Business Chapter 3 Doing Business in Global Markets
Important reasons to do business globally
There are over 7.1 Billion potential customers in the 194 countries that make up the global market. U.S Consumers seek the best value whether in the U.S. or other countries
Which of the following are functions of the world trade organization?
To mediate trade disputes among nations To oversee cross-border trade issues
The benefits of creating a joint venture when doing business internationally include
access to restricted local markets shared marketing expertise shared technology
a common Market
also known as trading bloc is a regional group of countries with a common external tariff, no internal trariffs, and coordinated laws to facilitate exchange amoung members
Revenue Tariffs
are designed to raise money for the government
Foreign direct investment (FDI)
buying of permanent property and business in foreign nations
Importing
buying products from another country
Small and medium-sized firms are often better prepared to leap into global markets because they
can react quickly to opportunities
The Foreign Corrupt Practices Act of 1978 prohibits ------- payments to foreign officals to secure business catracts.
dubious questionable
walmart has retail stores in China, and staples has retail stores in Australia. these are examples of U.S companies
engaged in the global market
One drawback of an interantional ___________ ____________is that one partner can learn the other's technology and business practices and then use what it has learned to its own advantage.
joint venture
Legal & regulatory forces can create problems in the global market because
laws and regulations vary greatly between countries
Absolute advantage
the advantage that exists when a country has a monopoly on producing a specific product
Balance of payments
the difference between money coming into a country and money leaving the country plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment
Outsourcing
the process whereby one firm contracts with other companies often in different countries,to do some or all of its functions
Dumping
the selling of products in a foreign country at lower prices than those charged in the producing country
Balance of Trade
the total value of a nations exports compared to its imports measured over a particular period
Exchange Rate
the value of one nation's currency relative to the currencies of other countries
Franchising
A contractual agreement whereby someone with a good idea for a business sells others the rights to use a business name and sell a product or service in a given territory in a specified manner.
Contract Manufacturing
A foreign company produces private-label goods to which a domestic company then attaches its own brand name or trademark.
Import Quota
A limit on the number of products in certain categories that a nation can import
Tariff
A tax imposed on imports
Which of the following is an advantage of offshore outsourcing?
Companies can create efficiencies by paying low wages to employees.
Culture
refers to the set of values, beliefs, rules, lanuage, and institutions held by a specific group of people.
Embargo
A complete ban on the import/export of a certain product or the stopping of all trade with a particular country
Benefits of exporting
Increased sales and revenues Increased number of potential customers
Which of the following statements regarding offshore outsourcing is TRUE?
It allows companies to focus on areas in which they can grow
Strategies For Reaching Global Markets risk and commitment
Least Licensing Exporting Franchising Most Contract manufacturing Invernational joint ventures and strategic alliances Foreign direct investment
Which of the following are considered major hurdles to successful global trade?
Legal and regulatory forces and economic and financial forces
________ is the process in which one company contracts with companies in other countries (primarily low-wage global markets) to do some or all of its functions
Offshore outsourcing
Exporting
Selling of products to another country
Free trade
When goods and services can be traded freely across borders without political and/or economic barriers
. Which of the following statements is a good prediction of future occurrences in global markets?
With the strong growth in technical talent globally, offshore outsourcing will likely continue to increase
Foreign Subsidiary
a company owned in a foreign country by another company called the parent company
Licensing
a global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty)
Strategic Alliance
a long term partnership betweeen two or more compaines established to help each company build competitive market advantages
Joint Venture
a partnership in which two or more companies, often from different countries, join to undertake a major project.
devaluation
lowering the value of a nation's currency relative to other currencies
For a Firm to be considered a multinational corporation it must have
manufactures and markets products in many different countries and has multinational stock
Disadvantages of international joint ventures
may become too large and inflexible shared technology may become obsolete
A weak transportation infrastructure results in a __________ barrier to global business
physical
Trade_________ is the use of government regulations to limit the import of goods and services such as import tariffs and quotas
protectionism
Primary Function of protective tariffs
to raise the price of imported products so that domestic goods are more competitively priced
Since 1975 the united states has bought more goods from other nations thatn it has sold resulting in a
trade deficit
Trade Surplus (favorable balance of trade)
when the value of a country's exports exceeds that of its imports