Chapter 1: Global Business Environment Flashcards
1. Recognize the major forces shaping the global business environment. 2. Relate key characteristics directly to principles, practices and development in international trade
Factors that transform International trade and global commerce are?
- Emerging global progress (BRICS)
- Technological progress
- Shifts in priority related to former “fringe” issues
Why can global investment be risky for the evolution of the global business environment?
- Investments can quickly flow into a region and can be withdrawn just as quickly. A.K.A hot money.
- Provides only short-term gains
- Can lead to systematic instability (Failure of one institution can affect their economy, thus affecting the global economy)
Common challenges between large corps. and SMEs are?
- Business vision
- People and financial management
- Marketing and sales skills
- Commercial acumen
- Competitive mettle
What basic procedures can be difficult for global businesses?
- Due diligence (an investigation of a person or company prior to signing a contract)
- Commercial credit check (Credit granted to a business by a bank for commercial purposes)
What are the infrastructures that support global business?
- Government agencies
- Regulatory bodies
- Financial institutions
- Technology
Define commerce
The activity of buying and selling, especially on a large scale.
Accelerated pace in the global business environment is due to some factors
Partnerships:
- China
- India
Technology:
- e-commerce
- Online trading platforms
- Social networking
What are new businesses and trade partners now focusing more on?
Professional services rather than primary inputs and manufactured goods.
What is an example of a bilateral relationship?
The flow of goods and services between U.S and china
Define multilateral
Agreed upon or participated in by three or more parties. I.e multilateral trade agreements.
Define south-south trade
Trade between low-and middle income countries. Is currently fast growing.
Define global sourcing
Practice of sourcing from the global market for goods and services across geopolitical boundaries. aims to exploit global efficiencies in the delivery of a product or service.
What factors blur the lines between trade and investment?
- Promotion of trade and export support foreign investment
- Trade promotion organizations are actively on the investments side
- Privatization of organizations
Give an example of specialized investment vehicles
Hedge funds
Define global integration
The process by which a company combines different activities around the world so that they operate using the same methods. refers to the many aspects of trade that businesses utilize to achieve the lowest possible cost and maximize the return for their products.
What makes global integration possible?
Globalization (the process by which businesses or other organizations develop international influence or start operating on an international scale).
What makes globalization possible?
Free trade agreements
List new emerging international powers?
- China
- Indian
- Russia(?)
- Brazil
- Europe (EU)
List some multilateral institutions
- World Trade Organization (WTO) - Assists in resolving trade disputes and welcoming other nations to do business according to agreements and rules. Negotiates trade agreements.
- United Nations Organization (UN)
- World bank
- International Labour Organization (ILO)
- United Nations Development Programme (UNDP)
Define protectionism
The theory or practice of shielding a country’s domestic industries from foreign competition by taxing imports. (Raising taxes to reduce imports to protect domestic industries).
Define out-sourcing
Obtain (goods or a service) from an outside or foreign supplier, especially in place of an internal source.
Define off-shoring
The practice of basing some of a company’s processes or services overseas, so as to take advantage of lower costs.
what is an issue regarding human capital
The recognition of educational and professional equivalencies between countries and jurisdictions. the vast majority of skill sets, educational credentials and technical and professional accreditation’s are poorly understood and thus inadequately matched across jurisdictions.
Define value chain
The process or activities by which a company adds value to an article, including production, marketing, and the provision of after-sales service.
Define value-added
The amount by which the value of an article is increased at each stage of its production, exclusive of initial costs.
Global business primary focuses are on what?
- Commodities
- Primary industries
- Traditional business services
What are some of the complex focuses of global business?
- High-value activities - engineering, professional services and even health care.
What are 2 major organizations used to support trade?
- Export Development Canada (EDC) - insures and finances exporters
- Trade commissioners - Sales representative of ther country. Help exporters find buyers.
Define absolute advantage
The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than another entity that produces the same product or service. Produces a product or service using a smaller number of inputs or a more efficient process than another entity producing the same. Not mutually beneficial.
Define comparative advantage
An economy’s ability to produce goods and services at a lower opportunity cost than trade partners. Gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins. Mutually beneficial.
Name some challenges in Jurisdiction
- Transfer of pricing across borders
- Transactions in another country
Name a few security enhancements in global business
- Biometric technology
- Customs inspection
- Securing shipments in transit
Name a security issue
Longer transit times due to increased security screenings, involve an economic cost.
Name 2 issues
- Intellectual property (IP) in global business - Organizations pursuing opportunities in the markets that most flagrantly violate IP regulations do so at significant risk.
- Environmental impacts - companies are increasingly being pressured to focus on “green” or “sustainable” supply chain models which use environmentally friendly inputs and result in byproducts or outputs that can be recycled. (Former “fringe” issue).
