GM - Chapter 1- Globalization and International Linkages Flashcards
International management process
- Applying management concepts and techniques in a multinational environment;
- Adapting management practices to different economic, political, and cultural environments
Multinational corporation (MNC):
1) Operations in more than one country
2) International sales
3) Nationality mix of managers and owners
Globalization:
the process of integration among countries around the world with a vision of a single market entity:
Social Economic Political Technological Cultural
Internationalization:
the process of a business crossing national and cultural borders.
Benefits of Globalization:
wealth, jobs, technology, lower prices.
Criticisms of Globalization:
1) off-shoring of business service jobs to lower-wage countries;
2) growing trade deficits;
3) slow wage growth;
4) environmental and social impacts.
Global Agreements:
World Trade Organization (WTO)
(General Agreement on Tariffs and Trade
(GATT))
Regional Agreements:
1) North American Free Trade Agreement (NAFTA)
2) U.S.-Central American Free Trade Agreement (CAFTA)
3) European Union (EU)
4) Association of Southeast Asian Nations (ASEAN)
5) Free Trade Agreement of the Americas (FTAA)
International economic power in the global economy - Shifting landscape due to:
Economic integration
Economic potential of emerging markets
Trends in International Investments:
1) 80% from developed countries
2) direct investment (FDI)
3) Growing at healthy rate
4) Outpacing domestic growth in most countries
Trends in International Trade:
1) Over ½ of world trade accounted for by United States, European Union and Japan
2) Increased substantially over last two decades
Economic Systems of the World:
1) Market Economy -private enterprise can own property andmontior the production ad disstrbution of goods adn services while the state simply supports competition and efficiatn practices
2) Command Economy- govt has explicit control over the price and supply of a good ro services
3) Mixed Economy - combo of market and command
Economic Performance: United States
- Foreign MNC’s find U.S. a lucrative expansion market
- Foreign firms welcomed as investors in U.S. market
- U.S. firms hold market dominance in many European markets; gaining market share in Asia
Economic Performance: Canada
- U.S.’s largest trading partner
- Most of the largest foreign-owned Canadian companies are totally or heavily U.S.-owned
- Legal and business environment in Canada is similar to that in U.S.
Economic Performance: Mexico
- Strongest Latin American economy
- Very strong maquiladora industry (materials and equipment can be imported on a duty and tariff-free basis for assembly or manuf and re-export mostly in Mexican border towns.)
- Trade with both Europe and Asia has increased
- Now competitive with Asia for the U.S. market