Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
M3 Final Exam
International Business Panorama
| Term | Definition |
|---|---|
| Exporting | Selling goods produced in the home country to customers in another country. It requires minimal investment but offers low control over distribution. |
| Licensing | A contractual agreement where a licensor grants a licensee the right to use its intellectual property (brand, patent) in exchange for fees or royalties. |
| Strategic Alliances | A cooperative agreement between two or more independent companies to pursue a common objective, allowing for shared control and local market experience. |
| Joint Venture (JV) | A separate legal entity created by two or more parent companies who become legal partners, sharing profits, losses, and control. |
| Owned Subsidiary | Entering a foreign market by buying a local company or opening a new office that is fully owned and controlled by the parent company. It is high-risk but offers high potential gain. |
| Multinational Expansion | The final step in internationalization where a company establishes a complex presence in multiple foreign locations, such as sales offices or factories. |
| Internal Readiness | The hidden variable a firm must assess before choosing a market; evaluating if it is financially and operationally prepared for expansion. |
| Core Internal Capabilities | The financial resources (capital, cash flow) and human capital (international skills, negotiation, cross-cultural leadership) needed for expansion. |
| Operational Systems & Scalability | The experience and infrastructure (supply chain, IT, processes) a company needs to support foreign operations. |
| Internal Risk Factors | Organizational limitations that can hinder expansion, such as lack of coordination, resource bottlenecks, or cultural barriers. |
| Capability-to-Entry Mode Fit Matrix | A tool recommending entry modes based on capability level: Low Capability = Exporting; Moderate = Licensing; High = Strategic Alliances/Joint Ventures. |
| Role of Exporting | It facilitates market expansion, diversification, economies of scale, competitive advantage, resource optimization, and serves as a pathway to global growth. |
| Direct Exporting | Selling products directly to foreign customers without using intermediaries, offering full control and higher profit margins but requiring more resources. |
| Indirect Exporting | Selling products to an intermediary (like a trading company) who then handles the export process. It is low-risk and fast but offers lower control and profit margins. |
| Intermediaries | Third-party entities (e.g., agents, distributors) that provide market access, regulatory assistance, logistics, and sales support in foreign markets. |
| Export Trading Companies (ETCs) | Intermediaries that handle the entire export process for a manufacturer. |
| Export Management Companies (EMCs) | Intermediaries that act as the export department for a company, managing its international sales. |
| Commission Agents/Brokers | Intermediaries who find buyers in foreign markets and connect them with sellers for a fee or commission. |
| Distributors & Wholesalers | Intermediaries that buy products locally and resell them to retailers or other businesses within the foreign market. |
| Advantages of Exporting | Includes increased sales, market diversification, economies of scale, and competitive advantage. |
| Challenges of Exporting | Includes tariff/non-tariff barriers, logistical complexities (shipping, customs), and limited market control. |
| Licensing (Definition) | A legal agreement where a licensor permits a licensee to use their intellectual property in exchange for fees or royalties. |
| How Licensing Helps Expansion | Enables rapid, lower-risk entry by monetizing IP, leveraging local knowledge, and reducing manufacturing/distribution costs without direct management. |
| Types of Licensing | Includes Patent Licensing, Trademark Licensing, Copyright Licensing, and Franchising (as a specific, complex form). |
| Franchising (Definition) | A business model where the franchisor grants the franchisee the right to use its entire business model, brand, and systems for a fee, involving higher control than licensing. |
| How Franchising Helps Expansion | Allows for rapid global expansion with lower investment from the owner, ensures brand consistency, and leverages local operator expertise. |
| Key Difference (Licensing vs. Franchising) | Licensing typically involves licensing a specific IP, while franchising involves licensing a complete business model and system with ongoing operational control. |
| Advantages of Licensing | Low-risk market expansion, minimal capital investment, faster entry, and passive income through royalties. |
| Challenges of Licensing | Loss of control over the brand, risk of brand dilution, dependence on licensee performance, and risk of IP theft. |
| Advantages of Franchising (for Owner) | Rapid expansion with lower investment, revenue from fees/royalties, local market adaptation, and lower operational risks. |
| Advantages of Franchising (for Local Operator) | Access to a proven business model, instant brand recognition, training and operational support, and easier financing. |
Created by:
user-2029370