Global Business, Trade Barriers, and Trade Agreements - Consistency or Adaptation - Forms for Global Business - Finding the Best Business Climate - Becoming Aware of Cultural Differences - Preparing for an International Assignment

Phases of Globalization

1. exporting 2. cooperative contracts 3. strategic alliances 4. wholly own affiliates

Southern Common Market (MERCOSUR)

A regional trade agreement among Argentina, Brazil, Paraguay and Uruguay, formed in March 1991.

A manager meets with an employee to explore their level of open-mindedness and cultural awareness during which activity? Cultural simulation Adaptability screening Documentary training Field simulation

Adaptability screening

Which of the following companies has high uncertainty avoidance?

At Sipria Insurance, little has changed since the 1960s. Few employees even know how to use e-mail, and most business is conducted by telephone or in person with a simple handshake. Since Sipria caters exclusively to older people who are less likely to use the Internet, its practices work well for the company.

government import standards

a standard ostensibly established to protect the health and safety of citizens but, in reality, is often used to restrict imports

joint venture

a strategic alliance in which two existing companies collaborate to form a third, independent company

General Agreement on Tariffs and Trade (GATT)

a worldwide trade agreement that reduced and eliminated tariffs, limited government subsidies, and established protections for intellectual property

Fung Kim Ping is a toymaker who lives in Guandong, China. She makes soft, squishy light-up ducks that delight her clients, including visitors from other countries. One of Kim Ping's best clients is Abdel Errihani, a businessman who owns several large toy stores in Morocco. Abdel is trying to persuade Kim Ping to develop an international business, starting in Marrakesh. Kim Ping is considering several strategies for going global, and she asks you for help in evaluating the pros and cons of each approach. First, Kim Ping wants to know how firms normally transition from being domestic to being global. Suppose Kim Ping and Abdel decide to set up a joint venture. Working together, the two companies will build a new, independent manufacturing facility in Morocco. What problems might Kim Ping and Abdel encounter with their joint venture? Check all that apply.

Because Kim Ping and Abdel must share their profits from the new venture, the profit available for each of them may be less. Kim Ping and Abdel may find themselves engaged in a power struggle as they determine how to run the new business.

Which of the following are examples of local adaptation? Check all that apply. Considering diverse income levels in pricing Buying materials from regional manufacturers Expecting customers to use the same technology Promoting a similar lifestyle across markets Creating personalized customer programs Selling a basic product line across all markets Hosting focus groups in all markets for feedback Requiring workers to follow strict processes Providing one warranty across all markets Allowing retailers to promote cultural values Expecting all markets to sell products similarly Hiring workers based on market expectations

Considering diverse income levels in pricing Buying materials from regional manufacturers Selling a basic product line across all markets Requiring workers to follow strict processes Allowing retailers to promote cultural values Hiring workers based on market expectations

An employee who is discussing and observing cultural differences with those who have lived abroad is involved in which experience? Adaptability screening Documentary training Field simulation Cultural simulation

Field simulation

government import standard

a standard ostensibly established to protect the health and safety of citizens but, in reality, is often used to restrict imports

A manager who is being evaluated to determine how likely they are to adjust to cross-cultural assignments is engaged in ______. adaptability screening field simulation cultural simulation documentary training

adaptability screening

licensing

an 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

cooperative contract

an 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 alliance

an agreement in which companies combine key resources, costs, risks, technology, and people

strategic alliances

an agreement in which companies combine key resources, costs, risks, technology, and people

regional trading zones

areas in which tariff and nontariff barriers on trade between countries are reduced or eliminated

Which of the following trade agreements includes the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua? CAFTA-DR UNASUR TFTA MERCOSUR

cafta-dr

How does a company minimize country risk by leveraging strategic business alliances? Avoidance Company strategy Nontariff barrier Cooperation

cooperation

Facilitating an event with _____ involves scenarios reflective of work, life, and social expectations of a different country. adaptability screening documentary training field simulation cultural simulation

cultural simulation

Learning by _____ involves practicing interpersonal activities through role-playing. documentary training adaptability screening cultural simulation field simulation

cultural simulation

A company should consider the quantitative factor of ________ when considering a location. policy uncertainty political uncertainty exchange rate company strategy

exchange rate

If a company transports its products to a foreign market for sale, which type of global business is being conducted? Joint venture Cooperative contract Exporting Strategic alliance

exporting

The General Agreement on Tariffs and Trade (GATT) substantially increased the number of tariffs imposed by member countries.

false

The term ________ refers to the values and beliefs of a society. collectivism national culture femininity short-term orientation

national culture

global new ventures

new companies that are founded with an active global strategy and have sales, employees, and financing in different countries

nontariff barriers

nontax methods of increasing the cost or reducing the volume of imported goods

French producers of foie gras (fattened duck or goose liver) worried about _____ when they heard of California's plans to enact a law banning the sale of the delicacy.

policy uncertainty

A ________ is created when a company builds its own facility in a foreign market. strategic alliance franchise wholly owned subsidiary joint venture

wholly owned subsidiary

How should a company determine if it will be able to access required technical skills for business operations? Exchange rate Purchasing power Company strategy Workforce quality

workforce quality

It is important for a company to assess the qualitative factor of ________ when considering a location. nontariff barrier exchange rate workforce quality building cost

workforce quality

A society that focuses on environmental sustainability for future generations demonstrates _______. national culture individualism long-term orientation masculinity

long term orientation

local adaption

modifying rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies

Which factor should a company evaluate to understand the risks associated with changes in country laws? Political uncertainty Nontariff barrier Company strategy Policy uncertainty

policy uncertainty

Which factor should a company evaluate to determine if consumers will purchase its goods? Nontariff barrier Company strategy Purchasing power Political change

purchasing power

Which of the following is a method of generating new revenue through global business? Gain diverse perspectives. Secure foreign investment. Access natural resources. Sell to new markets.

sell to new markets

exporting

selling domestically produced products to buyers in other countries

Which dimension describes a society that focuses on immediate gratification? Short-term orientation Collectivism Uncertainty avoidance Femininity

short-tern orientation

expatriate

someone who lives and works outside his or her native country

global business

the buying and selling of goods and services by people from different countries

The main reason for failure in overseas assignments is: the large expense of an overseas assignment. the difficulty of adjusting to language, cultural, and social differences. not enough time to prepare before the overseas assignment begins.

the difficulty of adjusting to language, cultural, and social differences.

purchasing power

the relative cost of a standard set of goods and services in different countries

policy uncertainty

the risk associated with changes in laws and government policies that directly affect the way foreign companies conduct business

political uncertainty

the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events

national culture

the set of shared values and beliefs that affects the perceptions, decisions, and behavior of the people from a particular country

World Trade Organization (WTO)

the successor to GATT; the only international organization dealing with the global rules of trade between nations; its main function is to ensure that trade flows as smoothly, predictably, and freely as possible

Countries that participate in free trade agreements typically have lower costs for consumer goods than countries that practice protectionism.

true

voluntary export restraints

voluntarily imposed limits on the number or volume of products exported to a particular country

global consistency

when 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

tariff

a direct tax on imported goods

quota

a limit on the number or volume of imported products

The World Trade Organization was founded as a result of the Maastricht Treaty.

false

Prior to departure on an overseas assignment, employees should receive language and cross-cultural training. For Alex's training, his company has sent him to the nearby Chinatown neighborhood to talk to residents there about cultural differences. This type of training is known as: field simulation. cultural simulation. documentary training.

field simulation.

wholly owned affiliates

foreign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company

A(n) ________ is arranged when a company sells its business model and operations to a local owner in a foreign market for a fee. wholly owned subsidiary joint venture franchise export

franchise

The advantage of _____ is that it standardizes policies and procedures across all of a company's locations, simplifying decision making.

global consistency

subsidies

government loans, grants, and tax deferments given to domestic companies to protect them from foreign competition

trade barriers

government-imposed regulations that increase the cost and restrict the number of imported goods

U.S. startup, MotorShoes, sells athletic shoes with wheels and a small motor that can allow the wearer to reach speeds of up to 10 miles per hour using a handheld remote control. Company founders think the shoes would sell well in big cities with large commuter bases. When searching for countries to expand sales to, the founders would want to identify countries with:

high purchasing power

Which trade barrier is created when a country places requirements on foreign products to protect consumers? Export restraint Quota Subsidy Import standard

import standard

Unilever produces single-use packets of soap and shampoo in emerging markets like Bangladesh, Pakistan, and Sri Lanka.

local adaption

Peter Metcalf describes Black Diamond as a company that does not operate in "the American way" but does adjust "to be something slightly different" in Europe and Asia due to cultural differences. This is an example of . At the same time, management has employees visit the Utah headquarters where they are "immersed" in the company's unifying culture. This is an example of .

local adaption;global consistency

Which preparation explores cross-cultural differences with foreign nationals located in the employee's home country? Field simulation Cultural simulation Adaptability screening Documentary training

Field simulation

franchise

a 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

multinational corporation

a corporation that owns businesses in two or more countries

tripartite free trade agreement

a regional trade agreement among twenty-seven African countries

Which of the following are examples of local adaptation? Check all that apply. Designing country-specific advertising in markets Selling customizable products across markets Using a unified operations model across markets Communicating the same message across markets Selling products only online across markets Asking for market input in product design Testing products with diverse consumer groups Hosting customer service in home country Allowing customers to pay in multiple currencies Selling through home country retailers Using retailer input for market merchandising Creating one pricing strategy across markets

Designing country-specific advertising in markets Selling customizable products across markets Asking for market input in product design Testing products with diverse consumer groups Allowing customers to pay in multiple currencies Using retailer input for market merchandising

Asia-Pacific Economic Cooperation (APEC)

a regional trade agreement between Australia, Canada, Chile, the People's Republic of China, Hong Kong, Japan, Mexico, New Zealand, Papua New Guinea, Peru, Russia, South Korea, Taiwan, the United States, and all the members of ASEAN except Cambodia, Laos, and Myanmar

Association of Southeast Asian Nations (ASEAN)

a regional trade agreement between Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam

Which of the following companies has long-term orientation?

Hikooki Flight is a Japanese plane manufacturing company. Mr. Hikooki is a planner, and he knows what the company will be doing 25 years from now. He is constantly reminding his employees about the importance of creating efficient and reliable products so that the company does not need to do rework. The owners of Personal Printing and Paper are both thrifty and patient. In their search for the highest quality paper, they actually established a cotton breeding research facility to create new and better types of cotton to be used in their products. Yes, it is going to take a while for them to see a payout on their investment, but it will be worth the wait.

Which of the following companies has high power distance?

In Allegra Systems, all of the managers wear suits and ties, while all of the employees wear casual dress. Managers are asked to speak first in every meeting, and employees rarely contradict what they say.

Thomas Hodel helps Black Diamond because he brings a European perspective to the U.S.-based business. When Thomas says, "It takes a long time to really figure out the differences in Europe," he is speaking of the difficulties managers can face in understanding the of different countries. Because Black Diamond manufactures and sells its outdoor sports products outside the United States, what should the company do to find attractive business climates for additional locations? Check all that apply.

Managers will want to find a country that is politically stable. Managers will want to look for a country that offers tax advantages to their company. Managers will need to find a country that has a growing market for the company's products.

In 2019, Black Diamond turned its last U.S. manufacturing facility into an assembly plant. All Black Diamond products will now be machined overseas, and simply put together in the U.S. Suppose the CEO of Black Diamond came to you and wanted to know the advantages of building new Black Diamond manufacturing facilities overseas. He is planning on making a direct investment in those facilities. What would you tell him?

Owning his overseas facilities will give him more control over how products are manufactured.

Which of the following companies has high femininity?

The fishermen in the small salmon fishing cooperative of Kodiak Island, off the coast of Alaska, routinely help each other by sharing information on where fish are biting, providing each other with materials for boat repairs, and sharing the profits from their catches. In addition, the fishermen on Kodiak Island donated almost 13,000 pounds of salmon to a nearby village with a 25% unemployment rate. Quality of life is important at Social Science Systems. All employees are eligible for child care, elder care, or pet care services, and employees can take as many vacation days as they need, as long as they get their work done. Employees regularly cooperate with each other to cover difficult or undesirable work shifts.

Which of the following are examples of global consistency? Check all that apply. Changing sales approaches by market Modifying business processes by market Using a home country distributor across markets Gaining economies of scale by standardization Considering the consumer as similar across markets Using different packaging across markets Selling one product line across multiple markets Using flexible procedures across markets Using a common language on marketing materials Providing a variety of product accessories Selling products based on home market preferences Creating multiple product lines based on culture

Using a home country distributor across markets Gaining economies of scale by standardization Considering the consumer as similar across markets Selling one product line across multiple markets Using a common language on marketing materials

custom classification

a classification assigned to imported products by government officials that affects the size of the tariff and the imposition of import quotas

multinational corporations

a corporation that owns businesses in two or more countries

proctectionism

a government's use of trade barriers to shield domestic companies and their workers from foreign competition

quotas

a limit on the number or volume or imported products

direct foreign investment

a method of investment in which a company builds a new business or buys an existing business in a foreign country

apec

a regional trade agreement among Australia, Canada, Chile, the People's Republic of China, Hong Kong, Japan, Mexico, New Zealand, Papua New Guinea, Peru, Russia, South Korea, Taiwan, the United States, and all the members of ASEAN except Cambodia, Lao PDR, and Myanmar

asean

a regional trade agreement among Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam

Dominican Republic-Central America Free Trade Agreement (CAFTA-DR)

a regional trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States

cafta-dr

a regional trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States

Maastricht Treaty of Europe

a regional trade agreement among most European countries

United States-Mexico-Canada Agreement (USMCA)

a regional trade agreement among the United States, Canada, and Mexico

usmca

a regional trade agreement among the United States, Canada, and Mexico

mercosur

a regional trade agreement among the primary countries of Argentina, Brazil, Paraguay, and Uruguay, with associated countries, Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Surinam