness across the world |
| Sarbanes-Oxley in America | The CEO is now required to sign off on ALL financial statements of a company. Accounting firms charged with auditing firms that they also consult for are presented with a serious conflict of interest |
| Ireland | This country has had extremely low taxes because it was viewed by the European Union to be a "developing economy." All of the intellectual property companies have set up in Ireland and declared it as a tax base. You can't build an economy on a lower tax rate, it is destined to fail because when the taxes are raised, all of the companies will simply pull out and head to the next best option |
| Country Institutional Environment Clusters | Cluster 1: Developing & transition economies 2. Emerging market nations 3. Second highest regulatory controls & high in political rights; strong physical infrastructure 4. Most developed institutional infrastructure with balanced regulatory controls and political rights; strong economic and physical infrastructure |
| Cluster 1 | High in regulatory control and low in political rights (Brazil (best), russia and nigeria) |
| Cluster 2 | A little high on political rights, low on monetary policy; second highest on investment constrictions (China, India, The Netherlands, Singapore) |
| Cluster 3 | Western Europe: Finland, France, Germany, Portugal, Sweden |
| Cluster 4 | Only the United states and Japan (Waning) |
| Foreign Direct Investments (FDI) | companies enter a country for the long haul. Practical impact: The great number of multinationals in a country, the greater the pressure on government to reduce corruption |
| Culture | a learned set of values, assumptions and beliefs that have been accepted by members of a group and that effect human behavior. |
| GLOBE Study | One of the most prominent studies of culture conducted by Geert Hostede and led by Robert House. Focused on power distance, uncertainty avoidance, individualism vs. collectivism, and gender focus |
| Power distance | The extent to which people accept power and authority. High in mexico and Venezuela. Low in Israel and Denmark |
| Uncertainty Avoidance | the need to be either clear or ambiguous (A preference when it comes to rules) The US, and Sweden are more comfortable with uncertainty whereas Japan and Indonesia need set rules. |
| Individualism vs. Collectivism | Extent to which people's identities are self-oriented and people are expected to take care of themselves and families; dependence or institutions or organizations. US and Great Britain - focus on individual achievement. China, Venezuela and Pakistan are collective, family and team-based |
| Gender Focus | Masculine traits: long work hours, less vacation, success, money, possessions, US - SE Asia. Feminine Traits: caring for others, quality of life (Continental Europe) |
| Vacation Days | Many western firms taken an entire month off during the summer. Salaries are lower because they live in more socialist state that have nationalized things that we have to pay for out of our paycheck, such as healthcare. |
| Working Time | Less developed countries tend to have higher working times in a year. This is NOT a measure of productivity, but mere a measure of time spent working. |
| International Market-Entry Strategies | Exporting, Importing, Licensing, Strategic Alliances and Joint Ventures, Direct Investment, Wholly Owned Subsidiaries |
| IM-ES: Exporting | making a product in the firm's domestic market and selling it in another country |
| IM-ES: Importing | Bringing a good, service, or capital into a home country from abroad |
| IM-ES: Licensing | An arrangement whereby a firm allows a foreign company to manufacture or market the products and uses its brand name, trademark, technology, patent, copyright, or other assets in exchange for a royalty based on sales (Altria/Philip Morris—Marlboro in China) |
| IM-ES: Strategic Alliance and Joint ventures | Two or more firms jointly cooperate for mutual gain by sharing business costs and/or sharing ownership of a new enterprise. |
| IM-ES: Direct Investment | Occurs when a firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country. Maquiladoras are light assembly plants built in northern Mexico, close to the U.S. border, which are given special tax breaks by the Mexican government. |
| Cross-Border Acquisitions | Alternative to starting from scratch, you buy an existing similar firm and put your brand on it. Upwards of 50% of all acquisitions Chinese firm Lenovo bought IBM’s PC business Wal-Mart in UK, Germany CNOOC, China’s largest oil company, failed in its bid for Unocal. Withdrew bid after objections in US Congress |
| IM-ES: Wholly Owned | Direct Investment: a firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country; controls 100% |
| "Greenfield Ventures" | “Greenfield ventures” Start from scratch for maximum control of brand name, quality, service, logistics, intellectual property Starbucks world-wide (Slowdown recently) and UPS & FedEx in China |
| Managing International Operations | Globally, Country/Regionally, transnationally. |
| Protecting a Country's Economy | The best way to do it is to let it develop under government protection and then let it compete with the rest of the world when it is ready. Post WWII Japan is an example of this |
| Managing International Operations: Globally | Assumes that the same product can be sold everywhere. The global home office makes strategic decisions, and is a centralized authority. Example Cemex in Mexico. Bad Example: Cell phones in US vs. eastern europe vs. china vs. japan |
| Managing International Operations: Region/Country Focus | Customizing to different cultures and countries. Good managers needed to make region-specific decisions to benefit the country. European firms tend to use this strategy (Unilever) |
| Managing International Operations: Transnational Focus | Centralized AND decentralized. Strategic devisions are decentralized but share resources. (Carlos Chosn, Nissan CEO) |
| Cultural Context: Language | Many things are lost in translation. Ex: Chevy's Nova, means "doesn't go" in spanish) |
| Cultural Context: Colors | Muslims like green, but green means death in other countries. Pink is female in US while yellow is female elsewhere |
| High Context | Very situation conversation, multiple meanings for similar statements. MUCH more than just body language. (Japan, China, Vietnam, Korea, Arabs, Greece) |
| Low Context | Much more is communicated through words. Very westernized. (Americans, English, Swiss, Canadian, German, Scandinavian) |
