Bus 401 - VanderKelen (Midterm 3) || Graded A+.
Foreign Direct Investment correct answers Direct investment in production or business in one
country by a business from another country
Multinational Firms correct answers Firms that Sell/Produce in multiple countries
WHY Firms Expand Internationally correct answers Growth
- Firms will spread internationally in order to grow their sales
WHY Firms Expand Internationally (Cont.) correct answers Efficiency
1) Low Cot Resources = Cheap Key Resources in Foreign Countries (Low Cost Labor)
2) Longer Product Life = Product Life Cycle - stages that the product goes through in lifespan,
Sell older products in other markets
3) Economies of Scale/Scope = Going international will allow you to spread cost over a larger #
of units
WHY Firms Expand Internationally (Cont.) correct answers Managing Risk
- Positioning in different markets, will prevent you from collapsing if a economic downturn
occurs
WHY Firms Expand Internationally (Cont.) correct answers Knowledge
- Exposed to tastes and needs from different countries
- Learn how firms in other countries operate and where they can improve their processes
WHY Firms Expand Internationally (Cont.) correct answers Responding to
Customer/Competitor
, If you see customers or competitors coming from out of the country, your firm can react on these
events
WHERE Firms Should Expand correct answers Market Risk
Sales Projections (Is there a solid customer base?)
Distribution Options (Will the product be able to reach customer efficiently?)
WHERE Firms Should Expand (Cont.) correct answers Political Risks
Tariffs, Location of Product Production, Distribution
WHERE Firms Should Expand (Cont.) correct answers Economic Risks
Foreign Country Economy is Unstable
Currency Fluctuation (High Volatility) - Value of Profits/Costs subject to fluctuation
Distance Between Countries (CAGE) correct answers Cultural, Administrative,
Geographic,Economic
Look to Lower Distance Across All Factors
Distance Between Countries (Cultural) correct answers Language, Ways of Conducting Business,
How Companies Contribute to Society
Religion, Ethnicity, Outsider Trust, Political Power
Affected Heavily by Culture
High Linguistic Content (TV,Books,Music))
Foreign Direct Investment correct answers Direct investment in production or business in one
country by a business from another country
Multinational Firms correct answers Firms that Sell/Produce in multiple countries
WHY Firms Expand Internationally correct answers Growth
- Firms will spread internationally in order to grow their sales
WHY Firms Expand Internationally (Cont.) correct answers Efficiency
1) Low Cot Resources = Cheap Key Resources in Foreign Countries (Low Cost Labor)
2) Longer Product Life = Product Life Cycle - stages that the product goes through in lifespan,
Sell older products in other markets
3) Economies of Scale/Scope = Going international will allow you to spread cost over a larger #
of units
WHY Firms Expand Internationally (Cont.) correct answers Managing Risk
- Positioning in different markets, will prevent you from collapsing if a economic downturn
occurs
WHY Firms Expand Internationally (Cont.) correct answers Knowledge
- Exposed to tastes and needs from different countries
- Learn how firms in other countries operate and where they can improve their processes
WHY Firms Expand Internationally (Cont.) correct answers Responding to
Customer/Competitor
, If you see customers or competitors coming from out of the country, your firm can react on these
events
WHERE Firms Should Expand correct answers Market Risk
Sales Projections (Is there a solid customer base?)
Distribution Options (Will the product be able to reach customer efficiently?)
WHERE Firms Should Expand (Cont.) correct answers Political Risks
Tariffs, Location of Product Production, Distribution
WHERE Firms Should Expand (Cont.) correct answers Economic Risks
Foreign Country Economy is Unstable
Currency Fluctuation (High Volatility) - Value of Profits/Costs subject to fluctuation
Distance Between Countries (CAGE) correct answers Cultural, Administrative,
Geographic,Economic
Look to Lower Distance Across All Factors
Distance Between Countries (Cultural) correct answers Language, Ways of Conducting Business,
How Companies Contribute to Society
Religion, Ethnicity, Outsider Trust, Political Power
Affected Heavily by Culture
High Linguistic Content (TV,Books,Music))
