Global Business Flashcards
impact of import
Recall the formula for gross domestic product, C + I + G + (Ex - Im). The expression (Ex - Im) equals net exports, which may be either positive or negative. If net exports are positive, the nation’s GDP increases. If they are negative, GDP decreases. All nations want their GDP to be higher rather than lower, so all nations want their net exports to be positive.
Nevertheless, we tend to treat imports as some sort of negative or bad thing even though, when you think about it, imports are what we gain from international trade while exports are what we pay in international trade.A net import balance is actually a good thing in that we are getting more from foreign trade than we are paying.The problem with it is that it is not sustainable.
improve exports
Lessons for strategy:
+Production is only one of a number of value-adding links; import, supply, fiscal, transport and export policies and business support services must be aligned to support sector performance.
+Mapping the flow of inputs and outputs - goods and services - in the production chain allows each firm to determine who else’s behaviour plays an important role in its success.
+Upgrading the performance of individual firms may have little impact if the ‘bigger picture’ is not taken into account through a strategy that facilitates performance for the entire sector.
Four upgrade options for firms
- Process. Increase efficiency and effectiveness of internal processes so that these are significantly better than those of rivals
- Product. Introduce new products or improve old products more quickly than rivals.
- Functional. Increase value-added by changing the mix of activities conducted within the firm (for example, taking responsibility for, or outsourcing, logistics or design functions)
- Chain. Move to a new value chain (for example, Taiwanese firms switched from the manufacture of transistor radios to calculators, to televisions, to computer monitors, to laptops and now to wireless application protocol, or WAP, phones).
advertisement
external -channels
internal improve quality; product innovation
governmental spending
short-term: to promote job growth and bolster economic activity.If government spending is zero, presumably there will be very little economic growth because enforcing contracts, protecting property, and developing an infrastructure would be very difficult if there were no government at all. In other words, some government spending is necessary for the successful operation of the rule of law.
long-term:government spending may actually decrease economic growth, possibly due to inefficient use of money.THE CONSEQUENCES OF UNPRODUCTIVE SPENDING AND THE MULTIPLIER EFFECT is negative for the nation
Football - mass-market.
unsegmented market; to appeal to an entire market with one basic marketing strategy utilizing mass distribution and mass media. Also called undifferentiated marketing.
FDI
foreign direct investment (An investment made by a company or entity based in one country, into a company or entity based in another country. Foreign direct investments differ substantially from indirect investments such as portfolio flows, wherein overseas institutions invest in equities listed on a nation’s stock exchange. Entities making direct investments typically have a significant degree of influence and control over the company into which the investment is made. Open economies with skilled workforces and good growth prospects tend to attract larger amounts of foreign direct investment than closed, highly regulated economies.)
4 types of MNE: natural resource seekers; market seekers; efficient seekers; capacity seekers (foreign market to promote)
Trade agreements (NAFTA and EU; ASEAN - association of South East ASian Nations)
North American Free Trade Agreement has two supplements: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).NAFTA is designed to eliminate tariff barriers and liberalize investment opportunities and trade in services. NAFTA includes Canada, Mexico, and the United States,The key provisions in NAFTA are:
the harmonization of trade rules,
the liberalization of restrictions on services and foreign investment,
the enforcement of intellectual property rights,
a dispute settlement process,
regional labour laws and standards, and
strengthened environmental standards
The largest and most comprehensive regional economic group is the EU.The implications of the EU for corporate strategy are:
Companies need to determine where to produce products.
Companies need to determine what their entry strategy will be.
Companies need to balance the commonness of the EU with national differences
labor costs
the direct labor cost we need to have the job time and wage
The sum of all wages paid to employees, as well as the cost of employee benefits and payroll taxes paid by an employer. The cost of labor is broken into direct and indirect costs. Direct costs include wages for the employees physically making a product, like workers on an assembly line. Indirect costs are associated with support labor, such as employees that maintain factory equipment but don’t operate the machines themselves.
Balance of payment
A statement that summarizes an economy’s transactions with the rest of the world for a specified time period. The balance of payments, also known as balance of international payments, encompasses all transactions between a country’s residents and its nonresidents involving goods, services and income; financial claims on and liabilities to the rest of the world; and transfers such as gifts.
The BOP is divided into three main categories: the current account, the capital account and the financial account.
-The current account is used to mark the inflow and outflow of goods and services into a country. Earnings on investments, both public and private, are also put into the current account.
-The capital account is where all international capital transfers are recorded. This refers to the acquisition or disposal of non-financial assets (for example, a physical asset such as land) and non-produced assets, which are needed for production but have not been produced, like a mine used for the extraction of diamonds.
-In the financial account, international monetary flows related to investment in business, real estate, bonds and stocks are documented. Also included are government-owned assets such as foreign reserves, gold, special drawing rights (SDRs) held with the International Monetary Fund (IMF), private assets held abroad and direct foreign investment. Assets owned by foreigners, private and official, are also recorded in the financial account.
