global business Flashcards
what is globalization
the integration and free movement of people, goods, services, and capital across national borders
- influences supply and demand
what are the drivers of globalization
- declining trade and investment barriers, and technological change
- major technological advances in communication, information processing, and transportation
what is the world trade center (WTO)
police force for world trading system
what is the international monetary fund
maintains order in the international monetary system
what is the world bank
promotes economic development
what is the United Nations
attempts to maintain international peace and security
describe trade
importing: buying products from another country
exporting: selling products to another country
- US is largest importer and second largest exporter, boosting US economy and generates jobs
why is trade important
no nation can produce all the products needed and it helps meet citizens needs, as well as having mutually beneficial exchange
what is free trade
the movement of goods and services among nations w/o political or economic factors
-comparative: a country sells products it produces most efficiently and buys from other countries what it can’t make
-absolute: a country having a monopoly on producing a certain product
what is outsourcing
process by which a firm contracts with other firms to do some or all of its functions
what is the balance of trade
total value of a nations exports compared to imports over a particular period
trade surplus vs. trade deficit
surplus: is favorable, when the call of a country’s export is more than that of it’s imports
deficit: is unfavorable, when the value of a country’s exports is less than that of it’s imports
what forces impact trade in global markets
- sociocultural
- economic and financial
- legal and regulatory
- environmental
what are sociocultural forces
culture of region (the beliefs, rules, values held, and can include religion manners, customs, language, and personal communication)
what are economic and financial forces
exchange rate, value of the dollar (high and low)
-currency changes all the time
what are legal and regulatory forces
there’s no global system of laws, meaning they can be inconsistent, and US firms must follow US laws whiles conducting global business
what are environmental forces
developing countries have transportation and storage systems that make international distribution difficult, and often technological abilities are far from those in the US, creating a tough business environment
what is licensing
when a firm (licensor) provides the right to manufacture its product or use its trademark to a foreign company (licensee) for a fee (royalty)
what is franchising
a contractual agreement whereby someone with a good idea for a business sells others the right to use the name and sell a product/service in a given area
what is contract manufacturing
a foreign company producers private label goods to which a domestic company them attaches its own brand name or trademark (outsourcing)
what is a joint venture
partnership in which two or more firms join to undertake a major project
- benefits include: joint technology, shared risk, shared marketing/management enterprise
what are strategic alliences
partnership between 2 or more firms established to help each firm build competitive advantage
- don’t typically share same risk, cost, profit
what is a foreign direct investment
buying of permanent property and business in foreign nations
-foreign subsidy: firm owned in a foreign country by another firm (parent)
what are tariffs
tax levied on imports, raising the cost of imported products relative to domestic products
- increaser government revenue
what are subsidies
government payment to a domestic producer
- help domestic producer compete against foreign imports and gain export markets
what are import quotas
direst restriction on number of items imported into a country
