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Chapter 8

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alexisturnbull's version from 2016-01-18 18:23

Section

Question Answer
Multinational corporationOwns businesses in two or more countries
Direct foreign investmentCompany builds a new business or buys an existing business in a foreign country
Trade barriersGovernment-imposed regulations that increase the cost and restrict the number of imported goods
TariffDirect tax on imported goods
Non tariffNontax methods of increasing the cost or reducing the volume of imported goods
World Trade Organization (WTO)Deals with global rules of trade between nations
What does the WTO do?Ensures that trade flows as smoothly, predictably, and freely as possible
ExportingSelling domestically produced products to customers in foreign countries
Cooperative contractAgreement in which a foreign business owner pays a company a fee for the right to conduct that business in his or her country
LicensingAgreement in which a domestic company receives royalty payments for allowing another company to produce the licensor’s product, sell its service, or use its brand name in a specified foreign market
FranchisingCollection of networked firms in which the manufacturer licenses the entire business to another person or organization
Strategic alliancesAgreement in which companies combine key resources, costs, risks, technology, and people
Joint ventureTwo existing companies collaborate to form a third, independent company
Wholly owned affiliatesForeign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company
Global new venturesNew companies that are founded with an active global strategy and have sales, employees, and financing in different countries
Attractive global business climate characteristicsPositions the company for easy access to growing markets, Effective but cost-efficient place to build an office or manufacturing facility, and Minimizes the political risk to the company
Factors that determine the growth potential of foreign marketsPurchasing power and Foreign competitors
Qualitative factors for choosing an office locationWork force quality and company strategy
Quantitative factors for choosing an office locationTariff and non tariff barriers, exchange rates, transportation and labor costs
What does global business require firms to identify?political uncertainty and policy uncertainty
National cultureSet of shared values and beliefs
What does national culture effect?the perceptions, decisions, and behavior of people from a particular country
Consistent cultural dimensions across countriesPower distance, individualism, Masculinity, uncertainty avoidance, and Short-term versus long-term orientation
Chances for a successful international assignment can be increased throughLanguage and cross-cultural training and consideration of spouse, family, and dual-career issues
Global businessis the buying and selling of goods and services by people from different countries
Free-trade agreementscreate new business opportunities, and intensify competition
Forms of global business includeexporting, cooperative contracts, strategic alliances, wholly owned affiliates, and global new ventures
Global businessthe buying and selling of goods and services by people from different countries
Multinational corporationa corporation that owns businesses in two or more countries
Direct foreign investmenta method of investment in which a company builds a new business or buys an existing business in a foreign country
Trade barriersgovernment-imposed regulations that increase the cost and restrict the number of imported goods
Protectionisma government’s use of trade barriers to shield domestic companies and their workers from foreign competition
Quotaa limit on the number or volume of imported products
Voluntary exportrestraints voluntarily imposed limits on the number or volume of products exported to a particular country
Government import standarda standard ostensibly established to protect the health and safety of citizens but, in reality, is often used to restrict imports
Subsidiesgovernment loans, grants, and tax deferments given to domestic companies to protect them from foreign competition
Customs classificationa classification assigned to imported products by government officials that affects the size of the tariff and the imposition of import quotas
Global consistencywhen a multinational company has offices, manufacturing plants, and distribution facilities in different countries and runs them all using the same rules, guidelines, policies, and procedures
Local adaptationmodifying rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies
Licensingan agreement in which a domestic company, the licensor, receives royalty payments for allowing another company, the licensee, to produce the licensor’s product, sell its service, or use its brand name in a specified foreign market
Franchisea collection of networked firms in which the manufacturer or marketer of a product or service, the franchisor, licenses the entire business to another person or organization, the franchisee
Exportingselling domestically produced products to customers in foreign countries
Cooperative contractan agreement in which a foreign business owner pays a company a fee for the right to conduct that business in his or her country
Strategic alliancean agreement in which companies combine key resources, costs, risks, technology, and people
Joint venturea strategic alliance in which two existing companies collaborate to form a third, independent company
Wholly owned affiliatesforeign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company
Global new venturesnew companies that are founded with an active global strategy and have sales, employees, and financing in different countries
Purchasing powerthe relative cost of a standard set of goods and services in different countries
Political uncertaintythe risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events
Policy uncertaintythe risk associated with changes in laws and government policies that directly affect the way foreign companies conduct business
National culturethe set of shared values and beliefs that affects the perceptions, decisions, and behavior of the people from a particular country
Expatriatesomeone who lives and works outside his or her native country
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