Chapter 8 Global Management Flashcards
Global Business
the buying and selling of goods and services by people from different countries
Multinational corporation
a corporation that owns businesses in two or more countries
Direct foreign investment
a method of investment in which a company builds a new business or buys an existing business in a foreign country
Trade barriers
government-imposed regulations that increase the cost and restrict the number of imported goods
Protectionism
a governments use of trade barriers to shield domestic companies and their workers from foreign competition
Tariff
a direct tax on imported goods
Nontariff barriers
nontax methods of increasing the cost or reducing the volume of imported goods
Quota
a limit on the number or volume of imported products
Voluntary export restraints
voluntarily imposed limits on the number or volume of products exported to a particular country
Government import standard
a standard ostensibly established to protect the health and safety of citizens but, in reality, is often used to restrict imports
Subsidies
government loans, grants, and tax deferments given to domestic companies to protect them from foreign competition
Customs classification
a classification assigned to imported products by government officials that affects the size of the tariff and the imposition of import quotas
General Agreement on Tariffs and Trade (GATT)
a worldwide trade agreement that reduced and eliminated tariffs, limited government subsides, and established protections for intellectual property
World Trade Organization (WTO)
the successor to GATT; the only international organization dealing with the global rules of trade between nations; its main function is to ensure that trade flows as smoothly, predictably, and freely as possible.
Regional trading zones
areas in which tariff and nontariff barriers trade between countries are reduced or eliminated
Maastricht Treaty of Europe
a regional trade agreement between most European countries
North American Free Trade Agreement (NAFTA)
a regional trade agreement between the United States, Canada, and Mexico
Dominican Republic-Central America Free Trade Agreement (CAFTA-DR)
a regional trade agreement between Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States.
Union of South American Nations (UNASUR)
a regional trade agreement between Argentina, Brazil, Paraguay, Uruguay, Venezuela, Bolivia, Colombia, Ecuador, Peru, Guyana, Suriname, and Chile.
Association of Southeast Asian Nations (ASEAN)
a regional trade agreement between Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam
Asia-Pacific Economic Cooperation (APEC)
a regional trade agreement between Australia, Canada, Chile, the People’s Republic of China, Hong Kong, Japan, Mexico, New Zealand, Papau New Guinea, Peru, Russia, South Korea, Taiwan, the United States, and all the members of ASEAN except Cambodia, Laos, and Myanmar.
Global consistency
when a multinational company has offices, manufacturing plants, and distribution facilities in different countries and runs them all using the same rules, guidelines, policies, and procedures.
Local adaption
modifying rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies.
Exporting
selling domestically produced products to customers in foreign countries
Cooperative contract
an agreement in which a foreign business owner pays a company a fee for the right to conduct that business in his or her country
Licensing
an agreement in which a domestic company, the licensor, receives royalty payments for allowing another company, the licensee, to produce the licensor’s product, sell its service, or use its brand name in a specified foreign market
Franchise
a collection of networked firms in which the manufacturer or marketer or a product or service, the franchisor, licenses the entire business to another person or organization, the franchisee
Joint Venture
a strategic alliance in which two existing companies collaborate to form a third, independent company
Wholly owned affiliates
foreign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company
Global new ventures
new companies that are founded with an active global strategy and have sales, employees, and financing in different countries
Purchasing power
the relative cost of a standard set of goods and services in different countries
Political uncertainty
the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events
Policy uncertainty
the risk associated with changes in laws and government policies that directly affect the way foreign companies conduct business
National culture
the set of shared values and beliefs that affects the perceptions, decisions, and behavior of the people from a particular country.
Expatriate
someone who lives and works outside his or her native country
