International Business Management Overview
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Questions and Answers

What factor is NOT considered a driver of international expansion for firms?

  • Improvements in logistics
  • Technological advancements
  • Local consumer preferences (correct)
  • Economic cooperation growth

Which of the following is a firm-specific driver for international expansion?

  • Growth of emerging markets
  • High product development costs (correct)
  • Regional political instability
  • Technological barriers

Which internationalization obstacle is related to tariffs and import quotas?

  • Financial risk
  • Self-reference criterion
  • Government barriers (correct)
  • Country risk

What component does NOT belong in the PESTEL analysis framework?

<p>Behavioral factors (B)</p> Signup and view all the answers

Which PESTEL analysis factor assesses the impact of government policies on a firm's operations?

<p>Political (D)</p> Signup and view all the answers

Which budget determination approach focuses on achieving a specific communication goal?

<p>Communication Goal (D)</p> Signup and view all the answers

Which communication step follows 'Awareness' in the sequence of converting a potential customer to a buyer?

<p>Comprehension (D)</p> Signup and view all the answers

Which reason for investing in foreign markets focuses on the availability of resources?

<p>Looking for new inputs (B)</p> Signup and view all the answers

What aspect of risk does the term country risk refer to in international business?

<p>Political instability in the foreign market (C)</p> Signup and view all the answers

What communication tool is primarily aimed at building credibility and strengthening brand perception?

<p>Public Relations (PR) (D)</p> Signup and view all the answers

Which advertising goal is primarily used to maintain consumer loyalty after initial awareness is established?

<p>Reminder (A)</p> Signup and view all the answers

What is the purpose of the 'Action' step in the communication sequence?

<p>To convince customers to purchase (C)</p> Signup and view all the answers

What is the primary characteristic of direct exporting?

<p>Handling all export operations internally (D)</p> Signup and view all the answers

Which of the following is NOT a disadvantage of exporting?

<p>Low profit margins (B)</p> Signup and view all the answers

What are contractual agreements primarily used for?

<p>Allowing foreign firms to use intangible assets (A)</p> Signup and view all the answers

What is a significant reason for the decline stage of a product life cycle?

<p>Products rapidly losing ground to new technologies (B)</p> Signup and view all the answers

Which entry mode is characterized by a foreign firm producing and selling products using a licensor's intellectual property?

<p>Contractual Agreements (A)</p> Signup and view all the answers

Which of the following is NOT a consideration for multinationals in product planning during the decline stage?

<p>Optimization of Manufacturing Processes (D)</p> Signup and view all the answers

What is a significant advantage of using contractual agreements for market entry?

<p>Low development costs and risks (B)</p> Signup and view all the answers

Which factor contributes to brand equity?

<p>Perceived quality by consumers (C)</p> Signup and view all the answers

Which is NOT typically considered a mode of entry into international markets?

<p>Public Relations (A)</p> Signup and view all the answers

What aspect of a brand is directly related to its ability to generate income outside its core structure?

<p>Licensing and Franchising (B)</p> Signup and view all the answers

What is a key disadvantage associated with franchising as a mode of entry?

<p>Risk of diluting the brand (C)</p> Signup and view all the answers

What is the primary purpose of brand identity?

<p>To create a unique image in consumers' minds (A)</p> Signup and view all the answers

Why is a well-maintained brand considered to have lasting value?

<p>It does not depreciate easily over time (B)</p> Signup and view all the answers

What does the term 'joint venture' refer to in the context of international market entry?

<p>A collaboration between two firms to share resources (A)</p> Signup and view all the answers

Which mode of entry involves necessitating a new facility built from the ground up?

<p>Greenfield Investment (A)</p> Signup and view all the answers

Which of the following is NOT a visible factor of a brand?

<p>Consumer trust (C)</p> Signup and view all the answers

Which element is considered a part of a brand's core strategic foundation?

<p>Competitor analysis (D)</p> Signup and view all the answers

What can a strong brand effectively do across various markets?

<p>Simultaneously operate in multiple sectors (C)</p> Signup and view all the answers

What is a characteristic of a brand that makes it hard to imitate by competitors?

<p>Strong differentiation (A)</p> Signup and view all the answers

What is the primary goal of penetration pricing?

<p>To establish a strong market presence quickly (A)</p> Signup and view all the answers

Which pricing strategy is characterized by consistent low prices aimed at price-sensitive customers?

<p>Economy Pricing (A)</p> Signup and view all the answers

What is a key characteristic of promotional pricing?

<p>Involves temporary discounts to boost sales (C)</p> Signup and view all the answers

Which of the following is NOT a reason to use a low pricing strategy?

<p>Creating long-term brand value (C)</p> Signup and view all the answers

Which factor is NOT associated with expanding to a foreign market?

<p>Weak competition in the destination country (C)</p> Signup and view all the answers

What trend in international distribution indicates control by fewer, larger players?

<p>Concentration (D)</p> Signup and view all the answers

What is a significant trend affecting global distribution systems?

<p>Increase in distribution marks capturing loyalty (A)</p> Signup and view all the answers

Which of the following is an essential characteristic for a successful brand strategy?

<p>Legally protected (D)</p> Signup and view all the answers

What management reason supports entering an international market?

<p>Greater bargaining power with suppliers (C)</p> Signup and view all the answers

Loss-leader pricing primarily serves what purpose?

<p>To drive traffic to a store with low-priced items (B)</p> Signup and view all the answers

Flashcards

What are multinational or transnational corporations?

Firms with headquarters in one country and operations in other countries, often referred to as MNCs or TNCs.

What are the drivers of international expansion?

Factors that drive businesses to expand their operations internationally, including seeking new markets, reducing costs, and gaining a competitive edge.

What is exporting?

Entering a foreign market to sell products that are either not produced locally or are in limited supply.

What is foreign investment?

Investing in foreign markets by establishing subsidiaries, joint ventures, or acquisitions.

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What is PESTEL analysis?

A tool to analyze the external environment of a business, considering political, economic, social, technological, legal, and environmental factors.

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What is the political aspect of PESTEL analysis?

Analyzing the political climate in a target market, including government policies, political stability, and potential risks.

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What is the economic aspect of PESTEL analysis?

Analyzing the economic conditions in a target market, including economic growth, inflation, interest rates, and currency exchange rates.

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Exporting

Selling goods produced in one country to buyers in another.

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Direct Exporting

Company handles all export operations directly.

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Indirect exporting

Company uses intermediaries to handle export activities.

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Contractual Agreements

Agreements allowing foreign firms to use intangible assets (technology, trademarks, or systems) without direct investment by the parent company.

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Licensing

Allowing a foreign firm to produce and sell products using the licensor's intellectual property in exchange for a defined fee.

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Franchising

Giving a foreign business the right to use a company's brand, products and operational model in exchange for a percentage of revenues.

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Greenfield Investment

A foreign company invests directly in a foreign market by setting up new facilities.

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Joint Venture

Two or more companies join forces to create a new entity in a foreign market.

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Acquisition

Acquiring an existing company in a foreign market.

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Percentage of Sales Budgeting

A budgeting approach that allocates a fixed percentage of a company's revenue to communication activities.

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Competition-Based Budgeting

A strategy where a company sets its communication budget based on what its competitors are spending.

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Communication Goal Budgeting

A communication strategy focused on achieving specific goals, like increasing brand awareness or driving sales.

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Reinforcement Advertising Goal

Advertising designed to reinforce a customer's purchase decision and highlight product benefits.

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Communication Tools

A communication strategy that leverages different tools like advertising, sales promotions, public relations, and personal selling to reach target audiences.

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Penetration Pricing

Setting a very low initial price to quickly gain market share and attract customers, especially entering a new market.

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Economy Pricing

Consistently offering low prices by minimizing production, marketing, and distribution costs. Targets price-sensitive customers.

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Promotional Pricing

Temporary discounts or special offers used to boost sales and attract new customers.

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Loss-Leader Pricing

Selling certain products below cost to attract customers who might then buy other higher-margin products.

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Low Pricing Strategy

A strategy suitable when entering new markets, dealing with price-sensitive customers, leveraging economies of scale, or competing in saturated markets.

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Successful Brand Strategy

A memorable, concise, legally protected, and product-related brand name helps a company stand out.

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International Market Expansion

Factors influencing a firm's decision to expand into an international market, such as market saturation, competition, legal restrictions, or untapped market potential.

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Concentration in International Distribution

A trend in international distribution where fewer, larger players control distribution channels, centralizing power and creating efficient systems.

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Internationalization in Distribution

A trend where distribution systems expand across borders, standardizing channels globally to increase reach in international markets.

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Increase in Distribution Marks

A trend where distributors focus on branding their distribution systems, creating their own private labels to build consumer loyalty.

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Decline Stage

The stage in a product's lifecycle where sales decline due to new technologies and product alternatives. This is a time of decreasing sales and profit for the product.

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Brand

A unique identifier, often including a name, logo, or slogan, that distinguishes a company's products from competitors. Brands build trust, loyalty, and value.

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International Product Policies

Strategies used by multinational companies to adapt their products for international markets. These include maintaining existing products, introducing new ones, adapting product features, finding new uses, or withdrawing products.

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Visible Factors of a Brand

The visible aspects of a brand, such as its name, logo, and advertising campaigns.

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Core Strategic Foundation of a Brand

The fundamental principles that drive a brand's strategy, including product quality, market analysis, segmentation, and positioning.

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Brand Identity

The perception and image consumers have of a brand, formed through its name, logo, symbols, packaging, colors, and communicated value propositions.

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Brand Equity

The overall value a brand holds in the market, based on consumer perception, loyalty, and reputation.

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Perceived Quality

The perceived quality of a brand's products, as judged by consumers.

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Product Lifecycle Extension

Extending the product lifecycle by selling to new markets, particularly in developing countries. This can help to maintain sales and profit for a product in decline.

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Simultaneous Brand Use Across Markets

A brand's ability to operate successfully across different markets and industries.

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Study Notes

International Business Study Notes

  • International business management is more complex, riskier, and presents new challenges compared to domestic business management, especially as the distance from home country increases.
  • International firms face issues like psychic distance, meaning a lack of knowledge about foreign markets, and self-reference criterion, which involves unconscious reference to one's own cultural values.
  • There are varied levels of internationalization:
    • Domestic marketing: focusing on the domestic market.
    • Export marketing: limited commitment involving exporting.
    • International marketing: substantial commitment to individual countries/regions.
    • Global marketing: extensive international commitment focusing on market segments rather than countries/regions (e.g., McDonald's).
  • Globalization has expanded economic and social ties between countries, shrinking the world economically.
  • Globalization creates opportunities for firms to buy and sell in diverse markets, leveraging labor & capital flexibility.
  • Globalization can affect markets at country, sector, and company scales.
  • Several factors drive international expansion, including competition, regional economic & political integration, advancements in transportation/logistics, and access to communication networks/internet.
  • Several factors drive export/investment in foreign markets such as satisfying host government requirements, remaining price-competitive domestically, testing foreign markets & extending product life-cycle
  • Various factors can hinder international expansion. These include government barriers, foreign investment laws, and risk situations like country risks, financial risks, and political risks.
  • PESTEL analysis (Political, Economic, Social, Technological, Legal, Environmental) is key for understanding the external environment in which a firm operates. Political factors involve government type, policies, and funding. Economic factors relate to industry trends and economic variables. Social factors involve norms and values. Technological factors involve innovation. Legal factors include laws, regulations, and legal systems (Common law, code law, or theocratic law). Lastly, environmental considerations are notable.
  • Several tools are used for risk mitigation in international business. These include engagement with host governments, undertaking risk analyses, utilizing local joint ventures, engaging risk consultants, and employing risk management tools like credit default swaps.
  • Different legal systems (common law, code law, theocratic law) shape how laws are interpreted and applied, affecting business operations.
  • Intellectual property rights are important, as countries differ in how they address counterfeiting and protect creative works.

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Description

This quiz covers key concepts in international business management, exploring its complexities compared to domestic management. Learn about the various levels of internationalization, the effects of globalization, and the challenges firms face in foreign markets. Test your knowledge on how cultural factors influence international business operations.

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