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MGMT 3P98 (3)

Midterm Cheat Sheet

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Brock University
Chang Hoon O H

Aside Wonderful Wizard of OZnationalizationprocess by which government takes control of business assets with or CHAPTER 1REGIONAL AND GLOBAL STRAETGY INTRO TO INTERNATIONAL BUSINESSOZ is short for ounce the measure of gold and silver without remuneration of the owner International Businessthe study of transactions taking place across national borders forDorothy hailing from Kansas represents the commoner Examples of Canadian Privatization the purpose of satisfying the needs of individuals and organizations a company headquartered in one or several countryTim Woodsman industrial worker rusted as solid and the factories shut down in the 1893privatizationBCRIC BC Resources Invst CoBombardierAir Canadanegotiated sales Multinational Enterprises MNesbut having operations in other countriesMore than 50 in all trade is made by depressionCanadian Forestry Services wood product labs to Forintek 1979 the worlds largest 500 MNEsScarecrow the farmer who apparently does notNorthern Transport Co Ltd To Inuvialuit Regional Corp 1985 Porters Determinants of National Competitive Advantages Diamond PERECPTION of the wizard having all the power when really it is the little man behind thePecheries Canada to Cooperative Agroalimentaire 1986 factor conditionsdemand conditionshow many cust GDP demand related and curtain controlling everythingNorthern Canada Power to Yukon Power 1987 and to NWT government 1988 supporting industries firm strategy structure and rivalry World Financial CrisesTerra Nova Telecom to BCE Inc 1988 infrastructureGDPregulationgovernment competitionuniversities etcthe Mexican Peso Crisis 19941995price quantity tax regulations license Governmentbusiness cooperationTATAs Internationalization StrategyAcquisition Peso was overvaluated fixed even though trade and financial flows are liberalized Levels of Economic integrationbeverage Tetley Tea UK Glaceu US Eight Oclock Coffee US Political risks investors exited from the Mexican marketfree trade arearemove barriers to trade such as tariffs among member countriessteel NatSteel Singapore Millennium Steel Thailand Corus Nethersthe Asian financial crisis NAFTAautomotive Daewoo Commercial Vehicle S Korea JaguarRand Rover UKUS Thailand exchange rate was fixed etccustom unions tariffs between member countries are eliminated and a common tradewhy acquisition why not partnership Malaysia overproductions etc policy toward nonmember countries is established technological adoption entering highend market Korea excessive foreign investments etcexample ANDEAN Bolivia Colombia Ecuador and Peru global competition and protect local market common market elimination of trade barriers among member countries a common WALMART CASE CHAPTER 5INTERNATIONAL CULTURE external trade policy and mobility of factors of production among member countries What are the critical factors in Walmarts success story Culture clash at Pharmacia and Upjohnexample MERCOUSUR Argentina Brazil Paraguay and Uruguay domestic factors wealthy suburbs with inexpensive landcultural differences between Pharmacia Sweden Italy and Upjohn US after mergingeconomic uniondeep form of integration characterized by free movement of goods Chinas open market system cultural differences bureaucratic style and hierarchical structure centralized services and factors of production among member countries and full integration of Factor landDemand huge middle income command and control system language problem attitude to job difficulties in economic policies Supporting China Firm CEO Invest implementing IT systemexample CARICOM Dominica Jamaica Grenada Surinam and 8 others Do Walmart business well in international marketchanged CEO from AM to Europeanpolitical unionan economic union in which there is full economic integration unification Do well Upjohn merged with Monsanto of economic policies and a single governmentCanada Mexico England Not at all Germany Japan Koreanot only for WalmartMonsanto took the name Pharmacia and spun off the most Pharmacia products namedexample EUprogress Canada UK Australia Former Soviet Union Carrefour Tesco it Monsanto Pfizer owned most of remaining Upjohn Trade creation for which they have a comparative advantage and start trading more Elements of cultureextensively with each other Trade diversion decrease trade with nonmember countries in CHAPTER 2THE MULTINATIONAL ENTERPRISE language religion values basic convictions that people have regarding what is right and favour of trade with each other 24 respond to competitorscustomerssuppliersfinancial Characteristics of MNEs wrong good and bad important and unimportant attitude a persistent tendency to feel Ontario Beer Can Tax institutions government and behave in a particular way toward some object customs common or established Ontarios exports to US market170 MILLION USs exports to Ontario30 milliondraw on a common pool of resources including assets patents trademarks information practises manners behaviour regarded as appropriate in a particular societyWhy did Ontario place the Tax at the beginning FSAs and CSAs and human resources affiliates and business partners are linked together by a Influences of culture on international management beer consumptioncommon strategic visionpopulation US 305 million Ontario 12 million corporate culture is a term used to characterize how the managers and employees of The Internationalization Process market share of imported US beer in Canada is about 8not all international business is done by FDIs particular companies tend to behavemarket share of imported Canadian beer in US is about 2setting up a whollyowned subsidiary is usually the last stage of doing business abroad 1 Work attitudeswork ethics organizational commitment etc licensing alliances trading agencies etc 2 Achievement motivation the desire to accomplish objectives and achieve success why do businesses wait to set up whollyowned subsidiaries CHAPTER 7INTERNATIONAL FINANCIAL MARKETS AND INSTITUTIONS 3 Time and futurepunctuality decisionmaking time constraints time expectations on foreign markets are risky too small or too competitivespot rate forward rate cross rate implementation of plans etc the MNE waits until the host market is large enough 4 Ethicsstandards of conduct and morality there are four major ways of conducting foreign exchange1 initially firm might license patents trademarks or technology to a foreign company in 2 approaches to culture1 interbank market2 Brokers market3 forward foreign exchange market psychicpsychological level or institutional level exchange for a fee or royalty A FIRM IN THE HOST MARKET WILL BE A LICENSEE 4 future market in currencies Geert Hofstedes Four cultural dimensions 2 firm sees potential for extra sales by exporting and uses local agent or distributor to enter Determination of the exchange rate1 Power distancea foreign market 2 Individualism vs collectivismtraders work in commercial banks where they buy and sell foreign currency for theirmay use exporting as vent for surplus production and might have no longterm 3 Masculinity vs femininitysuccess money and material goods employer commitment to international marketwork in brokerage firms where they often deal in both spot rate and forward rate 4 Uncertainty avoidancebrokers3 as exports become more important MNE will set up an office for its sales by transactionLongTerm Orientation LTOrepresentative or a sales subsidiary FINAL PRODUCTSspeculator is a participant who takes an open position This means that the individual High LongTerm Orientation country prescribes to the values of longterm commitments 4 firm might set up local packaging andor assembly operations INTERMEDIATE PRODUCTS either has foreign currencies on hand called a long position or has promised to deliver and respect for tradition This is thought to support a strong work ethic where longterm 5 firm will set up a whollyowned subsidiary FDI foreign currency in the future and does not have it on hand called a short position rewards are expects as a result of todays hard work Why do firms become MNEslimit their potential losses by locked in guaranteed foreign exchange positionshedgersLow LongTerm Orientation country does not reinforce concept of longterm traditionalto diversify themselves against the risks and uncertainty of the domestic business cyclearbitrageurs are individuals who simultaneously buy and sell currency in two or more orientation In this culture change can occur more rapidly as longterm traditions and industry product life cycle foreign markets and make profits from exchange rate differences commitments do not become impediments to changeto tap the growing world market for goods and servicesgovernmentsFons Trompenaars seven cultural dimensions in response to foreign competition Purchasing Power Parity 1Universalism vs Particularism rules and regulations competition game theoretic thinking Market imperfection Hymerlaw of One Price 2Individualism vs Collectivism human rights and valuesto reduce costsassumption identical products and low transportation costs 3Neutral vs Emotional objective vs subjective cheap labour natural resources economies of scaleexchange rates between any two currencies will adjust to reflect changes in the price 4Specific vs Diffuseto overcome barriers to entry into foreign markets levels of the two countries 5Achievement vs Ascription wholly owned subsidiaries joint venturethe exchange rate C 15 pe
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