Ajami Goodard Ch. 1, 2, 4, 5 Flashcards
A business focused in a home/domestic location, excludes MNC
Ethnocentric
Organizations that have investments, operations, or markets in several countries, but don’t integrate management of international functions
Polycentric
organizations that are integrated and have world perspective regarding depth/reach of international operations
Geocentric
Advantages gained by MNC
- technical know-how (patents)
- large size/economies of scale
- Greater access to resources
- lower cost financing
- greater brand awareness/image
- diversification of risk
Disadvantages of MNCs
- Host country regulations/restrictions
- Political risks
- exchange rates
- cultural differences
- operational difficulties
Globalization
the shift towards a more integrated and interdependent world economy
Globalization of Markets
the merging of historically distinct/separate national markets into one huge global marketplace
Globalization of Production
the sourcing of g/s aroudn the globe to take advantage of cost/quality differences
Disadvantages of global production
- barriers to trade
- transportation costs
- political/economic risk
- coordination challenges
Responsible for policing world trading system and making sure nations adhere to rules and treaties
World Trade Organization (previously GATT, General Agreement on Tariffs and Trade)
Established to maintain order in international monetary system
International Monetary Fund
Established to promote economic development
World Bank
International organization to promote peace, international cooperation, and security
United Nations
Group of 20, G20
Finance ministers, central banks in largest enconomies representing 90% world GDP, 80% of world trade
Moore’s law
cost of microprocessor continues to fall while its capacity increases
Driver’s of globalization
Declining trade/investment barriers and technological changes
Business that has productive act ivites in 2 or more countries
Multinational Enterprise
Direct Exporting
overseeing all aspects of sale/transmittal of merchandise
Indirect Exporting
Firms hire someone else to handle various pieces of the exchange (intermediaries)
Methods of going international
Exporting, licensing, franchising, management contracts, contract manufacturing, direct investment, strategic alliance/joint venture, subsidiaries, globalized operations , portfolio investments
Franchising vs licensing
Franchisees get help with operations/raw materials but less control than licensees
Government intervention in trade markets for specific industries in its economy
Protectionism
Group of commodity-producing countries join forces to bargain as a single entity , such as OPEC
Cartel
