Globalization : Political, Economic, & Legal System

Question 1

What is Globalization

Answer 1

International integration (pushed by countries) arising from the exchange of worldviews, products, ideas, and other aspects of culture.

Question 2

What opportunities to businesses are brought by globalization

Answer 2

Allowed corporations to outsource manufacturing and service jobs from high cost locations, where corporations can pay workers lower salaries and provide fewer (or no) benefits.

Question 3

What are the economic, political, and cultural effects of globalization

Answer 3

Cultural: this refers to the transmission of idea, meanings, and values around the world in such a way that extends and intensifies social relations.

Political: globalization may ultimately reduce the importance of nation states. Supranational institutions, such as the European Union, the World Trade Organization (WTO), the Group of Eight (G8), and the international Criminal Court, serve to replace or extend national functions to facilitate international agreement.

Economic: globalization refers to the widespread, international movement of goods, capital, services, technology, and information. It is the increasing economic integration and interdependence of national, regional, and local economics across the world through an intensification of the cross-border movement of goods, services, technologies, and capital.

Question 4

Define Importing

Answer 4

good or service brought into one country from another

Question 5

Define Exporting

Answer 5

good or service produced in one country then marketed to another country

Question 6

Define Licensing

Answer 6

Arrangement between a firm, called licensor, allows another one to use its intellectual property such as brand name, copy right, patent, technology, trademark for a specific period of time

Question 7

Define Franchinsing

Answer 7

Parent company (franchiser) gives rights to another company (franchisee) to do business using the franchiser’s name and products in a prescribed manner.

Question 8

Define Strategic Partnerships & Joint Venture

Answer 8

Positive aspect of the cooperation of two or more companies in different countries are joined together for mutual gain. Joint venture is where partners across globe collectively found a company to product goods and services.

Question 9

Define FDI

- Foreign Direct Investment

Answer 9

physically invest in buildings and facilities in a foreign country, acts as a domestic business. FDI get benefits from a cheaper labor cost, tax exemptions, and other privileges in that foreign country. The host country will get benefits by the introduction of new products, services, technologies, and managerial skills

Question 10

What are the 5 stages of entering a global market

Answer 10

Market Entry

Product Specialization

Value Chain Disaggregation

Value Chain Reengineering

Creation of New Markets

Question 11

Define Entry market

Answer 11

Companies enter new countries using business models similar to the ones deployed in their home markets. Companies often need to establish a production presence to gain access to local customers. Examples are In-service as food, retail, or banking.

Question 12

Define Product Specialization

Answer 12

Companies transfer the full production process of a particular product to a single, low-cost location and export to various consumer markets

Question 13

Define Value Chain Disaggregation

Answer 13

Companies disaggregation the production process and focus on completing each activity in the most advantageous location. Individual components of a single product might be manufactured in several different places and assembled into a final product elsewhere.

Question 14

Value Chain Reengineering

Answer 14

Companies seek to further increase their cost savings by reengineering their processes to suit local market conditions by substituting lower cost labor for capital. Example: General Electric’s (GE) medical equipment division has tailored its manufacturing processes abroad to take advantage of low labor costs. “The Change of the method to set up the production line

Question 15

Define Creation of New Markets

Answer 15

Create new demand due to the reduction of ticket price. This stage is focused on market expansion. This allows companies to substantially lower their sticker prices in both old and new markets and to expand demand. Significantly, the value of new revenues generated is often greater than the value of cost savings in the other stages

Question 16

What are the 4 drivers of globalization

Answer 16

Market, Cost, Competition, and Government Globalization

Question 17

Define Anarchy in political system

Answer 17

An Individual controls the country, No Government

Question 18

Define Monarchy in political system

Answer 18

Single person rules until death, power can vary by type: absolute, constitutional, or mix of both. Examples: Canada, Great Britain, Japan

Question 19

Define Oligarchy in political system

Answer 19

A small elite group holds powers, status not achieved through noble ancestry. Examples: Russia, Venezuela, China

Question 20

Define Dictatorship in political system

Answer 20

Single person (or very small group of people) holds power. Wields complete and absolute authority over a government and population. Example: North Korea, Cuba

Question 21

Define Democracy in a political system

Answer 21

Citizens organize political parties and elect leaders. Leader’s power organized through constitution and term limits. Example: United States

Question 22

Explain Traditional Economy

Answer 22

Centered around family, everyone consumes the same goods, relies on bartering, no surplus

Question 23

Explain Command Economy

Answer 23

Controlled and owned by the ruling class (Government) Cuba and North Korea.

Question 24

Explain Market Economy

Answer 24

The market controls distribution of resources, minimum government control

Question 25

Explain Mixed Economy

Answer 25

The market is the major determining power. Partial government regulation as needed. United States is a mixed economy