What is globalization? - ANSWER-When international integration arises from the interchange of world views, products, ideas and cultures.
What are
... [Show More] business opportunities that are presented by globalization? - ANSWER-Trade, transactions, capital and investment movements. The migration and movement of people and the dissemination of knowledge.
Culture effects of globalization - ANSWER-Ideas, meanings, values. Decreased uniqueness by once isolated communities.
Political effects of globalization - ANSWER-Reduces importance of nation states
Economic effects of globalization - ANSWER-International movement of goods, capital, services and technology and information.
What are arguments for globalization? - ANSWER-Access to broader market, gains access to cheap labor.
What are arguments against globalization? - ANSWER-Needs to understand foreign legal and political policies.
Market entry (Five stages of entering a global market) - ANSWER-Companies enter new country's using business models similar to the ones in home market.
Production Specialization (Five stages of entering a global market) - ANSWER-Companies transfer the full production process of a product to a single location.
Value Chain Desegregation (Five stages of entering a global market) - ANSWER-Desegregating the the production process and focus on completing each activity in a better location. (different areas)
Value Chain Reengineering (Five stages of entering a global market) - ANSWER-Companies seek to further increase their cost savings by reengineering their production process.
Creation of New Markets (Five stages of entering a global market) - ANSWER-Allows companies to lower their sticker prices in both new and old markets.
Cost Driver (4 drivers of globalization) - ANSWER-Refers to product development, manufacturing, and sourcing.
Competitive Driver (4 drivers of globalization) - ANSWER-New markets, increased level of trade.
Market Driver (4 drivers of globalization) - ANSWER-Customer needs. Preferences vary by product.
Government Driver (4 drivers of globalization) - ANSWER-Absence or presence of trade policies, technical standards, policies and regulations.
Economies of Scale - ANSWER-Refers to the concept that the unit cost to produce a product will decline as the variety increases.
Benefits of Global Expansion - ANSWER-More array of products, services technologies, medicines, and knowledge
Increased sales and exchanges
Growth rate in GDP
MNC's Benefits of Global Expansion - ANSWER-Unsaturated demand for new product
Lower labor costs
Less expensive natural resources
Higher revenue or lower structure cost
MNC's Cost of Global Expansion - ANSWER-Ethical business practice (labor, safety, environment)
Organizational structure (incorporating new regions to the value chain)
Public relations
Leadership
Legal and regulatory structure
C (CAGE) - ANSWER-Culture. Shared beliefs, practices, norms.
A (CAGE) - ANSWER-Administration. Similar country's trade with each other
G (CAGE) - ANSWER-Geography. Location
E (CAGE) - ANSWER-Economic. Socioeconomic and demiographic
World is flat - ANSWER-events that made the world smaller.
Monarchy - ANSWER-A single person ruling until death. (Britain)
Oligarchy - ANSWER-Small elite group holds power. (Russia)
Dictatorship - ANSWER-One person rules (Hitler)
Democracy - ANSWER-Citizens organize political parties. (USA)
Traditional Economy - ANSWER-Centers around family (hunt gather & nomadic societies)
Relies on bartering
Members produce what they need not no surplus
Benefits: No friction between members
Disadvantages: Mercy of climate
Low standard of living
Ex: Hati
Command Economy - ANSWER-Devoted to goals passed down from a ruler. Resources and business are owned by the government. Communist societies. Venuzela
Market Economy - ANSWER-Decentralized economy. Leaders make decisions on consumer demands. Regulates balance between supply and demand.
Mixed Economy - ANSWER-Too much government involvement. Protects private property. Supply and demand. Mix of market and command economy.
Religious Law - ANSWER-Theocratic law based on religious guidelines.
Civil Law - ANSWER-Judge investigates. (Europe, Central America, South America)
Common Law - ANSWER-Judicial rulings, judge acts as moderator. (USA)
IMF (International Monetary Fund) - ANSWER-Financing to members in economic difficulties to achieve macroeconomic stability and reduce poverty.
World Bank - ANSWER-Encourages developing countries to borrow for development projects.
WTO (World Trade Organization) - ANSWER-Regulation of trade between nations.
IMF Criticism - ANSWER-Requires borrower to fix financial problems to get financing. USA over represents. Helps developed countries more. Environmental
WTO Criticisms - ANSWER-Protects developed countries more.
World Bank Critisms - ANSWER-Privation of healthcare. US and Europe have too much control.
Mercantilism Trade Theory - ANSWER-Country's wealth is based by the amount of gold and silver holdings.
Import & Export Trade Theory - ANSWER-Import: Goods coming into a country.
Export: Goods coming out of a country.
Neo-mercantilism - ANSWER-Favors exports, discourages imports. (China)
Absolute Advantage - ANSWER-Ability of a country to produce goods more efficiently than another nation.
Comparative Advantage - ANSWER-Ability to produce a good or service at lowest opportunity cost.
H-O Theory - ANSWER-How a country could gain comparative advantage by producing products that were in abundance in the country.
Country Similarity Theory - ANSWER-The theory that a company will seek to exploit opportunities in those countries most similar to its home country because of the perceived need to make fewer operating adjustments
Global Strategic Rivalry Theory - ANSWER-MNC and their efforts to gain a competitive advantage.
Import Tariff - ANSWER-Taxes on goods imported into a country.
Export Tariff - ANSWER-Taxes on goods leaving a country.
Protective Tariff - ANSWER-Tariffs levied to reduce imports of a product and protect domestic industries.
Revenue Tariff - ANSWER-Raise revenue for government
Specific Tariff - ANSWER-Flat rate on each item imported
Ad Valorem Tariff - ANSWER-A Tariff based on a percentage of the price of a good.
Compound Tariff - ANSWER-a combination of an ad valorem and a specific tariff
Absolute Quota - ANSWER-limits the amount of a good allowed into the country to some specific quantity
Tariff Rate Quota - ANSWER-limit on goods exported to a country, once limit is hit a fee applies
VER (voluntary export restraint) - ANSWER-trade barrier that limits the number of goods exported to a particular country
Managed trade - ANSWER-Agreement sometimes temporary between countries to achieve certain trade outcomes.
Free trade agreement - ANSWER-Agreement between nations to reduce barriers to imports and exports. (little or no tariffs, quotas, subsidies)
Dumping - ANSWER-Selling goods in another country below market prices
Sanctions/Notational Security - ANSWER-Political way of managing international trade.
portfolio investment - ANSWER-investment in another country with no intent to manage or control
FDI investment - ANSWER-foreign investment with intent to manage or control
FDI Cost - ANSWER-foreign ownership, job losses to host county, reduction of culture.
FDI restrictions - ANSWER-Owner restrictions, home country can increase taxes and sanctions.
FDI benefits - ANSWER-financial incentives, provide insurance and tax breaks.
Greenfield FDI - ANSWER-MNC builds new factory in developing country.
Brownfield FDI - ANSWER-Purchase or lease of existing facilities to launch new product activity.
Regional Economic Integration - ANSWER-helps country focus on issues that are relevant to their stage of development
Free Trade area (5 Stages of regional integration) - ANSWER-members remove all barriers to trade (tariffs, quotas, nontariff barriers)
Customs Union (5 Stages of regional integration) - ANSWER-All members of the economic integration will use the same external tariff with non member countries. EX: MERCOSUR
Common Market (5 Stages of regional integration) - ANSWER-In member country's workers do not need a visa or work permit.
Economic Union (5 Stages of regional integration) - ANSWER-Economic agreement, removing trade barriers and adopting common economic policies.
Political Union(5 Stages of regional integration) - ANSWER-When member countries behave as a single country.
Benefits of regional economic int - ANSWER-Trade agreements create more opportunities by removing barriers
Growth rates in developing countries
Expands job opportunities
USMCA - ANSWER-Automobiles must have 75% of their components manufactured in US, Canada, and Mexico
Labor provisions for wages state 40-45% of automobile parts must be made by workers making 16$ an hour by 2023
Floating exchange rate - ANSWER-Currency value is allowed to fluctuate according to supply and demand
Fixed exchange rate (pegged) - ANSWER-governments try to maintain a constant currency value against a specific currency or good
Crawling bands - ANSWER-bands adjusted periodically by the countrys central bank
Pegged with horizontal bands - ANSWER-fluctuates within a larger band of greater than 1% currency's value
Monopoly - ANSWER-Market where there are many buyers but only one seller. Example: Apple
Antitrust laws in USA - ANSWER-Limits the power of price controlling cartels
Paris Agreement - ANSWER-Climate agreement
Kyoto Protocol - ANSWER-Treaty to reduce greenhouse gas emissions
UCC - ANSWER-Governs contractural transaction with goods and tangible object
WIPO (World Intellectual Property Organization) - ANSWER-United nations implements global policies related to intellectual property
Sabrones Oxely Act - ANSWER-Protects investors by making corporate disclosures more reliable and accurate
CSR - ANSWER-Ethical role of a corporation in society
Culture effects on ethics - ANSWER-Social norms are not identical in different countries
Internal control - ANSWER-system that accurately maintains material statements
Irregularities - ANSWER-Intentional misrepresentation of accounting data with the aim to defraud
Discrepancies - ANSWER-Accounting errors that are not intentional
Functional Departmentalization (Structure) - ANSWER-Organizes company business by functions (BEST)
Product Departmentalization (Structure) - ANSWER-Organized company business by product
Market Departmentalization (Structure) - ANSWER-Organized by type of customer served
Geographic Departmentalization (Structure) - ANSWER-Organized by geographics
Matrix Structure (Structure) - ANSWER-Popular in high tech firms. Combines functional and product, creates special teams.
Team Structure - ANSWER-People with complementary skills working together for common purpose
Tall Stucture - ANSWER-several layers of management
Flat structure - ANSWER-only a few layers of structure
Centralization - ANSWER-upper management handles issues
Decentralization - ANSWER-Lower level employ [Show Less]