MindMap Gallery Chapter 11 International Business Operations
The three major characteristics of the 2023 Mid-term Economist Examination - Business Administration and International Business: 1. The combined reflection of the enterprise's internationalization strategy. 2. Aim to enter and develop international markets. 3. Complex, changeable and risky.
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This is a mind map about bacteria, and its main contents include: overview, morphology, types, structure, reproduction, distribution, application, and expansion. The summary is comprehensive and meticulous, suitable as review materials.
This is a mind map about plant asexual reproduction, and its main contents include: concept, spore reproduction, vegetative reproduction, tissue culture, and buds. The summary is comprehensive and meticulous, suitable as review materials.
This is a mind map about the reproductive development of animals, and its main contents include: insects, frogs, birds, sexual reproduction, and asexual reproduction. The summary is comprehensive and meticulous, suitable as review materials.
Chapter 11 International Business Operations
Section 1 Overview of International Business
Types and characteristics of international business: three major categories, three characteristics
Three major categories: international trade, international direct investment, and other international economic activities
Three major characteristics: 1. The combined reflection of the enterprise’s internationalization strategy. 2. Aim to enter and develop international markets. 3. Complex, changeable and risky.
The main body of international business--multinational corporations
Legal organizational forms of multinational companies: parent company, branch, subsidiary, office
Management organizational forms of multinational companies: a total of 6 structures
International Business Department: with comprehensive franchise
Global product structure: Various product departments are set up around the world, and each product department is fully responsible for the global planning, management and control of its products.
Global regional structure: With regions as units, regional divisions are set up to engage in operations, and each regional division is responsible to the president of the company.
Global functional structure: Set up functional departments around the company's main functions such as production, sales, R&D, and finance.
Global hybrid structure: An organizational structure formed by a company combining two or more of the above organizational structures to set up divisions
Matrix organizational structure: cross-management and control of the company's business, regional management and product management coexist
Market entry modes of multinational corporations
Export mode: indirect export, direct export
Licensing model: From the perspective of authorized content, it is divided into patent license, trademark license, and proprietary technology transfer (license); according to the geographical scope of the technology used and the size of the right to use, it is divided into exclusive license, exclusive license, general license, and sub-license , cross-licensing
International direct investment model: From the perspective of establishment method, it is divided into acquisition and new establishment; from the perspective of the degree of control of the parent company over the subsidiary, it is divided into sole proprietorship and joint venture.
Business strategies of multinational companies: global standardization strategy, localization strategy, transnational strategy, international strategy
Multinational companies with a global standardization strategy emphasize improving profitability and reducing costs through economies of scale, learning effects and location economies, that is, low-cost strategy
Multinational companies with a localization strategy provide products that are consistent with consumer interests and preferences in the markets of different countries.
Transnational strategy not only considers cost reduction to form experience-based cost-effectiveness and location-effectiveness, but also pays attention to the needs of the host country market.
Multinational companies with international strategies often produce products for the domestic market first, and then make slight changes based on the conditions in other regions and sell the products to various markets.
Section 2 International Direct Investment Business
Forms of international direct investment
International joint ventures, international cooperative enterprises, international sole proprietorships
An international joint venture refers to an enterprise established in the territory of the host country in accordance with the relevant laws of the host country in which foreign investors and investors from the host country jointly contribute capital for a common investment project. It is the most common form of international direct investment.
Its characteristics are: joint investment, joint operation, shared risks, and shared profits.
International cooperative enterprises refer to enterprises jointly established by foreign investors and investors from the host country in accordance with the laws of the host country on the basis of signing a contract.
Its characteristics are: the rights and obligations of all parties are agreed in the cooperation contract through negotiation. It is a typical contractual joint venture.
An international wholly-owned enterprise refers to an enterprise established in the host country by foreign investors in accordance with the laws of the host country and all capital is owned by the foreign investor.
Its characteristics are: foreign investors invest alone, bear risks independently, operate and manage independently, and enjoy operating profits exclusively.
Motivations and theories of international direct investment
Motives for international direct investment: market-oriented motives, cost-reduction-oriented motives, technology and management-oriented motives, installment investment risk-oriented motives, preferential policy-oriented motives
Motivations and theories of international direct investment
Motives for international direct investment: market-oriented motives, cost reduction-oriented motives, technology and management-oriented motives, diversified investment risk-oriented motives, preferential policy-oriented motives
Theories of international direct investment: product life cycle theory (Vernon), marginal industry expansion theory (Kiyoshi Kojima), international production eclectic theory (Dunning)
The product life cycle is divided into three stages: 1. Product innovation stage; 2. Product maturity stage; 3. Product standardization stage.
The theory of marginal industry expansion holds that the home country should start from marginal industries that are or will soon be at a comparative disadvantage, and actively promote small and medium-sized enterprises in the domestic manufacturing industry to actively develop foreign direct investment, so that they can fully tap into the host country's lack of capital, technology and management experience. potential comparative advantage.
International production eclectic theory: Foreign direct investment by multinational companies is determined by three basic factors: ownership advantage, internalization advantage and location advantage.
If an enterprise only has certain ownership advantages, it can only choose to participate in international economic activities in the form of technology transfer;
If the enterprise has both ownership advantages and internalization advantages, export trade is a better form of participating in international economic activities;
If an enterprise has ownership advantages, internalization advantages and location advantages at the same time, developing foreign direct investment is a better form of participating in international economic activities.
Methods of establishing international direct investment enterprises: establishing new enterprises in the host country (also known as greenfield investment), merging and acquiring enterprises in the host country
Benefits, costs and policy tools of international direct investment
Host Country Benefits, Costs and Policy Tools
Benefits to the host country: resource transfer effects, employment effects, balance of payments effects, effects on competition and economic growth
Costs to the host country: negative effects on domestic competition, negative effects on the balance of payments, loss of some economic independence
Host country policy tools: Policies that encourage foreign direct investment include tax breaks, low-interest loans, grants or subsidies. The two most common ways to restrict foreign direct investment are ownership restrictions and operational restrictions.
Home country benefits, costs and policy instruments
Home country benefits:
The home country's balance of payments improves due to the repatriation of earnings from foreign subsidiaries
International direct investment increases employment in the home country. The host country's subsidiary's demand for imports from the home country will have an employment effect.
Foreign subsidiaries in the home country can transfer skills acquired abroad back to the home country
home country costs
When initial financing of international direct investment results in capital outflows, the home country's balance of payments is harmed
If the purpose of international direct investment is to find a low-cost production location for the home market, the current account of the balance of payments will also be hurt.
When international direct investment replaces direct exports, the current account of the balance of payments will also suffer.
home country policy tools
Policies to encourage international direct investment include insurance, financial support, tax incentives and political pressure. Policies that restrict international investment include limiting the amount of capital transferred out by companies; manipulating tax policies to encourage companies to invest in their own countries; restricting domestic companies from investing in certain countries.
Section 3 International Trade Contracts and International Trade Practices
Transaction negotiation and contract signing
Transaction negotiation: offer, acceptance
International trade contract signing
International trade practices and planning: 11 trade terms
Characteristics of letter of credit: 1. Letter of credit is a kind of bank credit. 2. A letter of credit is an independent document. 3. A letter of credit is a transaction of documents.
Section 4 International Commodity Import and Export Practices
Main business links of commodity export
11 main business links: urging, reviewing, and modifying certificates; stocking, packaging, and marking; export inspection; applying for export verification forms; chartering and booking space; insuring cargo insurance; export customs declaration; cargo loading and shipping; preparing documents and settling foreign exchange; handling export collection and verification; handling export tax rebates
Chartering and booking: liner transportation and chartering transportation; fixed-distance chartering and time chartering
Cargo insurance: basic insurance (safety insurance, water damage insurance, all risks) and additional insurance (general additional insurance, special additional insurance)
Ping An Insurance: Mainly related to the scope of maritime risks, including sacrifices and allocations caused by general average, rescue costs, etc., excluding partial losses caused only by natural disasters.
Water damage insurance = Ping An insurance Partial losses caused by natural disasters
All risks = water damage insurance general additional insurance
Main business aspects of commodity import
9 main business links: applying for issuance and modification of letters of credit; chartering ships and booking space; insuring cargo insurance; payment and redemption orders; import customs declaration; import inspection declaration; paying freight in exchange for bills of lading; picking up goods; import claims (claims) The maximum period shall not exceed 2 years)