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Summary Principles of Business Administration

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- Principles of Business Administration
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A snapshot of the summary - Principles of Business Administration

  • Chapter 1

  • What is the difference between domestic and international business?
    - Boundaries (Domestic within the boundaries of one country, international is between two different countries) 
    - Currencies 
    - Legal systems 
    - Cultures
    Availability of resources 
  • What is the difference between visible and invisible trade?
    Visible: Trade of physical goods/ tangible products -> Also called merchandise export/import

    Invisible: Trade of services/ intangible products ex. Banking. -> Also called service export/ import
  • What is the difference between franchising and licensing?
    • Franchising is operating under the rights of the brand name wheras licensing is just selling the rights to sell a specific product. 
    • Franchising: McD 
    • Licensing: Disney 
  • Chapter 4

  • What is culture? What are the characteristics?
    Culture is a shared set of values, behaviors, and beliefs that exist within a group of a society that distinguishes it from another.

    Characteristics: 
    • Learned behaviour 
    • Interrelated 
    • Adaptive 
    • Shared
  • What are the elements of social structure?
    Individuals, families and groups
    • Defining family 
    • Individual's role within groups 
    • Importance of the individual relative to the group 

    Social stratification (Society's categorisation of people) 
    • Attributes 
    • Highly stratified societies 
    • Less stratified societies 


    Social mobility (Ability to move between different social groups in society) 
    • Low social mobility
      • You are born into a group and are most likely to stay in this group your entire life 
    • Socially mobile societies 
      • Easy to move from lower group to higher 
  • Why might language become a cultural problem in business?
    • Message becomes a different meaning when translated 
    • Words may have different meanings in other languages (Ex. Saying yes) 
  • International investment theories

  • Why do companies choose to use FDI according to the theory "Ownership advantages"?
    Ownership advantages gives a competitive advantage to the firm from owning a valuable asset - Ex. Brand name, economies of scale, or technology - to better penetrate new markets.
  • Developing international strategies

  • What is strategy formulation and strategy implementation?
    Strategy formulation is deciding what to do and strategy implementation is actually doing it. 

    In a strategy formulation the firm establishes its goals and a strategic plan that will lead to those goals. 

    In strategy implementation the company develops tactics for achieving the international strategies. 
  • Leadership in int. Business

  • What is the theory called that states that leaders cannot succeed by always using the same set of behaviours in all circumstances?
    Contemporary leadership theory
  • Scope, implementation and pitfalls of strategic alliances

  • When forming a strategic alliance, following pitfalls might happen:
    • Incompatibility of partners
    • Access to information
    • Distribution of earnings
    • Loss of autonomy
    • Changing circumstances

    Describe each pitfall and what consequences they might have,
    • Incompatibility of partners
      • Partners not able to work together - Can lead to conflict, often poor performance
      • How to solve: Meet up beforehand to discuss reasons to join the alliance
    • Access to information
      • One partner may have to share information with the other that was preferred to keep secret
        • Ex. Information about technology
    • Distribution of earnings
      • Share risks and costs -> Also share profit
        • Who earns how much?
    • Loss of autonomy
      • Share control -> Limited what you can do
    • Changing circumstances
      • The motivating drivers for the alliance be disappear.  
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