Chapter8 Flashcards
Fundamental changes that allow global markets
Reduction or elimination of trade barriers
Standardization of laws internationally
Decreasing concern of distance and time with regards to moving product
Globally integrated production processes
Globalization
The process by which goods and services capital and people flow across national borders
Four sets of criteria necessary to assess a country’s market
Economic analysis
Infrastructure and technological analysis
Government actions or inactions
Sociocultural analysis
Trade deficit
A country imports more goods than it exports (USA)
Trade surplus
A country that exports more than it imports (China )
Note companies rather manufacture here
GDP
Gross domestic is the market value of goods and services produced in a year
GNI
GDP + net income from investments abroad(minus payments made to nonresidents who contribute tot the domestic economy
PPP
theory that if exchange rates in tow countries are in equilibrium a product purchased in one country will be the same price in the other if expressed in the same currency
BRIC
(Brazil Russia India China )
Likely to see the most market growth because stagnated growth makes high purchasing power countries like us and uk less attractive
Rural areas
Increase product costs because more hands touch it
Evaluating real income
Firms Can make make adjustments to a product or change the price to meet the unique needs of a country
Infrastructure
Basic facilities and installments needed for a community or society to function
4 elements of infrastructure
Transportation
Distribution channels
Communications
Commerce
Economic analysis using metrics
General economic environment
Market size and population growth
Real income
Infrastructure and technology transportation channels
Communication
Commerce
transportation
channels
Communication
Commerce
Sociocultural analysis
Power distance Uncertainty avoidance Individualism Masculinity Time orientation
Trade agreements
Signatory or the trading bloc to which it belongs
Tariffs
Intended to make imported goods more expensive and less competitive
Quotas
Maximum quantity that can enter a country
Power distance
Willingness to accept social inequality as natural
Individualism
Perceived obligation and dependence on groups
Uncertainty avoidance
Extent to which society relies on orderliness structure consistency
Masculinity
Men dominate power positions
Time orientation
Short term vs long term
Example a country who values long term is will into wait for a product to be successful
Brazil strengths
7th largest economy Predicted growth rate to 5h largest economy Large population that is literate Imposition of social programs Growing middle class
Russia
Ups and downs in economy Growing consumer market Well educated population Strong demand for US goods Strong internet presence Aging population Corruption
India
Expanding middle class Young population Well educated Highly skilled workers Lacks modern supply chain facilities
China
Unequal distribution of wealth
Migrant workforce
Slowing population
Large economy 2nd
global entry strategy
Export
Franchise
Strategic alliance
Joint venture
Exporting
Producing in one country selling in another
Cons of exporting
Limited return
Difficult to achieve economies of scale
Pros of exporting
Least risky because no infrastructure buildings etc
Franchising
Contract agreement between franchiser and franchisee
Pros of franchising
Less risky than full owning
Less investment
Con of franchise
Limited control
Limited profit
Strategic alliance
Collaborative relationships between independent companies Cisco and TaTa
Joint venture
Pool two firms resources together
Direct investment
Firm maintains 100% ownership
High risk
GloCalization
Forms standardize products globally but use different promotional campaigns to sell them
Reverse innovation
Companies develop niche products for underdeveloped markets and expand them in their original home markets
