MGT 302 Ch. 1

The changing nature of the multinational enterprise

- MNE: productive activities in 2 or more countries. - 2 notable trends in the demographics of the multinational enterprise have been... 1. the rise of non- U.S. multinationals 2. the growth of mini-multinationals

Declining Trade and Investment Barriers

- Many barriers to international trade took the form of high tariffs on imports of manufactured goods. - Goal of high tariffs to protect domestic industries from foreign competition. - After WW2, barriers were reduced.

The Changing World output and world trade picture

- US share of world output is declining. Many economies especially in Asia are growing at a faster rate. - US share of total exports has declined. Now behind China. - Many developing countries are now increasing their shares of world output.

The Changing Foreign Direct Investment Picture

- barriers opened to develop a more free-flow of goods so non U.S. firms increasingly began to invest across national borders.

Stock of FDI

- the total accumulated value of foreign-owned assets at a given time

Multinational Enterprise (MNE)

A firm that owns business operations in more than one country

Communications

Development of the microprocessor to help how much info can be processed and how fast it is processed.

Group of twenty (G20)

Finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank

Factors of production

Inputs in to the productive process of a firm, including labor, management, land, capital, and technological know-how

World bank

International institution set up by 44 nations in order to promote general economic development in the world's poorer nations, through investments in infrastructure and other initiatives

United Nations

International organization made up of 193 countries, headquartered in New York City, formed in 1945 to promote peace, security and cooperation

General Agreement on Tariffs and Trade (GATT)

International treaty that committed signatories to lowering barriers to the free flow of goods across national borders and let to the WTO.

International Monetary Fund (IMF)

Often referred to as the lender of last resort, the International Monetary Fund was set up to maintain order in the international monetary system.

World Trade Organization (WTO)

The organization that succeeded GATT as a result of the successful completion of the Uruguay Round of GATT negotiations

Moore's Law

The power of microprocessor technology doubles and its costs of production fall in half every 18 months.

International Business

any firm that engages in international trade or investment.

Globalization of production

decrease costs - trend by individual firms to disperse parts of their productive processes to different locations around the globe to take advantage of differences in cost and quality of factors of production.

Foreign Direct Investment (FDI)

direct investment in business operations in a foreign country

The internet

has emerged as an equalizer, and also makes it easy for buyers/ sellers to expand their global presence at a lower cost.

Globalization of Markets

increase revenue - merging of historically distinct and separate national markets into one huge global marketplace. - Moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into one global market.

International trade

process by which a firm exports goods or services to consumers in another country

The Changing World Order

the collapse of communism in eastern Europe, economic development in china, free market reforms and democracy in latin America. - series of democratic revolutions swept the communist world between 1989 and 1991. - Switched to democracy and free-market economies.

Transportation technology

the most important developments are probably development of commercial jet aircraft and super freighters and the introduction of containerization, which greatly simplifies trans-shipment from one mode of transport to another

Globalization

trend away from distinct national economic units and toward one huge global market