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What is the term for companies with fewer than 500 employees that face unique challenges in international expansion?
SMEs (Small and Medium-Sized Enterprises)
What does FOB stand for?
Free on Board
What is the key difference between licensing and franchising?
Licensing transfers technology or IP, while franchising includes business concepts like branding and operations.
What does WOS stand for in international business?
Wholly Owned Subsidiary
What does FDI stand for?
Foreign Direct Investment
What model describes internationalization as a learning process where firms reduce uncertainty incrementally?
Uppsala Model
What does the term "direct export" mean?
Selling products directly to customers in another country
Name one risk associated with subcontracting in developing countries.
Poor labor standards or lack of control over subcontractor practices
What is the primary goal of natural resource-seeking FDI?
Accessing specific natural resources like oil, minerals, or timber
Name one advantage of acquiring an existing local business
Faster entry into the market
Which type of venture is defined as a business that seeks to compete globally from inception?
International New Venture
In what situation might a firm shift from indirect to direct exports?
When the firm wants greater control over customer relationships or after-sales service.
What is a common drawback of franchising for the franchisor?
Losing control over how the brand and products are represented locally
What is a key advantage of using a greenfield investment?
The ability to design operations from scratch to fit the parent firm’s strategy
What does a joint venture involve?
Two or more companies sharing ownership of a new entity
Name the three factors a firm must evaluate when selecting an entry mode into a foreign market.
Firm's resources, host context, and competitive advantages
What is the term for firms that link sellers and buyers overseas, especially helpful for SMEs?
Export intermediaries
Which business model allows firms to operate in foreign markets without significant capital investment by transferring rights for a royalty fee?
Licensing
key advantage of being the first mover in a foreign market?
Establishing strong brand recognition and customer loyalty
Why might a firm choose a joint venture over a wholly owned subsidiary in an emerging market?
To share costs and risks while gaining local knowledge and legitimacy
What term refers to leveraging networks to overcome resource deficiencies in international expansion?
Network Internationalization Model
Why might a firm use a letter of credit in an international trade transaction?
To ensure payment security when dealing with an unknown foreign partner.
How can digital platforms like Uber or Airbnb adapt to succeed in international markets?
By localizing services, complying with local regulations, and adapting to cultural preferences?
Name a disadvantage faced by first movers in foreign markets
High uncertainty about market demand and technology
Why did Walmart's attempt to enter the German market fail?
Cultural misalignment, low-wage perceptions, and fierce competition from Aldi and Lidl