global business

Question 1

what is globalization

Answer 1

the integration and free movement of people, goods, services, and capital across national borders
- influences supply and demand

Question 2

what are the drivers of globalization

Answer 2

1. declining trade and investment barriers, and technological change
2. major technological advances in communication, information processing, and transportation

Question 3

what is the world trade center (WTO)

Answer 3

police force for world trading system

Question 4

what is the international monetary fund

Answer 4

maintains order in the international monetary system

Question 5

what is the world bank

Answer 5

promotes economic development

Question 6

what is the United Nations

Answer 6

attempts to maintain international peace and security

Question 7

describe trade

Answer 7

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

Question 8

why is trade important

Answer 8

no nation can produce all the products needed and it helps meet citizens needs, as well as having mutually beneficial exchange

Question 9

what is free trade

Answer 9

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

Question 10

what is outsourcing

Answer 10

process by which a firm contracts with other firms to do some or all of its functions

Question 11

what is the balance of trade

Answer 11

total value of a nations exports compared to imports over a particular period

Question 12

trade surplus vs. trade deficit

Answer 12

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

Question 13

what forces impact trade in global markets

Answer 13

• sociocultural
• economic and financial
• legal and regulatory
• environmental

Question 14

what are sociocultural forces

Answer 14

culture of region (the beliefs, rules, values held, and can include religion manners, customs, language, and personal communication)

Question 15

what are economic and financial forces

Answer 15

exchange rate, value of the dollar (high and low)
-currency changes all the time

Question 16

what are legal and regulatory forces

Answer 16

there’s no global system of laws, meaning they can be inconsistent, and US firms must follow US laws whiles conducting global business

Question 17

what are environmental forces

Answer 17

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

Question 18

what is licensing

Answer 18

when a firm (licensor) provides the right to manufacture its product or use its trademark to a foreign company (licensee) for a fee (royalty)

Question 19

what is franchising

Answer 19

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

Question 20

what is contract manufacturing

Answer 20

a foreign company producers private label goods to which a domestic company them attaches its own brand name or trademark (outsourcing)

Question 21

what is a joint venture

Answer 21

partnership in which two or more firms join to undertake a major project
- benefits include: joint technology, shared risk, shared marketing/management enterprise

Question 22

what are strategic alliences

Answer 22

partnership between 2 or more firms established to help each firm build competitive advantage
- don’t typically share same risk, cost, profit

Question 23

what is a foreign direct investment

Answer 23

buying of permanent property and business in foreign nations
-foreign subsidy: firm owned in a foreign country by another firm (parent)

Question 24

what are tariffs

Answer 24

tax levied on imports, raising the cost of imported products relative to domestic products
- increaser government revenue

Question 25

what are subsidies

Answer 25

government payment to a domestic producer
- help domestic producer compete against foreign imports and gain export markets

Question 26

what are import quotas

Answer 26

direst restriction on number of items imported into a country