Lesson 6 Flashcards
Global Economy
Is making the diverse countries of the world increasingly interdependent regarding resource supplies, product markets and business competition
What is globalization
Process of growing interdependence among the components of the global economy
What is World 3.0
A world where nations cooperate in the global economy while still respecting different national characters, cultures, and interests
What is Global Management
It involves managing operations in more than one country
What is a Global manager
A manager who is informed about International Development Trans-national in outlook
What are the reasons why businesses go global
- Profits
- Customers
- Suppliers
- Labour
- Capital
- Risk
International Businesses:
Conducting for-profit transactions of goods and services across national boundaries
Types of Market entry strategies:
- Global Sourcing
- Exporting and importing
- Licensing agreement
- Franchising
Direct Investment Strategies:
- Joint Ventures
- Foreign Subsidiaries
Market entry strategies:
Involves the sale of goods or services to foreign markets but
do not require expensive investments
Joint Ventures:
Operate in a foreign country through co-ownership by foreign and local partners
Foreign subsidiaries
Local operation completely owned by a foreign firm
Foreign Direct Investments (FDIs):
Involves setting up and/or buying all or part of a business in another country
What does Insourcing refer to
Local job creation that results from foreign direct investment
Political risk
Potential loss in value or control of a foreign investment due to instability and political changes in the host country
Political risk Analysis
Forecast political disruptions that threaten the security of a foreign investment
World Trade Organization (WTO) deals with issues about:
- Tariffs as trade barriers
- Non-tariff barriers: e.g., protectionism
- Most favored nation (MFN) status (often means lowest tariffs, the fewest trade barriers and import
restrictions, and the highest import quotas)
Transnational corporation
A global corporation that operates worldwide on a borderless basis without being ID to one national home
Mutual benefits for host country and MNC
- Shared growth opportunities
- Shared income opportunities
- Shared learning opportunities
- Shared development opportunities
Ethical challenge: Corruption
Illegal practices that further one’s business interests
Ethical challenge: Corruption of foreign public officials act (CFPOA)
Makes it illegal for Canadian firms and their representatives to engage in corrupt practice overseas
Ethical challenge: Conflict Minerals
Gains sale of minerals used to help finance armed violence
Ethical challenge: Child Labour
Employment of children for work otherwise done by adults
Ethical challenge: Sweatshops
Business operations that employ workers at low wages for long hours and in poor working conditions
The Uppsala Model:
- Firms change by learning from their experience of operations, current activities in foreign markets
- Firms change through the commitment decisions that they make to strengthen their positions in the foreign market
