Globalization - ANSWER-Worldwide interconnections in virtually every sphere of activity including the spread of products, technology, information, and job
... [Show More] opportunities. Can result in blurred boundaries between nations, organizations, and investors
Trade - ANSWER-The actions of buying and selling goods and serviced
Capital - ANSWER-Financial assets such as funds but also equipment, facilities, and other means of production
1. Trade and Transactions
2. Capital and Investment Movements
3. Migration and Movement of People
4. Dissemination of Knowledge - ANSWER-Four fundamental aspects of globialization
Economic
Cultural
Political - ANSWER-Three major areas of globalization
Outsource - ANSWER-To obtain goods or services from an outside or foreign supplier
Cultural Globalization - ANSWER-Transmission of ideas, meanings, and values around the world in such a way that extends and intensified social relations
Nongovernmental Organizations (NGOs) - ANSWER-Not for profit organizations that are independent of the government and are active in humanitarian causes
Economic Globalization - ANSWER-Refers to the widespread international movement of goods, capital, services, technology, and information
Subsidies - ANSWER-A sum of money granted by the government to assist and industry or business
Intellectual Property - ANSWER-A work or invention that is a result of creativity, such as a manuscript
Financial Instrument - ANSWER-A monetary contract between parties
Stakeholder Analysis - ANSWER-A technique to identify and assess the important key people, groups of people, or institutions that may significantly influence the success of an organization's activity, project, or business
Foreign Direct Investment - ANSWER-When a firm invests assists directly into a foreign country's buildings, equipment, or organizations
Stage 1: Market Entry
Stage 2: Product Specialization
Stage 3: Value Chain Disaggregation
Stage 4: Value Chain Re-engineering
Stage 5: Creation of New Markets - ANSWER-The five stages of becoming a global company
McKinsey Global Institute - ANSWER-An organization whose mission is to help leaders in the commercial, public, and social sectors develop and understanding of the evolution of the global economy
Stage 1: Market entry - ANSWER-Stage when companies enter the new countries using business models similar to the ones deployed in their home markets
Stage 2: Product specialization - ANSWER-Stage when companies transfer the full production process of a particular product to a single, low-cost location and export the goods to various consumer markets
Stage 3: Value Chain Disaggregation - ANSWER-Stage when companies disaggregate (separate into its component parts) the production process and focus on completing each activity in the most advantageous location
Stage 4: Value Chain Reengineering - ANSWER-Stage when companies seek to further increase their cost savings by re-engineering their processes to suit local market conditions by substituting lower cost labor for capital
Stage 5: Creation of New Markets - ANSWER-Stage when companies focus on market expansion
Opportunities for Scale - ANSWER-Cost advantages due to an increase in the amount of output and a decrease in the cost per unit
Market Opportunities
Cost
Competition
Government - ANSWER-Four industry globalization drivers
Scope - ANSWER-To develop efficiencies in terms of variety not volume
1. Ethical Business Practices
2. Organization Structure
3. Public Relations
4. Leadership
5. Legal and Regulatory Structure
6. Infrastructure
7. Technology - ANSWER-7 Drawbacks of Global Expansion
Market Driver - ANSWER-Drivers: Opportunity for scale and scope; convergence of needs; needs and wants of the market
Cost Drivers - ANSWER-Drivers: Economies of scale and scope; exploiting cost of factors of production
Competition Drivers - ANSWER-Drivers: New markets; Increased levels of trade
Government Driver - ANSWER-Drivers: Favorable policies; Support for industry
1. Organizations
2. Governmental Organizations
3. NGOs - ANSWER-What are the different forms of international business?
Importer - ANSWER-Sells products and services that are sources from other countries
Exporter - ANSWER-Sells products and services that are sources from its home country in foreign countries
Foreign Direct Investment - ANSWER-When a firm invests assets directly into a foreign country's buildings, equipment, or organizations
Organizations - ANSWER-Engages in foreign business such as exporting, importing, foreign direct investment
Governmental Organization - ANSWER-Engages in creating international treaties to issues such as trade, environment, or child labor; maintain embassies and consulates in foreign countries
Non-Governmental Organization (NGO) - ANSWER-Includes any nonprofit, voluntary citizens group that are organized on a local, national, or international level
Six Sigma - ANSWER-A method that provides tools for organizations to increase performance and decrease process variation
Culture
Administration
Geography
Economics - ANSWER-CAGE components
Human capital - ANSWER-The education and skills of workers
Gini Coefficient - ANSWER-Measures the inequality among values of a frequency distribution such as levels of income
Happy Planet Index - ANSWER-Measures how well nations are doing at achieving long, happy, sustainable lives
Political system - ANSWER-The system of politics and government in a country; it governs a complete set of rules, regulations, institutions, and attitudes.
Anarchy - ANSWER-The absence of organized government; individuals have the right to choose what happens
Monarchy - ANSWER-A government in which a single person rules until he or she dies or abdicated the throne
Absolute Monarchy - ANSWER-Governments where a monarch has absolute or unmitigated power
Constitutional Manarchy - ANSWER-Governments of nations that recognize monarchs but require that these figures abide by the laws of a greater constitution; feature prime ministers
Oligarchy - ANSWER-An elite group holds the power of the government
Dictatorship - ANSWER-Power is held by a single person (or very small group of people) who wields complete and absolute authority over a government and its population
Democracy - ANSWER-Form of government that strives to provide all citizens an equal voice, or vote, in determining state policy, regardless of socioeconomic status
Totalitarian Dictatorship - ANSWER-A dictatorship in which the dictator controls all aspects of its subjects lives, including occupations, religious beliefs, and the number of children each family is permitted to have
Macroeconomic - ANSWER-A branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole
1. Centered around a family or tribe and guided by tradition
2. Found in hunt-gatherer and nomadic societies; everyone consumed and produces the same goods
3. Relies on bartering
4. Members product what they need with no surplus
5. Eventually, the economy evolves to some form of currency - ANSWER-5 characteristics of a traditional economy
1. Collective or state ownership of capital (such as money, property, and other physical assets)
2. The state determines inputs and outputs
3. Labor is allocated according to state plans
4. Private ownership is not possible
5. Prices and paying for goods and services are regulated by the state with little regard to costs; often a currency does not exist but resources are given to citizens as needed - ANSWER-5 distinguishing features of a command economy
1. It is standard for all goods and services to be privately owned.
2. People are free to choose to produce, sell, and purchase goods at the price set with the capital they possess
3. Every seller aims to make the most profit possible
4. Market economy relies on an efficient market in which all buyers and sellers have equal access to the same information
5. Competition keeps prices low
6. Government interference is at the minimum that is necessary to ensure that markets are functioning correctly - ANSWER-6 characteristics of a market economy
Civil
Common
Religious - ANSWER-Three types of conventional systems of law
Civil Law - ANSWER-Countries under this system of law have more detailed, prescriptive laws in which the role of the judge is to investigate whether a law has been broken
Common Law - ANSWER-This legal system is based on precedence. The role of the judge is to hear arguments from both parties and make a judgment, which is used as a precedent for future cases
Religious Law - ANSWER-This legal system is based on religious beliefs
Special Drawing Right (SDR) - ANSWER-International type of money reserve created by the IMF used to loan money to member countries
Balance of Payments - ANSWER-The difference in total volume between payments into and out of the country over a period of time
Fixed-Rate Currency Exchange System - ANSWER-When a country's currency value is fixed or pegged by a monetary authority against the value of another currencyC a basket of currency, or another measure of value
To promote international economic cooperation
To promote international trade
To promote employment
To promote exchange rate stability
By making financial resources available to member countries to meet their balance of payment needs - ANSWER-Objectives of the IMF
Collateral - ANSWER-Something pledged as security for repayment of a loan to be forfeited in the event of a default
1. Prior actions
2. Quantitative Performance Criteria
3. Indicative Targets
4. Structural Benchmarks - ANSWER-Four conditions of the IMF
Prior Actions - ANSWER-Actions that a country agrees to before the IMF's executive board approves financing or completes a review
Quantitative Performance - ANSWER-Criteria that are specific and measurable conditions that a country must meet to complete a review
Indicative targets - ANSWER-Quantitative targets used to measure a country's progress in meeting the IMF's requirements
Structural benchmarks - ANSWER-Nonquantitative measures such as social safety nets
A country doesn't need collateral, but has to correct financial practices that led to debt in the first place to ensure the country can pay back its loan to support other struggling countries - ANSWER-Conditionality of the IMF
Being owned and directed by the governments of the member nations - ANSWER-Which activity of the IMF affects policy making?
IMF - ANSWER-Is a cooperative institution and provides more effective currency exchange
Privatization - ANSWER-Selling government holdings to private companies
Deregulation - ANSWER-The removal of regulations or restrictions in a particular industry
Result currency exchange change between nations - ANSWER-Original purpose of the IMF
Provides means for nations to easily exchange currency
Provides oversight
Offers loans to member organizations - ANSWER-Evolved purpose of the IMF
1. Conditionalities may make conditions worse in a struggling country
2. Poor countries are underrepresented
3. Does not consider effects on the environment - ANSWER-3 criticisms of the IMF
AAA Rating - ANSWER-The highest possible rating that may be assigned by a credit rating agency for a bond
Debt Instrument - ANSWER-A tool used by a company or any other entirety to raise money or capital
1. Helping build sustainable economic growth
2. Investing in people
3. Building resilience to shocks and threats - ANSWER-3 World Bank Priorities
1. To end extreme poverty
2. To improve the income of the lowest 40% of citizens in each country - ANSWER-2 World Bank Goals
Commodities - ANSWER-A raw material or primary agricultural product that can be bought or sold
Mercantilism - ANSWER-One of the earliest economic theories, which states that a country's wealth was determined by the amount of gold and silver they had in their possession
Trade surplus - ANSWER-When the value of a country's exports is greater than the value of goods being imported
Nation-States - ANSWER-When a group of people are conscious of sharing a common identity and the same culture
Protectionism - ANSWER-The theory or practice of protecting a country's domestic industries from foreign competition by taxing imports
Navigation Acts - ANSWER-British Acts in 1651 to tighten and protect trade between Asia, American colonies, Africa, and England. Trade had to come in English ships. The purpose was to use American colonies to increase British finances and power
Government subsidies - ANSWER-Money paid by the government to help and organization or industry reduce its costs
Free trade - ANSWER-International trade left to its natural course without tariffs, quotas, and other restrictions
Absolute Advantage - ANSWER-The ability of an individual or group to produce a good or service more efficiently than another
Production Possibility Frontier (PPF) - ANSWER-A curve that shows various combinations of the amount of two that can be produced within the limits of the given resources and technology
Slope - ANSWER-The gradient of a graph at any point calculated as the change in y over the change in x
Hecksher-Ohlin Theory - ANSWER-Stated that countries would produce and export goods that required resources or factors that were in abundant supply and therefore cheaper; in contrast, countries would import goods that required resources that were in short supply but higher demand
Country Similarity Theory - ANSWER-Theory that proposed that customers in countries that are in the same or similar stage of development would have similar preferences; takes brands and customer loyalty, technology, and quality into account
Global Strategic Rivalry Theory - ANSWER-Theory that focused on Multinational corporations and their efforts to gain a competitive advantage against other global firms; to prosper, they must develop competitive advantage
Barriers to Entry - ANSWER-The obstacles that make it difficult for a new company to enter a given market. These barriers may include technology challenges, start-up costs, or government regulations
Economies of Scale - ANSWER-A proportionate savings in costs gained by an increased level of production
Convertible - ANSWER-A currency that can be used to buy or sell without government restrictions
Resource endowments - ANSWER-Refers to the skill and abilities of a country's workforce, the natural resources available within its borders, and the sophistication of its capital stock
Economic sanctions - ANSWER-Commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual
Value chain - ANSWER-The process or activities by which a company adds value to an article, including production, marketing, and the provision of after-sales services
Producer Surplus - ANSWER-The difference between how much money producers want to sell a good for an how much they receive by selling it
Wholesaler - ANSWER-A person or company that sells goods in large quantities at low prices, typically to retailers [Show Less]