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Unit 2 - Global D080
Managing in a Global Business Environment
| Term | Definition |
|---|---|
| driver of globalization - technology | social media platforms |
| driver of globalization - transportation | commercial air travel |
| driver of globalization - connection | cultural trends |
| driver of globalization - not a driver | wealth inequity |
| economic globalization | refers to the international movement of goods, capital, and services |
| 5 stages of becoming a global company | market entry, product specialization, value chain disaggregation, value chain reengineering, creation of new markets |
| Stage 1 - market entry | companies enter new countries |
| Stage 2 - product specialization | full production to a single, low-cost location |
| Stage 3 - value chain disaggregation | complete each activity in the most advantageous location |
| Stage 4 - value chain reengineering | companies seek further cost savings, substituting lower cost labor for capital |
| Stage 5 - creation of new markets | market expansion |
| 4 industry globalization drivers | market opportunities, cost, competition, government support |
| market opportunities | opportunity for scale + convergence of needs |
| cost | economies of scale and scope + exploiting cost of factors of production |
| competition | new markets + increased levels of trade |
| government support | favorable policies + support for industry |
| economies of scale | A proportionate savings in costs gained by an increased level of production |
| scope | To develop efficiencies in terms of variety not volume |
| financial instrument | A monetary contract between parties |
| multinational firms | A large corporation incorporated in one country which produces or sells goods or services in various countries |
| challenges of global expansion | ethical business practices, organizational structure, public relations, leadership, legal and regulatory structure ( |
| challenges in developing and less-developed countries | infrastructure, technology |
| Multinational organizations | can be businesses, governmental agencies, and NGOs |
| CAGE framework | culture, administration, geography, economics |
| human capital | The education and skills of workers |
| Globalization 1.0 | This is the least desirable level of globalization to deal with due to a lack of transportation and technology options. |
| Globalization 2.0 | This stage of globalization leads to more access to delivering goods on a worldwide platform due to advances in transportation. |
| Globalization 3.0 | This is the most desirable level of globalization due to advances in technology and communication, making global interactions and transactions smoother. |
| economics | Which factor is an element of a CAGE analysis when assessing barriers to cross-border activity? |
| economics | Which factor of CAGE addresses differences in country size that affect barriers to globalization? |
| Gini coefficient | Measures the inequality among values of a frequency distribution such as levels of income |
| Happy Planet Index | Measures how well nations are doing at achieving long, happy, sustainable lives |
| It increases the wealth of the rich rather than the poor | Which argument is used by critics who wish to discourage movement towards globalization? |
| Political systems | Monarchy, Oligarchy, Dictatorship, Democracy |
| Monarchy | A single person rules until he or she dies or abdicates the throne + Power can vary by type: absolute, constitutional, or a mix of both. |
| Oligarchy | A small, elite group holds power + Status not achieved through noble ancestry |
| Dictatorship | A single person (or a very small group of people) holds power + Wields complete and absolute authority over a government and population |
| Democracy | Citizens organize political parties and elect leaders + Leaders power organized through constitution and term limits |
| Examples of Monarchy | Constitutional: Canada, Great Britain, Japan + Absolute: Saudi Arabia, Qatar |
| Examples of Oligarchy | Russia, Venezuela , China |
| Examples of Dictatorship | North Korea, Cuba |
| Examples of Democracy | United States |
| Anarchism | Individuals control political activities, and the government has no control over these activities |
| Democracy | The government provides a country’s citizens the freedom and rights to vote for political leaders |
| Oligarchy | A small, elite group of people hold the power |
| Dictatorship | A centralized government creates oppressive policies based on ideas from powerful leadership |
| Restrictions on freedom of speech | Which accommodation should an American multinational company make to conduct business in China? |
| gross domestic product (GDP) | The total value of goods and services provided in a country in a one-year period |
| gross national product (GNP) | The total value of goods and services provided by a country, both inside and outside of its borders, in a one-year period |
| gross domestic product (GDP) + gross national product (GNP) | These two measures, which are calculated slightly differently, total the market value of the goods and services a country produce |
| Command Economy Examples | North Korea, China, Cuba, Russia |
| Market Economy Examples | France, Canada, United States |
| Market Economy | Which type of economy is decentralized and allows firms and households to participate in global trade with minimum governmental interference? |
| Command economic system | This system’s property is publicly owned, and the government controls economic production |
| Market economic system | This system’s production is controlled by private owners who can choose to participate in global trade |
| Mixed economic system | This system protects private property and is driven by self-interest, and the government can intervene in the market as needed |
| Civil law | Which type of legal system is based on a code and focuses on how the law is applied to the facts? |
| Common law | Which law is based on tradition and precedent given that judicial rulings can stand as precedents for future cases? |
| Customary law | Which legal system can vary from community to community and is found in countries without strong formal justice systems? |
| economic globalization | is the globalization of production, sales, and finance activities in international markets around the world |
| competition drivers | are about entering new markets to beat competitors |
| civil law | is applied in continental Europe. Germany uses a civil law system |
| World Bank | Encourages developing countries to borrow for development projects |
| World Bank | Developmental institution |
| World Bank | Financed reconstruction after wars in the 1940s. It is now focused on supporting developing countries |
| World Bank | Large: 40 offices, over 10,000 staff |
| World Bank | Investment bank owned by the governments of the 180 member nations |
| World Bank | Borrows and loans |
| World Bank | Borrowers must meet requirements to qualify for loans |
| International Monetary Fund | Oversees the international monetary system |
| International Monetary Fund | Cooperative institution |
| International Monetary Fund | In phase one, prior to 1973, regulated international exchange rates In phase two, post-1973, provides a means for effective international currency exchange, supervises economic policies, and provides financial assistance to members |
| International Monetary Fund | Small: 2,300 staff members |
| International Monetary Fund | Resources come from quota subscriptions or membership fees |
| International Monetary Fund | Acts more like a credit union |
| International Monetary Fund | Loans to all member nations |
| Similarities between the IMF and World Bank | owned and directed by the governments of member nations, almost every country on earth is a member of both institutions, both concern themselves with economic issues, headquartered in Washington DC, hold joint annual meetings, share joint task forces |
| Which activity of the International Monetary Fund (IMF) impacts policymaking? | Being owned and directed by the governments of the member nations |
| What is a characteristic of the International Monetary Fund (IMF)? | The IMF is a cooperative institution and provides more effective currency exchange. |
| What was the initial purpose of the International Monetary Fund (IMF) in phase one, prior to 1973? | Regulated currency exchange between nations |
| privatization | Selling government holdings to private companies |
| deregulation | The removal of regulations or restrictions in a particular industry |
| How does the International Monetary Fund (IMF) impact international organizations and governments? | It reduces funding for social programs |
| debt instruments | A tool used by a company or any other entity to raise money or capital |
| AAA ratings | The highest possible rating that may be assigned by a credit rating agency for a bond |
| World Bank | has one of the highest AAA ratings because its debt instruments are backed up by member countries |
| World Bank | is a common name for the International Bank for Reconstruction and Development? |
| What was the first loan that the World Bank made after the end of World War II? | to France to rebuild its infrastructure |
| Which criticism is associated with the World Bank? | The developed countries such as the U.S. and Europe have too much control over its decisions. |
| Which criticism is made about the World Bank? | It does not consider how funding projects will affect the environment. |
| General Agreement on Tariffs and Trade (GATT) | GATT eventually evolved into the World Trade Organization (WTO) |
| The Functions of the WTO | oversee agreements, transparency of trade policy, assist developing nations, provide outreach, settle disputes, ensure non-discrimination |
| Most-favored-nation (MFN) status | if a country grants another country (even a non-WTO member) a special favor, then every other WTO member must get the same treatment |
| TRIPS (Trade-Related Aspects of Intellectual Property Rights) A WTO agreement that governs all IP laws and protects intellectual property rights for global businesses. | A WTO agreement that governs all IP laws and protects intellectual property rights for global businesses. |
| commodities | A raw material or primary agricultural product that can be bought or sold |
| What was one of the results of the Uruguay Round of the World Trade Organization negotiations? | Decrease in tariffs |
| Which strategic network was established to work towards decreasing tariff rates and protecting commerce and intellectual property globally? | World Trade Organization (WTO) |
| Which organization was formed after World War II to encourage international commerce? | World Trade Organization (WTO) |
| Which criticism is made about the World Trade Organization (WTO)? | It protects developed countries more than developing countries. |
| embargos | An order of a government prohibiting the departure of commercial ships from its ports |
| mercantilism | One of the earliest economic theories, which stated that a country's wealth was determined by the amount of gold and silver they had in their possession |
| trade surplus | When the value of a country's exports is greater than the value of goods being imported |
| protectionism | The theory or practice of protecting a country's domestic industries from foreign competition by taxing imports |
| government subsidies | Money paid by the government to help an organization or industry reduce its costs |
| Types of trade barriers | tariffs (import tariffs, export tariffs, protective tariffs, revenue tariffs, specific tariffs, ad valorem tariffs, compound tariffs), quota (absolute quota, tariff-rate quota), VER, other limits |
| Free trade | International trade left to its natural course without tariffs, quotas, or other restrictions |
Created by:
drister05
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