Chapter 4: Global Management Flashcards
Globalization
The trend of the world economy toward becoming a more interdependent system
Global village
The “shrinking” of time and space as air travel and the electronic media have made it easier for the people around the globe to communicate with one another
E-commerce
Electronic commerce
The buying and selling of a goods and services over computer networks
Global economy
The increasing tendency of the economies of the world to interact with one another as one market instead of many national markets
Minfirms operating world wide
Small companies can get started more easily
Small companies can maneuver faster
Cross cultural awareness
The ability to operate in different cultural settings
Multinational corporation
A business firm with operations in several countries
Multinational organization
A nonprofit organization with operations in several countries
Ethnocentric managers
Managers who believe that their native country, culture, laugaue, and behavior are superior to all others
Parochialism
A narrow view in which people see things solely through their own perspective
Polycentric managers
Managers who take the view that native managers in the foreign offices best understand native personnel and practices, and so the home office should leave them alone
Geocentric managers
Managers who accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective
Why companies expand internationally
1) availability of supplies
2) new markets
3) low labor costs
4) access to financial capital
5) avoidance of tariffs and import quotas
Maquiladoras
Manufacturing plants allowed to operate in Mexico with special privileges in return for employing Mexican citizens
5 ways to expand internationally
1) global outsourcing
2) importing, exporting, countertrade
3) licensing and franchising
4) joint ventures
5) wholly owned subsidiaries
Outsourcing
Using supplies outside the company to provide goods and services
Global outsourcing
Also called offshoring
Use of suppliers outside the United States to provide labor, goods, services
Importing
Buying goods outside the country and reselling them domestically
Exporting
Producing goods domestically and selling them outside the country
Counter trading
Bartering goods for goods
Licensing
Company x allows a foreign company to pay it a fee to make or distribute ax’s product or service
Franchising
A form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company brand name and a package of materials and services
Joint venture
Aka strategic alliance
A US firm may form a joint venture with a foreign company to share the risks and rewards of starting a new enterprise together in a foreign country
Wholly owned subsidiary
A foreign subsidiary or subordinate section of an organization, that is totally owned and controlled by an organization
Greenfield venture
A foreign subsidiary that the owning organization has built from scratch
Free trade
Movement of goods and services among nations without political or economic obstruction
Trade protectionism
The use of government regulations to limit the import of goods and services
Elements of trade protectionism
1) tariffs
2) import quotas
3) trade embargo’s and sanctions
Tariff
Trade barrier in the form of a customs duty, or tax, levied mainly on imports
Import quotas
Trade barrier in the form of a limit on the numbers of a product that can be imported
Dumping
Practice of a foreign company’s exporting products abroad at a lower price than the price in the home markets - or even below the costs of production - in order to drive down the price of a competing domestic product
Embargo
Complete ban on the import, export of a certain product
Sanction
Trade prohibition on certain types of products, services, or technology to another country for a specific reason
3 organizations to facilitate international trade
World trade organization
World bank
International Monterey fund
Trading bloc
Aka economic community
A group of nations within a geographical region that have agreed to remove trade barriers with one another
North American free trade agreement
Trading block consisting of USA, Canada, Mexico
European Union
Union of 28 trading partners in Europe
Trans pacific partnership
A trade agreement among 12 pacific rim countries
Most favoured nation
Trading status describes a condition in which a country grants other countries favourable trading treatment such as the reduction of import duties
Exchange rate
Rate at which currency of one area or country can be exchanged for the currency of another’s
Culture
Shares set of beliefs, values, knowledge, and patterns of behavior common to a group of people
Low context culture
Culture in which shared meanings are primarily derived from written and spoken words
High context culture
Culture in which people rely heavily on situational cues for meaning when communicating with others
Hofstede model of four cultural dimensions
Identifies four dimensions along which national cultures can be placed
1) individualism / collectivism
2) power distance
3) uncertainty avoidance
4) masculinity / feminity
Globe project
Massive ongoing cross cultural investigation of nine cultural dimensions involved in leadership and organizational processes
Variations in six cultural areas
1) lanaguage
2) interpersonal space
3) communications
4) time orientation
5) religion
6) law and political stability
Monochronic time
The standard kind of time orientation in US business; a preference for doing one thing at a time
Polychronic time
The standard king of time orientation in Mediterranean, Latin American, and Arab cultures, a preference for doing more than one thing at a time
Expropriation
Governments seizure of a domestic or foreign company’s assets
Foreign corrupt practices act
Act that makes it illegal for emplyees of US companies to make questionable or dubious contributions to political decision makers in foreign nations
Expatriates
People living or working in a foreign country
