Master this deck with 20 terms through effective study methods.
Explore the evolution of international business from early foreign trade to the rise of multinational enterprises (MNEs). Learn key theories by Hymer and Dunning, factors driving foreign direct invest...
The primary activities involved in value creation for a firm include research and development, production, marketing and sales, and customer service. These activities are essential for delivering value to customers and achieving competitive advantage.
Support activities in value creation include information systems, logistics, and human resources. These activities provide the necessary support to primary activities and help ensure that the firm operates efficiently and effectively.
A firm's core competencies are unique skills or capabilities that competitors cannot easily match or imitate. These competencies enable the firm to offer distinctive products or services, which can lead to a competitive advantage in international markets.
It is crucial for a firm's strategy to align with its operating environment because this alignment ensures that the firm can effectively respond to external challenges and opportunities, thereby enhancing its chances of success in the market.
When expanding internationally, a firm may need to adapt its organizational structure to accommodate different market conditions, regulatory environments, and cultural differences. This could involve creating new divisions, altering reporting lines, or decentralizing decision-making.
Stephen Hymer was a Canadian economist known for his pioneering work on foreign direct investment (FDI) and the theory of multinational companies. He developed theories that explain why firms choose to invest abroad and how they operate in foreign markets.
Companies should consider a variety of factors when conducting business overseas, including legal systems, political systems, economic policies, language differences, accounting standards, labor standards, living standards, environmental regulations, local cultures, corporate cultures, foreign-exchange markets, tariffs, import/export regulations, trade agreements, climate, and education.
Differences in legal systems can impact international business operations by affecting contract enforcement, dispute resolution, regulatory compliance, and intellectual property protection. Companies must navigate these differences to operate successfully in foreign markets.
Political systems influence international business strategies by determining the stability of the business environment, the level of government intervention, and the regulatory framework. Companies must assess political risks and adapt their strategies accordingly.
Understanding local cultures is important for multinational enterprises because cultural differences can affect consumer behavior, management practices, and communication styles. Companies that are culturally aware can better tailor their products and marketing strategies to meet local needs.
Foreign direct investment (FDI) refers to the investment made by a firm in one country in business interests in another country. Firms engage in FDI to access new markets, acquire resources, and achieve economies of scale.
Tariffs and import/export regulations can affect international trade by increasing the cost of goods, limiting market access, and creating barriers to entry. Companies must navigate these regulations to optimize their supply chains and pricing strategies.
Trade agreements are significant in international business as they establish the rules for trade between countries, reduce tariffs, and promote economic cooperation. These agreements can enhance market access and create a more favorable environment for businesses.
Climate influences international business operations by affecting supply chain logistics, production processes, and consumer preferences. Companies must consider climate-related factors when planning their operations and market strategies.
Differing accounting standards can complicate financial reporting and analysis for multinational companies, leading to challenges in consolidating financial statements, ensuring compliance, and making informed investment decisions.
It is essential for firms to adapt their marketing strategies in different countries to resonate with local consumers, address cultural preferences, and comply with local regulations. Tailored marketing can enhance brand acceptance and customer loyalty.
Multinational enterprises face challenges regarding labor standards, including variations in wage levels, working conditions, and labor rights. Companies must ensure compliance with local labor laws while maintaining ethical practices.
Living standards in a country affect business operations by influencing consumer purchasing power, demand for products and services, and overall market potential. Companies must assess living standards to tailor their offerings appropriately.
Foreign-exchange markets impact international business by affecting currency conversion rates, which can influence pricing, profitability, and financial planning. Companies must manage foreign-exchange risks to protect their investments.
Education levels in a country can influence a firm's workforce by determining the availability of skilled labor, affecting productivity, and shaping the overall talent pool. Companies may need to invest in training and development to bridge skill gaps.