Chapter 17

Question 1

resources, markets, and competition are worldwide in scope.

Answer 1

global economy,

Question 2

the process of growing interdependence among elements of the global economy.

Answer 2

Globalization

Question 3

the creation of domestic jobs by foreign employers.

Answer 3

Insourcing

Question 4

shifts local jobs to foreign locations to take advantage of lower-wage labor in other countries.

Answer 4

Outsourcing

Question 5

conducts commercial transactions across national boundaries.

Answer 5

international business

Question 6

Why Businesses Go Global

Answer 6

• Profits—gain profits through expanded operations.
• Customers—enter new markets to gain customers.
• Suppliers—get access to products, services, and materials.
• Capital—get access to financial resources.
• Labor—get access to low-cost, talented workers.
• Risk—spread assets among multiple countries.

Question 7

firms purchase materials, manufacturing, or services around the world for local use.

Answer 7

global sourcing,

Question 8

a network of a firm’s outsourcing suppliers and contractors.

Answer 8

global supply chain

Question 9

moves foreign production and jobs back to domestic locations.

Answer 9

Reshoring

Question 10

local products are sold abroad.

Answer 10

exporting,

Question 11

the process of acquiring products abroad and selling them in domestic markets.

Answer 11

Importing

Question 12

one firm pays a fee for rights to make or sell another company’s products.

Answer 12

licensing

Question 13

a firm pays a fee for rights to use another company’s name and operating methods.

Answer 13

franchising

Question 14

operates in a foreign country through co-ownership with local partners.

Answer 14

joint venture

Question 15

each partner hopes to achieve through cooperation things they couldn’t do alone.

Answer 15

global strategic alliance,

Question 16

a local operation completely owned by a foreign firm.

Answer 16

foreign subsidiary

Question 17

establishes a foreign subsidiary by building an entirely new operation in a foreign country.

Answer 17

greenfield venture

Question 18

a global institution established to promote free trade and open markets around the world.

Answer 18

World Trade Organization (WTO)

Question 19

gives a trading partner the most favorable treatment for imports and exports.

Answer 19

Most favored nation status

Question 20

taxes governments levy on imports from abroad.

Answer 20

Tariff’s

Question 21

are nontax policies that governments enact to discourage imports, such as quotas and import restrictions.

Answer 21

Nontariff barriers

Question 22

a call for tariff s and favorable treatments to protect domestic firms from foreign competition.

Answer 22

Protectionism

Question 23

the North American Free Trade Agreement linking Canada, the United States, and Mexico in an economic alliance.

Answer 23

NAFTA

Question 24

a political and economic alliance of 28 European countries.

Answer 24

EU or European Union

Question 25

links 21 nations to promote free trade and investment in the Pacific region.

Answer 25

APEC is the Asia-Pacific Economic Cooperation

Question 26

links 14 southern African countries in trade and economic development efforts.

Answer 26

SADC is the Southern Africa Development Community

Question 27

extensive international business dealings in many foreign countries.

Answer 27

global corporation or multinational corporation (MNC)

Question 28

an MNC that operates worldwide on a borderless basis.

Answer 28

transnational corporation

Question 29

where large global firms gain disproportionately from the global economy versus smaller firms.

Answer 29

globalization gap

Question 30

involves illegal practices to further one’s business interests.

Answer 30

Corruption

Question 31

makes it illegal for U.S. firms and their representatives to engage in corrupt practices overseas.

Answer 31

Foreign Corrupt Practices Act

Question 32

employ workers at very low wages, for long hours, and in poor working conditions.

Answer 32

Sweatshops

Question 33

the full-time employment of children for work otherwise done by adults.

Answer 33

Child labor

Question 34

possible profit loss because of fluctuating exchange rates.

Answer 34

Currency risk

Question 35

possible loss because of instability and political changes in foreign countries.

Answer 35

Political risk

Question 36

forecasts how political events may have an impact on foreign investments.

Answer 36

Political-risk analysis

Question 37

culturally aware and informed on international affairs.

Answer 37

global manager

Question 38

Universal Facilitators of Leadership Success

Answer 38

• Acting trustworthy, just, honest
• Showing foresight, planning
• Being positive, dynamic, motivating
• Inspiring confidence
• Being informed and communicative
• Being a coordinator and team builder

Question 39

Universal Inhibitors of Leadership Success

Answer 39

• Being a loner
• Acting uncooperative
• Being irritable
• Acting autocratic