Ch 1 Globalizationa & International Business Flashcards
International business
All commercial transactions including sales, investments, and transportation, that take place between two or more countries.
Globalization
The widening set of interdependent relationships among people from different parts of the world that happens to be divided into nations
Born – global companies
Start out with global focus because of their founders international experience and because advances in communications give them a good idea of where global markets and supplies are
Clustering or agglomeration
Many new companies locate in areas with numerous competitors and suppliers
G20 or Group of Twenty
19 of the world’s most important countries plus representation from the European Union of its members not included in the 19 that meet to discuss global conditions
Sovereignty
Freedom to act locally and without externally imposed restrictions
Reshoring
Bringing jobs back from over seas
Merchandise exports
Tangible products or goods that are sent out of the country
Merchandise imports
Goods brought into a country
Service exports
Non-merchandise international earnings where the provider and receiver of payment makes a service export
Service imports
Non-merchandise international earnings where the recipient and payer makes a service before
Turnkey operations
Construction project performed under contract and transferred to owners when they’re operational
Management contract
Arrangements in which one company provides personnel to perform general or specialize management functions for another, such as disease management of theme parks in France in Japan
Licensing agreements
One company allows another to use its assets such as trademarks, patents, copyrights
Royalties
Earnings off of licensing agreements
What r the driving forces of globalization
Less pervasive - much of world lack resources to connect beyond their domain.
Size of country - small countries more globalized
Income of country - higher income population more globalized
Variance among globalization aspects - can be high in one area and low in another. Like US high technically but low economically
Criticisms of globalization
Countries sovereignty is diminished - vulnerable to foreign mandate, difficult to maintain traditional ways.
The resultant growth hurts the environment - carbon footprint with 1000 container ships
Some people lose both relatively and absolutely - income inequality
Greater insecurity increases personal stress. - jobs & social status
Criticisms of off shoring
Not much cost saving on consumer end, but increase to corporate and stakeholders
Labor income decrease yet profits increased
Trading good jobs for bad ones
When restoring occurs they higher labor at a Lower cost
Quality of jobs created offshore not good
Franchising
Mode of business in which one party allows another to use a trademark as an Essential asset of the franchisees business
Foreign direct investment
Investors take a controlling interest in a foreign company
Joint venture
Two or more companies share ownership of a foreign direct investment the operation is a joint venture
Portfolio investment
A noncontrolling financial interest in another entity
Collaborative arrangements
Companies work together in joint ventures, licensing agreements, management contracts, minority ownership, and long-term contractual arrangements
Strategic alliance
An agreement that is of critical importance to one or more partners or two in agreement that does not involve joint ownership
Multinational enterprise (MNE)
Any company with foreign direct investment
Multinational corporation (MNC)
Another term for multinational enterprise they also use translational company
