Chapter 5 Flashcards
Globalization
the movement of goods, services, technology, investment, ideas, and people throughout the world
positive effects of gobalization (7)
- outsourcing
- lower prices
- improved human rights
- increased productivity
- innovation
- better jobs
- increased capital flow
negative effects of globalization (9)
- lost canadian jobs
- fear of job loss
- loss of canadian productivity
- exploitation of cheap labour
- increased pollution
- unhealthy products
- spread of disease
- increase in the income gap
- influence of multinational corporations on governments
companies use three major types of globalization strategies
- global strategy
- multidomestic strategy
- transnational strategy
global strategy (4)
- regards the world as one big market. all people want the same product and will respond to marketing in a similar way
- products and marketing are around the world
- takes advantage of economies of scale (proportionate savings gained by producing larger quantities)
- does not respond to individual cultures
multidomestic strategy (3)
- customizes products, services, and marketing, for the local culture - local management is most capable of determining that is best for the local subsidiary
- effective when cultural differences are prominent
- less political and exchange rate risk
transnational strategy (3)
- combines the best elements of the global and multidomestic strategies
- Respects needs of local market, while maintaining efficiencies of a global strategy
- manufacturing takes place at least expensive source, human resources and marketing take place at the local level
trade agreement (2)
- An enforceable treaty between two countries that involves the movement of goods and services, elimination of trade barriers, establishment of terms of trade, and ecouragement of foreign investment
- Agreements may be multilateral (3+ parties) or bilateral (2 parties)
NAFTA (4)
- january 1994 between canada, us, mexico
- created world’s largest free trade area
- sets rules surrounding movement of goods, services, and invrstments across North America
- Eliminates tariffs and other trade barriers, and promotes fair competition
advantages of nafta (3)
- has helped create higher paying jobs in education, engineering, and banking sectors in Canads
- allows freer flow of goods and services across north america, providing better access to raw materials, talent, capital, and technology
- trade has tripled between the three members since NAFTA’s inception
disadvantages of NAFTA (3)
- Manufacturing jobs have been lost to Mexico, where labour costs are lower
- without tariffs, many Mexican farmers could not compete and lost their livelihoods
- canadian companies sold to foreign investors
Tax Treaties
Created to prevent double taxation and tax evasion for people who would pay taxes in Canada and another country. The treaty determines how much tax each country can collect
the EU
- trade agreement signed in 1993
- encompasses 27 countries in europe
euro
european currency unit adopted by the european union and used in most european countries
trade organizations
groups established to help with free flow of goods and services
-created by individual governments to help domestic companies expand
