Globalization: Markets, Production, and Challenges
Political Risk
The risk of adverse political events or actions that can impact business operations
Inflation rate
The rate at which the general level of prices for goods and services is rising
Foreign Corrupt Practices Act (FCPA)
A US law that prohibits bribing foreign officials
China
A country transitioning from a centrally planned economy to a state capitalist market economy
Gini coefficient
A measure of income inequality within a country
PPP (Purchasing Power Parity)
A measurement of the relative purchasing power of different currencies
Currency Crisis
A rapid and unintended depreciation of a country's currency
State Capitalism
An economic system in which the government plays a large role in the economy and supports key industries
Technological progress
Advancements in technology that enable globalization
Developed Countries
Countries with high per capita GDP, advanced technologies, and good infrastructure
Emerging Markets
Countries with intermediate per capita GDP, growing middle class, and transitioning economies
Developing Countries
Countries with low per capita GDP, outdated technology, and poor infrastructure
Globalization of markets
Expanding markets beyond national boundaries to sell to multiple countries
Globalization of competition
Increased competition among companies from different countries
Interdependent
Mutually reliant on each other
Services
Non-tangible economic activities, such as healthcare and entertainment
Facilitating Payments
Payments made to facilitate routine governmental actions
Globalization of production
Producing goods and services in different countries to take advantage of best and/or cheapest inputs
Culture
The collective programming of the mind that distinguishes one human group from another
Transportation costs
The cost of moving goods from one place to another
Communication costs
The cost of transmitting information from one place to another
Individualism vs. Collectivism
The degree to which individuals prioritize their own goals versus the goals of the group
Communication Styles
The different ways in which people communicate, including direct and indirect styles
Power Distance
The extent to which a society accepts and expects power to be distributed unequally
Uncertainty Avoidance
The extent to which a society is comfortable with ambiguity and uncertainty
Time Orientation
The extent to which a society values and prioritizes time
Political/Legal Environment
The laws, regulations, and political stability of a country that affect business operations
Unemployment rate
The percentage of the labor force that is unemployed and actively seeking employment
Gross National Income (GNI)
The total income earned by a country's residents, including income from abroad
Gross National Product (GNP)
The total market value of all goods and services produced by the residents of a country, regardless of location
Gross Domestic Product (GDP)
The total market value of all goods and services produced within a nation's borders in a year
Value of exposed goods as share of GDP
The value of goods traded internationally as a percentage of a country's GDP
Globalization
The widening and deepening of interdependent relationships among people from different nations
Bilateral Investment Treaties (BITs)
Treaties between two countries that regulate and protect foreign investments
Currency Hedging
Using financial instruments to protect against unfavorable currency fluctuations