Global Business WGU Study Guide Answers

What is an enterprise resource planning system (ERP)?

Enterprise Resource Planning Systems (ERP)- refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations.

List different economic systems and differentiate. How does each economic system impact business operation and economic production?

Traditional Economy: Centered around a family, everyone consumes the same goods, relies on bartering, no surplus. Command (Planned) Economy: Controlled by the ruling class, all resources are owned by the government. Market Economy: The market controls the distribution of resources, no government control. Mixed Economy: The market is the major determining power, partial government regulation as needed.

What are the considerations for locating and relocating production facilities? List and explain the factors in location decisions. List and explain the factors in relocation decisions.

Determinants in Location decisions: Value-to-weight ratio - think of weight in terms of transportation costs. We want to minimize shipping costs, both for raw material, coming into the plant and for finished goods, going out. Companies often locate plans, close to suppliers, customers, or both to make the most efficient decisions based on the value-to-weight ratio of products. Products with high value weight ratio, justify lower transportation costs. Conversely, lower value-to-weight ratio indicates high shipping costs. Such businesses need to build up production facilities and multiple locations to avoid expensive shipping. Factor conditions: labor, land, capital, technology - Heckscher-Ohlin Theory (Factor Proportions Theory). Multinationals tend to locate in areas with ample numbers of workers with necessary levels of skill, education or experience. Companies can benefit from being in an area that have become hubs for certain industries or processes because of the access to pools of experienced workers. This is one of the ways that host countries can make themselves attractive to multinationals, to invest in human capital development. Fixed costs and minimum efficient scale (MES) - Multinationals tend to choose locations with fixed costs--like land, construction, utilities and taxes-- are low. Building an area with lower fixed cost, reduces the amount of investment needed and lowers the break-even threshold for a venture. Community, culture and public attitudes- Companies and managers wants to locate where they would want to live, where they find it pleasant. So, they need to consider quality of life issues, such as culture, climate, schools, crime in the area. We have country factors, so cultural factors of different countries also come into play because differences in cultural norms can create problems in communication and work styles that affect productivity. Stability-- economic, social, and political-- is also critical... plays a critical role for companies to examine when, considering locating to a particular country. So, these are all country factors that we have. Business environment: companies seek locations with a favorable business environment. Financial (tax breaks, exchange rate volatility) - Local governments might offer financial incentives such as tax breaks to incentivize them to do business in their locales. And then we have market impressions. There can be negative press and customer reactions when a company decides to move production overseas. Negative publicity can have a lasting impression of branding and revenues. Determinants of Relocation decisions: Growth - companies search for high growth areas for manufacturing. Emerging economies have significantly higher rates of growth than mature economies. This is due to large scale capital investments in low wage and low cost economies. An example is the automotive industry has been challenged by low growth, sales and declining margins in mature markets such as in the United States, in Europe and Canada. Government incentives - Countries sometimes offer special incentives to attract companies. Malaysia, for example, established a multimedia Super Corridor which offers tax breaks desirable facilities and modern infrastructure to companies. And in a similar way. China has special economic zones, or SEZs, that promote international, high quality standards. Additionally, government provision of other factors such as uninterrupted power supply and connections to transportation infrastructure play an important role. The poorest countries can, of course, provide developed or modern infrastructure to multinationals by taking out a long term, low interest loan with the World Bank. Costs - Reducing cost is a powerful driver in a manufacturing relocation. The opportunity to lower material costs is considered marginally more important than labor or capital costs. There are other cost drivers such as government incentives, local and regional interest rates and trade policy. Here's an example, the Trade War between the United States and China that started in 2018 is an example of how government actions affect manufacturers and trigger the need to relocate to avoid punitive tariffs. In this case, having to deal with cost. For example, we have, BMW previously assembled and exported most of its SUVs worldwide from its plant in Spartan Burg, South Carolina. ⦁ Raw materials, partially processed commodities, component parts ⦁ Wages ⦁ Trade agreements and trade barriers Innovation - Alright, the importance of innovation is increasing as a global economy. Global business activities continue to shift eastward. We have the great case study of Procter and Gamble establishing a low cost diaper manufacturing facility in Vietnam. Procter and Gamble utilized the very, very low cost labor in Vietnam, incorporated that with low tech manufacturing techniques.

Define and differentiate backward vertical FDI and forward vertical FDI?

Backward vertical FDI: when a firm brings the goods or components back to its home country (i.e., acting as a supplier). Forward vertical FDI: when a firm sells the goods or components in the local or regional market (i.e. acting as a distributor).

List different political systems and differentiate them. How does each political system impact business operation?

Communism: Classless society. Goods are distributed equally among citizens. All factors of production are owned by the government. Socialism: represented by some European countries. Government controls some industries but not all. Strong labor union usually is seen in socialism economic ideology. Capitalism: Government minimizes the role in the economy. Private ownership of business is observed.

What are the criticisms on the IMF? Elaborate on each of them.

Conditionality causes the citizens of the borrowing country to pay a heavy price in the short-run. Requiring borrowing countries to make structural adjustment such as privatization or deregulation can make conditions worse in a struggling country. IMF policies are significantly impacted by rich countries. Imbalance of voting power—poorer countries are underrepresented. IMF's projects might hurt environmental quality.

Define Corporate Social Responsibility. What is the goal of the CSR?

Corporate social responsibility (CSR) is the ethical role of a corporation in a society. The aim of corporate social responsibility, or CSR, is to increase long term profits and shareholder trust through positive public relations and high ethical standards. The purpose of corporate social responsibility is to give back to the community, take part in philanthropic causes, and provide positive social value. Businesses are increasingly turning to CSR to make a difference and build a positive brand around their company.

What are the IMF's major functions, goals, and conditionalities?

Initial Goal: restore the international payment system, stabilize exchange rates, foster trade, and correct the BOP issue (correct temporary trade imbalances with short-term loans). Surveillance: Oversee international monetary and financial system. Guide member countries to develop economic policies, provide technical assistance in banking, oversee fiscal affairs and exchange rate stability. Voting: Based on a quota system. The Special Drawing Right—international monetary reserve asset

How can verbal language and body language cause issues in business communication? Use examples to illustrate.

Language—same meaning might be expressed in different ways. Arabic speakers, for example, have only one word for ice while Inuit people have multiple words describing types of snow and quality of snow. Body Language- Body language can significantly increase your chances of understanding of being understood. It is essential to understand body language in order to accurately interpret a situation, comments or gesture.

How does culture influence staffing strategies and performance evaluation?

Make sure to include a description of the advantages and disadvantages of the three HR strategies. Ethnocentric: Same HR policy across different countries. Use expatriates for management positions. Leadership roles and key positions that are filled by expatriates from the home country. Polycentric: Each subsidiary controls its own HR policy. The focus is on each subsidiary as an autonomous business. Leadership roles and key positions of staff by local professionals who can immediately be effective without the adjustment period needed for someone new to the culture. This approach is used when the company values efficiency and respects the talents and education of the host country's workforce. So, when you take a polycentric approach, you don't have to worry about the different types of cultural training. Because the entire personnel group is from that culture. You can guess something like franchising would be somewhat polycentric. Geocentric: Integrated worldwide HR system. Use whoever is the best fit for the position. the parent company and subsidiaries work together to create an integrated worldwide HR system and allows for differences but share resources across the organization. Leadership positions are filled by the best employees worldwide, based on a meritocracy, rather than nationality. There is more fluid movement among employees, which creates diversity in the workforce. This approach is used when the company prioritizes quality and talent, regardless of its origin. I think Coca Cola is a pretty good example of this geocentric approach. •Managing workforce and Hiring considerations: • Expatriates failure • Cultural training • Repatriation • Performance evaluations - It is important for global managers to incorporate cultural differences when developing ways to evaluate employees performances in various countries. For example, evaluations conducted in individualistic cultures, involves the manager and the individual employee, while in collectivist culture, it involves the manager and the group-- that is the entire group or team is evaluated not individuals. We see something called 360-degree evaluations in low power cultures. This is where the manager evaluates and scores an employee's performance, and then the employee evaluates and scores the manager's performance. • Compensation issues—Balance sheet approach. Is one possible way to pay. This approach pays a similar base salary company wide or region wide and offers expatriates an allowance and adjustments based on specific market conditions in each country. The first is the cost of benefits in another country. For instance, many countries, offer universal healthcare, and these are offset by higher taxes. And, therefore, the employee would have health benefits covered while working and paying taxes in that country, Canada, Finland and Japan are examples. The next one would be legally mandated, or culturally accepted amounts of vacation days. For example, we have paid vacation days ranging from five in the Philippines to thirty in Finland. We have legal requirements of profit sharing, for example, in France, the government heavily regulates profit sharing programs. So, if you compensate your employees with stock options, you want to be aware of this. Pay systems that work with the countries cultures, such as something based on seniority. For example, Chinese culture focuses heavily on seniority and pay scales should be developed accordingly. Then we have the thirteen months bonus structure and expected, or sometimes mandated, annual lump sum payments. So, you have to adjust your payroll practices for that.

What are the 4 drivers of globalization?

Market: opportunity for scale and scope and convergence of needs. Cost: economies of scale and scope, exploiting cost of factors of production. Competition: new markets, increased levels of trade. Government: favorable policies, support for industry.

What are the arguments for and against globalization from country's perspective?

Some argue that globalization is a positive development as it will give rise to new industries and more jobs in developing countries. Others say globalization is negative in that it will force poorer countries of the world to do whatever the big, developed countries tell them to do.

Why are protections needed for whistleblowers?

Whistleblowers are protected from retaliation for disclosing information that the employee or applicant reasonably believes provides evidence of a violation of any law, rule, regulation, gross mismanagement, gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety.

The reasons for insourcing are

1. Insourcing protects your intellectual property Insourcing IT solutions is often done to protect your intellectual property. The goal is to maintain the capabilities within your in-house staff regarding key technologies or products you develop. So many companies have found this out the hard way by outsourcing key development work on to realize it forms a key differentiator to their customers. 2. Faster speed of execution when work is done in-house Another one of the insourcing advantages is speed of delivery. You can more rapidly develop systems/solutions in-house using your own staff who are keenly aware of the business requirements for your product. By outsourcing this work you end up having to set out highly detailed use cases, specifications, business requirements, test procedures, etc. All of which and to cost and time required (and will have been second nature to your in-house staff). 3. Better monetary cost savings in the long-term You might think that outsourcing work is going to save you money. Insourcing jobs results in more financial outlay on a day-to-day basis for individual salaries - on the face of it. However, outsourcing work invariably results in a greater need for documentation, more rework, more need for testing and more micro-management which adds to your increasing costs over time. 4. Reduced cultural differences Cultural differences can often result in confusion and a lack of certainty about deliverables and expectations. Good management procedures can effectively manage this if they are conscientious of these cultural differences. However insourcing benefits from the fact that you have a single cultural mindset at work in all development, testing, sales, marketing, etc. so can work from the same set of principles. 5. Your management requirements decrease When comparing insourcing versus outsourcing, your senior executives often miss out on the additional needs for managing your subcontractors. If the corresponding outsourcers have a good management system then this may not be extensive. However, one of the insourcing advantages is the ability for your management teams to have greater control over the productivity and effectiveness of team members, something which is often lost with outsourcing. 6. You can be more certain of skill levels The simple fact is that insourcing jobs allows you to hire and train up employees to the levels you would expect. When dealing with outsource companies you often have little control over team setups (outside of your service level agreements). 7. You have more control over attrition of staff Insourcing companies often realize that a high level of attrition (losing staff members) may be due to key problems with the project or management levels. With this visibility you can start implementing changes to improve the situation. Once this work is outsourced then you have reduced supply chain visibility and less insights into why staff are leaving and changing so frequently in your outsourced teams. 8. You can insource more complex systems/solutions By the time you have explained your systems, completed analysis, testing, integration and re-factoring when dealing with outsource companies, you could well have delivered the same solution using in-house staff. One of the main insourcing outsourcing dilemmas comes back to how complex the body of work is. The more complex the system is the more likely insourcing will be able to deliver it on budget, on time and to a higher level of quality. The strange thing is that the business requirements just need to be sufficiently novel for outsourcers not to 'grasp' it. So, the level of complexity could actually be quite basic (i.e. not that complex to your internal staff). You always need to do more explaining and end up experiencing more rework when outsourcing complex systems.

Define AUP

An acceptable use policy, acceptable usage policy or fair use policy, is a set of rules applied by the owner, creator or administrator of a network, website, or service, that restrict the ways in which the network, website or system may be used and sets guidelines as to how it should be used.

What is culture? Describe each of Hofstede's six cultural dimensions with respect to global business. (Pay attention to the applications).

Culture is the beliefs, values, mind-sets, behavior pattern, norms, and practices of a group of people. Power distance—Hierarchies-Power distance refers to how a society, a culture, accepts or does not accept differences between people as in hierarchies in the workplace, in politics and so on. For example, high power distance cultures openly accept that the boss is a superior or a higher up and, as such, deserves more formal respect and authority. High powered distance cultures are found in Russia, Malaysia, Slovakia, Japan, Mexico and the Philippines. In lower power distance cultures on the other hand, superiors and subordinates are more likely to see each other as equal in power. In Sweden, Norway and Israel, subordinates and managers alike often have the power to speak their minds. Individualistic vs Collectivist- an individualistic society refers, or individualism refers, to people's tendencies to take care of themselves and their immediate circle of family and friends, perhaps even at the expense of the overall society. In individualistic cultures what counts most is self realization. In individualistic cultures, competition is the fuel for success. Examples of individualistic societies include the United States, Australia and United Kingdom. In collectivist societies, group goals take precedence over individual goals. Basically, individual members render loyalty to the group, and the group takes care of its individual members Rather than giving priority to "me" the "us" identity predominance. Of paramount importance is pursuing the common goals, beliefs and values of the group as a whole. Cultures that value collectivism and the group over the individual includes Singapore, Korea, Mexico and the Arab nations. Masculinity vs Femininity - This is how society views traits that are considered masculine or feminine respectively. Traditionally perceived "masculine" values include such things as assertiveness, materialism, less concern for others. In masculine oriented cultures, men tend to be more focused on performance, ambition and material success. They are tough, whereas women cultivate modesty and quality of life. Cultures, such as we find in Japan and Latin America are examples of masculine oriented cultures. By contrast, feminine cultures are thought to empathize. The Scandinavian cultures rank as feminine cultures as do cultures in Switzerland and New Zealand and the United States is ranked in the middle between masculine and feminine classifications. Uncertainty avoidance - how much uncertainty a society or culture is willing to accept. it's high risk propensity. High uncertainty avoidance cultures prefer to avoid conflict and competition. They tend to appreciate very clear instructions, Japan and France are examples. In countries with low uncertainty of avoidance, people are more willing to take on risks, companies may appear less formal, unstructured, and thinking outside the box is valued. Examples of these cultures of lower uncertainty avoidance are Denmark, Singapore, Australia, and, to a slightly lesser extent, the United States. Members of these cultures usually require less formal rules to interact. Long-term vs Short-term orientation - Long-term oriented orientation cultures value persistence and perseverance, thriftiness, and having a sense of shame. These are evident in traditional Eastern cultures. Short term orientation cultures are more likely to be focused on the immediate or short term effect of an issue. Examples include the United Kingdom and United States. Indulgence vs Restraint - This refers to the degree of freedom that societal norms give to citizens in fulfilling their human desires. Indulgence is defined as a society that allows relatively free gratification of basic natural human desires related to enjoying life, and having fun. Restraint is defined as a society that controls gratification of needs and regulates it by means of strict social norms.

Define and differentiate discrepancies and irregularities.

Discrepancies - unintentional errors. Irregularities - intentional fraudulent misrepresentation.

What is specialization? Use a scenario to show the relationship between specialization, economies of scale and production efficiency in international trade. (Hint: you can use a 2 country, 2 products scenario)

Specialization is a method of production whereby an entity focuses on the production of a limited scope of goods to gain a greater degree of efficiency. This specialization is thus the basis of global trade, as few countries have enough production capacity to be completely self-sustaining. Economies of scale is Globalization enables large companies to realize economies of scale that reduce costs and prices, which in turn supports further economic growth. However, this can hurt many small businesses attempting to compete domestically. Production efficiency is an economic term describing a level in which an economy or entity can no longer produce additional amounts of a good without lowering the production level of another product.

Define GDPR and its features

The General Data Protection Regulation 2016/679 is a regulation in EU law on data protection and privacy in the European Union and the European Economic Area. It also addresses the transfer of personal data outside the EU and EEA areas.

Identify features of each major real-world regional integration bloc and differentiate them.

The Central America Free Trade Agreement (CAFTA-DR) - these blocs include the Central American Trade Agreement, or CAFTA-D.R, which was passed in 2005. Besides the United States, CAFTA-D.R includes Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. The goal of the agreement is the creation of a free trade area, much similar to that of NAFTA. This agreement is unusual because of the inequality in economic size between the United States, on one hand, and the other nations in the regional economic bloc. Specifically, the combined gross domestic product of the five Central American countries and the Dominican Republic is approximately one half of one percent of the gross domestic product of the United States. The Caribbean Community and Common Market (CARICOM) - was formed in 1973 by countries in the Caribbean with the intent of creating a single market with the free flow of goods, service, labor and investment. The CARICOM is composed of 15 member states. The Andean Community - called the Andean Pact until 1996. This is a free trade agreement signed in 1969 among Bolivia, Chile, Colombia, Ecuador and Peru. Eventually, Chile left while Venezuela joined for about 20 years and left in 2006. The Gulf Cooperation Council (GCC) - also known as the Cooperation Council for the Arab States of the Gulf, was created in 1981 as a political and economic organization. The group focuses on trade and economic as well as social issues. The GCC formed a common market in 2008, thus allowing free flow of trade, investment and workers across member states. The Africa Economic Community (AEC) - It was signed in 1991 and implemented in 1994. It provides for a staged integration of the various regional economic agreements around Africa. The AEC is composed of the community of Sahal Saharan states or CEN-SAD, the community market for Eastern and Southern Africa or COMESA, the Eastern African Community, or EAC, the Economic Community of Central African States, or ECCAS, the Economic Community of West African States or ECOWAS, the Intergovernment or Authority on Development or IGAD, the Southern African Development Community or SADC, and the Arab Maghreb Union or AMU. The Asia-Pacific Economic Cooperation (APEC) - founded in 1989 by 12 countries as an informal forum. APEC is the only regional trading group that uses the term "member economies" rather than countries in deference to China. Focused primarily on economic growth and cooperation. The regional group has had success in liberalizing or promoting free trade, as well as facilitating business, economic and technical cooperation among member economies. North American Free Trade Area (NAFTA): Free trade area: abolition of tariffs and quotas among members. Members pursue independent trade policies with non-members. Went into effect on January 1, 1994. Canada is United States' second largest trade partner (Mexico is 3rd) Objectives: Expand trade through elimination of barriers, Protect intellectual property rights, Create institutions to address potential problems to protect labor rights and environmental quality. **The United States-Mexico-Canada Agreement may replace NAFTA in the future. Mercado Comun del Sur (MERCOSUR): Customs Union: members share common external tariffs with non-members. Treaty of Asuncion in 1991 lead to creating the Southern Cone Common Market (MERCOSUR) Brazil, Paraguay, Uruguay, Argentina, Venezuela. Association of South East Asian Nations (ASEAN): Founded in 1967. Essentially a common market. 2 main objectives: Accelerate economic growth, social progress, and cultural development in the region. Promote regional peace and stability through the rule of law in relationship among countries in the region. ASEAN's most important trading partner is China. Signed free trade agreements with Australia-NZ, India. European Union (EU): Economic Union. Established in 1951. Headquartered in Belgium. Standardized product and labeling. Eliminate border controls. Establish unified policies for energy. Eurozone: EU members that adopted the euro as their official currency. The European Central Bank sets monetary policy for the Eurozone.

What is WIPO's major functions?

WIPO's two main objectives are (i) to promote the protection of intellectual property worldwide; and (ii) to ensure administrative cooperation among the intellectual property Unions established by the treaties that WIPO administers.

How to prevent discrepancies and irregularities?

You can prevent discrepancies and irregularities by: Maintain a record of stocks and their locations. Always place similar stocks together. Establish adequate procedures and properly train staff. Record all stock movements. Continuously investigate other causes of discrepancies. Use a system of checks and balances to ensure no one person has control over all parts of a financial transaction. Reconcile agency bank accounts every month. Restrict use of agency credit cards and verify all charges made to credit cards or accounts to ensure they were business-related.

Identify examples of unethical practices in business operation.

Your answer should include grease payment, kickback, fraudulent accounting practices, etc. Odebrecht - a Brazilian construction firm involved in the building of multiple projects. In 2014. The company had paid kickbacks to politicians across Latin America to secure lucrative contracts. British East India Company - This is the famed Boston Tea Party victim, so to speak, was founded in the sixteen hundreds as one of the world's first limited liability corporations. The main ethical violation here is bribery. They forced bribery from the Indian principality when they had an exclusive charter the East Indies or today, modern day India given to them by the Queen of England. So they had control of the Indian subcontinent. They were able to squeeze out bribes from the princes and kings of various kingdoms in India. Parmalat - was founded in 1961, grew into a multinational conglomerate. In 2003. it became public that Parmalat had been reporting positive and growing earnings every year while actually losing money. The company partook in double billing, using receivables from fake sales as collateral, for collateral to borrow, creating fake assets, hiding debts from investors, and colluding with third party auditors and bankers to finance the fraud. Banana Republics - United Fruit Company. It cultivated bananas in Central and South America. Under the guise of economic development, the company set up so-called banana republics and areas where it exerted their monopoly power and prevented any development that conflicted with company profits, such as the construction of government roads. We have bribery, which is commonly considered the practice in which an individual would benefit from little or no benefit to the company. Kickbacks, a payment made to someone who has facilitated a transaction or appointment, especially illicitly. Cronyism, the appointment of friends and associates to a position of authority without proper regard to the qualifications. Nepotism, the practice among those with power to influence or favoring relatives or friends, especially by giving them jobs. Creative accounting, the exploitation of loopholes in financial regulation in order to gain advantage or present figures in a misleadingly favorable light. Earnings management is the use of accounting techniques to produce financial statements that present the overly positive view of a company's business activities and financial position. We have misleading financial analysis: financial analysis of an organization is misleading when it is used to misrepresent the organization, the situation or its prospects. We have insider trading. This is the illegal practice of trading on the stock market--stock exchange---to one's owns advantage through having access to confidential information. We have securities fraud, which is a type of white collar crime. It's serious. That can be committed in a variety of forms but primarily involves misrepresenting information investors used to make decisions. Finally, we have facilitation payments. Payments made to officials with the intention of expediting an administrative process. The payment is meant to smooth the process of a service that the payer is legally entitled to. Grease payments are paid in order to expedite a deal or transaction. A grease payment is not intended to make a business deal happen. It merely makes it happen faster.

Define contract.

Contracts are legally enforced promises. (Verbal or written)

What is business ethic? Why business ethic is important to global businesses?

(Hint: discuss from ethical consumerism perspective) Business ethics and ethical consumerism (Morals involve right versus wrong. Ethics, on the other hand, talks about a good thing to do vs a not a good thing to do.) Business ethics describes how an organization will make decisions that are sustainable that will always or would be how organization makes decisions that are sustainable and good things to do, so to speak. Businesses that are perceived at valuing ethical actions more than the bottom line are gaining favor with the buying public. Consumers, especially those in North America, are likely to vote with their wallets against companies whose social and environmental performance is poor. Ethical consumerism is a form of political activism based on the premise that purchasers in markets consume not only goods but also, implicitly, the process used to produce them. From the point of view of ethical consumerism, consumption is a political act that sanctions the values embodied in a product's manufacture. Far from being a purely abstract or decorative document, a code of ethics or code of conduct establishes an identity for the group. When entering a foreign market, establishing a code of ethics can build a positive international image that results in better business practices and profits.

How does supply chain management improve customer value?

A customer value oriented supply chain management is able to produce competitive cost and time advantages, as well as solving problems in convergence, coordination and information sharing during the creation and transfer of value, by implementing resource sharing and collaboration between members in the supply chain.

What is quota? List and explain the types of quota.

A quota is a government-imposed trade restriction that limits the number or monetary value of goods that a country can import or export during a particular period. Countries use quotas in international trade to help regulate the volume of trade between them and other countries. There are two types of quotas: absolute and tariff -rate. Absolute quotas are quotas that limit the amount of a specific good that may enter a country. Tariff-rate quotas allow a quantity of a good to be imported under a lower duty rate; any amount above this is subject to a higher duty.

What is an organizational structure?

An organizational structure is the formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organizational goals. It allows for activities based upon a division of labor by departmentalization, standardization, and specialization of functions and tasks. It facilitates coordination and integration of activities through hierarchical supervision, formal rules and procedures, and training and socialization. It sets the organization's boundaries and regulates its contacts with its environment and with other organizations.

What are the challenges expatriates might encounter?

Challenge #1: Fitting in. As an expatriate moving abroad, there is a big chance that you are leaving an extensive social & professional network back home. Challenge #2: A language barrier. Challenge #3: Being lonely. Challenge #4: Finances & money management. Challenge #5: Healthcare.

How do international corporate tax brackets influence global business decisions?

Corporate tax brackets vary from country to country. A lot of countries use a flat-rate system. Indirect Taxes- taxes that can be passed on to another entity or individual. They are usually imposed on a manufacturer or supplier who then passes on the tax to the consumer. The most common example of an indirect tax is the excise tax on cigarettes and alcohol. Value-added Tax (VAT)- is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed. Goods & Services Tax (GST)- is a tax on goods and services sold domestically for consumption. The tax is included in the final price and paid by consumers at point of sale and passed to the government by the seller. The GST is a common tax used by the majority of countries globally.

What are the economic, political, and cultural effects of globalization? Elaborate on each of the aspect.

Economic effect-Trade, Investment, Information technology. Trade is a type of economic globalization and a measure of economic integration. On a national scale, it loosely represents the proportion of all production that crosses the boundaries of a country, as well as the number of jobs in that country dependent upon external trade. Investment is all invested capital in the world that is owned by non-nationals. Information technology has become the driving force within the current economy. Every business function and form of communication is handled through a constantly changing IT environment. Political effect-Reduce the importance of nation-states. Nation states is a state in which a great majority shares the same culture and is conscious of it. The nation state is an ideal in which cultural boundaries match up with political boundaries. Some countries that don't like political integration might create isolation policy. NGOs are non-governmental organizations. NGOs are a subgroup of organizations founded by citizens, which include clubs and associations that provide services to their members and others. Cultural effect-Transmission of ideas, meanings, and values around the world.

Compare the entry speed, cost level and risk level for all entry strategies. (Hint: check the summary table in the textbook)

Exporting: Advantages: Fast entry, low risk. Disadvantages: Low control, low local knowledge, potential negative environmental impact of transportation. Licensing and Franchising: Advantages: Fast entry, low cost, low risk. Disadvantages: Less control, licensee may become a competitor, legal and regulatory environment (IP and contract law) must be sound. Strategic Alliance: Advantages: Shared resources to gain more market share. Disadvantages: Very vulnerable relationship - because any one entity could exit at any time. International Joint Venture: Advantages: Shared costs reduce investment needed, reduced risk, seen as local entity. Disadvantages: Higher cost than exporting, licensing, or franchising; integration problems between two corporate cultures. Acquisition: Advantages: Fast entry; known, established operations. Disadvantages: High cost, integration issues with home office. Subsidiary (Greenfield Venture): Advantages: Gain local market knowledge; can be seen as insider who employs locals; maximum control. Disadvantages: High cost, high risk due to unknowns, slow entry due to setup time.

What are the benefits and costs of global expansion from MNCs' perspective?

For global companies, often referred to as multinational corporations (MNCs), common benefits of expanding into developing markets include unsaturated demand for new products, lower labor costs, less expensive natural resources, and other inputs to products. Larger market and advanced technologies are other benefits. Challenges of Global Expansion from company's perspective include Ethical business practice concerns, Organizational structure, Public relations, Leadership, Legal and regulatory structure.

Define greenfield and brownfield FDIs. Give an example for each.

Greenfield FDIs: when multinational corporations enter into host countries to build new facilities where none previously existed. Coca-Cola, McDonald's and Starbucks are great examples of US firms that have invested in greenfield projects around the world. Brownfield FDI: when multinational corporations enter into host countries by purchasing or leasing existing facilities. For example, a company that makes hammers may buy a factory that previously made screwdrivers in order to expand their hammer-making operations.

Identify the reasoning behind strengthening and weakening currency

How does it impact international trade? A strengthening U.S. dollar means that it now buys more of the other currency than it did before. A weakening U.S. dollar is the opposite - the U.S. dollar has fallen in value compared to the other currency - resulting in fewer U.S dollars being exchanged for the stronger currency. Exchange rate movements affect exporters, tourists, and international investors in different ways. For a U.S. firm selling abroad, a stronger U.S. dollar is a curse. A strong U.S. dollar means that foreign currencies are correspondingly weak. In this way, a stronger currency reduces a country's exports. When the value of a currency falls, so that a currency trades for less of other currencies. Exchange rate movements affect exporters and tourists.

What are the sources of financing investment used by large companies?

Large companies/Traditional Funding (Shared Stockholders): Cash-is legal tender—currency or coins—that can be used to exchange goods, debt, or services. Sometimes it also includes the value of assets that can be easily converted into cash immediately, as reported by a company. Loans- a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient incurs a debt and is usually liable to pay interest on that debt until it is repaid as well as to repay the principal amount borrowed. Bonds- a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include municipal bonds and corporate bonds. Bonds can be in mutual funds or can be in private investing where a person would give a loan to a company or the government. Equity (shares)- are long-term financing sources for any company. Investors in such shares hold the right to vote, share profits and claim assets of a company. The value in case of equity shares can be expressed in various terms like par value, face value, book value and so on.

Define and compare Centralized VS. Decentralized decision-making methods. List advantages and disadvantages for each.

Multinational Corporations (MNC)- company that operates in two or more countries, leveraging the global environment to enter new markets to increase revenue Decision making in MNC: Centralized - only the top managers make decisions. Lower-level managers execute the directives Ex.: Military. In-efficient decision making. Consistency. Decentralized - decision-making is pushed down to the managers who are the closest to the work or client. Flexibility to meet local needs. Inconsistent decision making.

Define multinational companies. Identify benefits of being a multinational company. Identify impacts of multinational companies.

Multinational companies are corporations that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located. Benefits: multinationals can often overcome trade problems. Ability to sidestep regulatory problems. Shift production from one plant to another as market conditions change. Tap new technology from around the world. Save a lot in labor costs. Disadvantages: Laws - One of the major disadvantage is the strict and stringent laws applicable in the country. MNCs are subject to more laws and regulations than other companies. It is seen that certain countries do not allow companies to run its operations as it has been doing in other countries, which results in a conflict within the country and results in problems in the organization. Intellectual Property - Multinational companies also face issues pertaining to the intellectual property that is not always applicable in case of purely domestic firms. Political Risks - As the operations of the MNCs is wide spread across national boundaries of several countries they may result in a threat to the economic and political sovereignty of host countries. Loss to Local Businesses - MNCs products sometimes lead to the killing of the domestic company operations. The MNCs establishes their monopoly in the country where they operate thus killing the local businesses which exists in the country. Loss of Natural Resources - MNCs use natural resources of the home country in order to make huge profit which results in the depletion of the resources thus causing a loss of natural resources for the economy. Money flows - As MNCs operate in different countries a large sum of money flows to foreign countries as payment towards profit which results in less efficiency for the host country where the MNCs operations are based. Transfer of capital takes place from the home country to the foreign ground which is unfavorable for the economy.

What are the pros and cons of hiring expatriates?

PROS: They uphold same practices. When you relocate your employees to international location, you can save up on time to train them about the company's rules and regulations. They have better knowledge. They are motivated. CONS: They are expensive. They have high burnout rate. It can seem problematic and risky.

Define and compare portfolio investment and foreign direct investment.

Portfolio Investment involves purchasing stocks in a foreign business. The portfolio investor is eligible to receive dividend payments, participate in all decisions, usually by voting at shareholder meetings and sell the stock at any time for a profit or loss here. The intent of the investor is not management of control over the company's day to day operation. Foreign direct investment (FDI) is primarily a long-term strategy, which involves investment in or the acquisition of foreign assets with the intent to control and manage.

⦁ What are the 5 stages of entering a global market?

Stage 1 - Market Entry: the business needs to enter into a foreign market. Stage 2 - Product Specialization: the company is able to find a single location where it can move the entire production of a single product to that location and reduce the production cost. Stage 2 is really cost driven. Stage 3 - Value Chain Disaggregation: we separate all of those steps in the entire production process. Look at where is the most advantageous location for each single component to further decrease our production cost. Stage 3 is also cost driven. They would produce things that are very light like mouses or keyboards so that we can ship them around without having to spend too much if they were heavy. Stage 4 - Value Chain Reengineering: the company could change its production method. This stage is something we can do to reduce the costs even further. Stage 5 - Creation of New Markets: now the company can create more demand on their product because the sticker price would be much lower than before because of this cost reduction.

What are the 3 marketing strategies to enter a foreign market?

Standardization: Used in international markets by a firm that are the same as those used in its domestic market. Adaptation: Used in international markets by a firm that are different from those used in its domestic market. Glocalization: Involves pursuing a standardization strategy in foreign markets when possible and an adaptive one when necessary.

How is supercomputer applied in business operation?

Supercomputers- is a computer with a high level of performance as compared to a general-purpose computer. The performance of a supercomputer is commonly measured in floating-point operations per second instead of million instructions per second. Since 2017, there are supercomputers which can perform over 10¹⁷ FLOPS.

How does tariff impact import prices, quantity of imported product, consumers, domestic businesses, and the government?

Tariffs increase the prices of imported goods. Because of this, domestic producers are not forced to reduce their prices from increased competition, and domestic consumers are left paying higher prices as a result.

Define National Environmental Protection Act. What is the major function of NEPA?

The National Environmental Policy Act is a United States environmental law that promotes the enhancement of the environment and established the President's Council on Environmental Quality. The law was enacted on January 1, 1970. The stated purposes of NEPA are: To declare a national policy which will encourage productive and enjoyable harmony between man and his environment; to promote efforts which will prevent or eliminate damage to the environment and biosphere and stimulate the health and welfare of man; to enrich the understanding of the ecological systems and natural resources important to the Nation; and to establish a Council on Environmental Quality.

How is expatriate's compensation package determined in global business?

The main compensation items for expatriates involve base pay, cost-of-living adjustments, housing allowances, home leave, education assistance for dependents and premium pay.

Define supply and demand of a currency.

The supply of a currency is determined by the domestic demand for imports from abroad. The more it imports the greater the supply of pounds onto the foreign exchange market. A large proportion of short-term trade in currencies is by dealers who work for financial institutions. Demand is the measure of how much of a particular commodity people want at any one time. Demand for a currency has the opposite effect on the value of a currency than does supply. As the demand for a currency increases, the currency becomes more valuable.

What are the 3 production processes? Define and differentiate.

Three common types of manufacturing production processes are: make to stock (MTS), make to order (MTO), and make to assemble (MTA). The make-to-stock (MTS) strategy is a traditional production strategy that is based on demand forecasts. It is best utilized when there is a predictable demand for a product, such as for toys and apparel at Christmastime. The make-to-order (MTO) strategy (also known as "built to order") allows customers to order products built to their specifications, which is especially useful with heavily customized products. Examples of make-to-order products include computers and computer products, automobiles, heavy equipment, and other big-ticket items. The make-to-assemble (MTA) strategy is a hybrid of MTS and MTO in that companies stock basic parts based on demand predictions, but do not assemble them until customers place their order. The advantage of such a strategy is that it allows fast customization of products based on customer demand.

What is internal control?

What are the functions of internal control system? Internal Controls are the redundancies added to a system to make certain that it functions properly. The primary purpose of internal controls is to help safeguard an organization and further its objectives. Internal controls function to minimize risks and protect assets, ensure accuracy of records, promote operational efficiency, and encourage adherence to policies, rules, regulations, and laws.

What are the trends in global business adoption, use and growth in technology?

3-D printing- also known as additive manufacturing, is a manufacturing process where a 3D printer creates three-dimensional objects by depositing materials layer by layer in accordance to the object's 3D digital model. Artificial intelligence (AI)-refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. The term may also be applied to any machine that exhibits traits associated with a human mind such as learning and problem-solving. BOTS (Internet robots)- is a software application that runs automated tasks over the Internet. Typically, bots perform tasks that are simple and repetitive, much faster than a person could. Augmented and virtual reality- Augmented reality is an interactive experience of a real-world environment where the objects that reside in the real world are enhanced by computer-generated perceptual information, sometimes across multiple sensory modalities, including visual, auditory, haptic, somatosensory, and olfactory. Virtual reality is a simulated experience that can be similar to or completely different from the real world. Applications of virtual reality can include entertainment and educational purposes. Cybersecurity- Computer security, cybersecurity or information technology security is the protection of computer systems and networks from the theft of or damage to their hardware, software, or electronic data, as well as from the disruption or misdirection of the services they provide.

List and Elaborate on the benefits and costs of regional economic integration.

: Trade agreements create more opportunities for countries to trade with one another by removing the barriers to trade and investment. Due to a reduction or removal of tariffs, cooperation results in lower prices for consumers in the bloc countries. Production moves to the members of the trading bloc, which have a comparative advantage and therefore are more efficient in production. May significantly contribute to the relatively high growth rates in less-developed countries. By removing restrictions on the labor movement, economic integration can help expand job opportunities. May also facilitate closer political cooperation and promote peace. Costs: Essentially, regional agreements have formed new trade barriers with countries outside of the trading bloc, which could mean weaker companies within the bloc can be protected inadvertently. Countries may move production to cheaper labor markets in member countries. Member nations may lose their political and economic independence. An emphasis on internal trade and the exclusion of external countries decreases the possibility of global free trade. Countries may see their national cultural identity reduced. Regional integration may encourage mergers and acquisitions within the block to create large rivals.

Define monopoly and explain how monopoly hurt consumers. How is the Antitrust Law implemented in the U.S.?

A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity. This contrasts with a monopsony which relates to a single entity's control of a market to purchase a good or service, and with oligopoly and duopoly which consists of a few sellers dominating a market. Monopolies create inflation. Since they can set any prices they want, they will raise costs for consumers. It's called cost-push inflation. Antitrust laws are aimed at protecting the market from anticompetitive practices, particularly from large companies that may hold a monopoly. Consumers are vulnerable when there is little market competition because businesses can control prices. The FTC's competition mission is to enforce the rules of the competitive marketplace — the antitrust laws. These laws promote vigorous competition and protect consumers from anticompetitive mergers and business practices. In the United States, antitrust law is a collection of federal and state government laws that regulate the conduct and organization of business corporations and are generally intended to promote competition for the benefit of consumers.

What opportunities to businesses are brought by globalization?

Access to New Cultures, The Spread of Technology and Innovation, Lower Costs for Products, Higher Standards of Living Across the Globe, Access to New Markets, Access to New Talent, International Recruiting, Managing Employee Immigration.

What are the reasons for insourcing and outsourcing? What are the risks of outsourcing? Explain the advantages of outsourcing. Describe the risks associated with outsourcing and explain the reasons for insourcing.

Advantages of Outsourcing: Lower costs - For example, third party suppliers are more likely to capture economies of scale than internal organization. Just think about this, a bakery outsourcing flour. Buying it from a flour producer or flour mill, that flour mill can achieve economies of scale by mass production of flour. Also offshoring typically offers significant infrastructure and labor cost advantages over traditional outsourcing. Greater flexibility - If one supplier is having issues and increases the price of flour, the bakery has the flexibility to find another supplier. Enhanced expertise- Some suppliers may have proprietary access to technology or other intellectual property advantages that an integrated company might not be able to access by itself. Greater discipline- Separation of purchasers and providers can assist with transparency and accountability in identifying the true costs and benefits of certain activities. Focus on core activities- outsourcing can allow companies to concentrate on those activities in which the company has the capability and scale, experience, or differentiation to yield economic results or economic benefits. In other words. A company can maximize total value and allows others to produce supportive goods and services. Risks associated with outsourcing: Loss of control- Companies can experience loss of control over their own processes, process technologies and quality standards when specific processes or services are outsourced. So, you don't get to see the component parts. You don't get to monitor the performance and the quality as it's going through the production process, because that's being conducted in a separate company. Loss of innovation- You have loss of innovation when certain support services--such as information, technology, software development, or materials management --are outsourced innovation maybe impaired. Loss of organization trust- So, this is going to affect the psychological make up of the remaining employees in the company. Higher than expected transaction costs- These are costs that are decision relevant, but not part of the accounting system. So, it's not one of those fixed cost variable cost things. It is one of the most important considerations in the make-or-buy decision, and when we talk about that we mean, should we insource versus outsource . So that is synonymous: the make-or-buy decision is the same as the decision to insource versus outsource.

Define expatriates, third country nationals, and host country nationals.

An expatriate is an individual living and/or working in a country other than his or her country of citizenship, often temporarily and for work reasons. An expatriate can also be an individual who has relinquished citizenship in their home country to become a citizen of another. Third Country National is a term often used in the context of migration, referring to individuals who are in transit and/or applying for visas in countries that are not their country of origin, in order to go to a destination country that is likewise not their country of origin. A host-country national (HCN) is an employee who is a citizen of a country in which an organization's branch or plant is located, but the organization is headquartered in another country. An impediment to hiring HCNs is that such employees may not understand the parent company's culture.

What is Child Online Privacy Act? How is it applied in business world?

Children's Online Privacy Protection Act (COPPA)- 1998. The primary goal of COPPA is to place parents in control over what information is collected from their young children online. The Rule was designed to protect children under age 13, while accounting for the dynamic nature of the Internet.

⦁ List different legal systems and differentiate

Civil Law—The judge applies law code, rarely uses the jury. Applied in Continental Europe and Latin and Central American countries. Common Law—The judge interprets the law, uses the jury to determine facts. Applied in the U.S., UK, Wales, Australia, Canada, etc. Religious law—based on religious guidelines. Islamic law is widely applied in middle-eastern countries and Southeast Asian countries. Talmudic Law, Cannon Law, Customary Law, etc

How does quota impact import prices, quantity of imported product, consumers, and domestic businesses?

Consumers: It's a negative impact on customers. Why? Because the price has gone up. Nobody likes to pay a higher price. Domestic business: is not referring to the importers. They're going to be getting protection. Why? The price has gone up. As a seller, they get more revenue, and they will have an incentive to produce more and sell more. That's why we say that the use of tariff would help those industries generate more jobs. Because they need to hire more workers to produce more T shirts now to make more money. Government: it's going to be a benefit. Tariff is a tax. So that's a tax revenue that the government could get. If the government sells the quote license to different importers, that's going to be a revenue for the government as well.

How does culture impact business ethic standard? Explain and give examples.

Culture - The sum of attitudes, values, goals, and practices shared by individuals in a group, organization, or society. Culture impacts how local values influence the concept of global business ethics. Each professional is influenced by the values, social programming, and experiences he or she has absorbed since childhood. These collective factors impact how a person perceives an issue and the related correct or incorrect behavior. Culture reflects the moral and ethical beliefs and standards that speak to how people should behave and interact with others. These normative beliefs, together with related cultural values and rituals, impose a sense of order and control on aspects of life that might otherwise appear chaotic or unpredictable. Western cultures are primarily rule-based, while most of the world's cultures are relationship-based. Westerners tend to trust the system, whereas non-Westerners are cemented by personal honor, familial duty and friendship. In much of the world, cronyism is a foundation for trust, and may therefore present no conflict of interest.

What is a data management system? How does it improve working efficiency?

Database Management Systems (DBMS)- is a software package designed to define, manipulate, retrieve, and manage data in a database. A DBMS generally manipulates the data itself, the data format, field names, record structure and file structure. It also defines rules to validate and manipulate this data. Proper database management systems help increase organizational accessibility to data, which in turn helps the end users share the data quickly and effectively across the organization. A management system helps get quick solutions to database queries, thus making data access faster and more accurate.

Define horizontal FDI and vertical FDI. Give an example for each.

Horizontal FDI: when a company is trying to open a new market—a retailer, for example, that builds a store in a new country to sell to the local market. Vertical FDI: when a company invests internationally to provide input into its core operations—usually in its home country. For example, Toyota assembles cars in both the United States and China. Vertical foreign direct investment occurs when a multinational decides to acquire or build an operation that either fulfills the role of a supplier (backward vertical FDI) or the role of a distributor (forward vertical FDI).

What are the advantages and disadvantages of different distribution strategies? Structure your answer in terms of comparing the indirect strategy to the direct strategy.

Direct Distribution Strategy: Selling directly to customers without any intermediaries. Advantages: Control - you maintain control of the product marketing and costs in a shorter channel, which means a product reaches the customer faster. Less costly in long term Stronger connection with customers Disadvantages: More expensive in short term. It's more expensive in the beginning, because it requires capital investment to set up facilities and hire staff. Difficult to manage on a large scale Shipping and government restrictions Requires own logistics team and transportation. Indirect Distribution Strategy: strategy that used one or more intermediaries between producer and customer. Advantages - NO upfront costs. Contact with many customers Marketing expertise Shipping and handling capabilities Loans to producer Disadvantages: Loss of control Profits shared with intermediaries. You must trust the intermediaries to represent your brand and interact with customers. Intermediaries may develop a sense of ownership over your products. The more intermediaries you have between the producer and the consumer, it means that the more the producer has to share profits all the way down with more middle or intermediaries. Increased complexity leads to more risk.

⦁ What are the WTO's major functions, rules, rounds of negotiations, and criticisms?

Encourages international trade through the lowering of trade barriers, Expanded through successive negotiations called "rounds", A forum for negotiations to reduce tariff and non-tariff barriers to trade, The Uraguay Round—reduced tariff significantly. It also covers IP rights protection (TRIPS: Trade Related Intellectual Property Rights Protection agreement). The Uruguay Round lasted from 1986-1994. It was conducted under GATT which is kind of like an international organization or agreement that promotes free international trade before the WTO was formed. The Doha Round-inconclusive till the present. Why? Doha Round really focuses on the agriculture products. In Doha Round there are two arguments. The developing nations have been arguing that those developed nations, I'm emphasizing that the United States, the European Union, and Japan have been providing subsidies to their farmers so that these farmers can sell those agricultural products, in international market at a very low price. Oversees trade agreements and facilitates disputes between member countries. MFN status rule—Most favored nation status rule. This basically says that one country cannot discriminate the trading partners. Basically, it says it has to be a fair trade. You cannot discriminate your trade partners. You cannot use free trade when trading with Mexico but then you say twenty percent tariff.

Identify the reasons and strategies that governments promote FDI.

Expand their domestic economy, attract new technologies, business knowledge, and capital. An inflow of capital can benefit both the global and host country economy. Increased jobs and reduced poverty. Improved human capital development. Increased tax revenues. Invested capital goes to businesses with the highest potential for growth. Companies can maximize revenue by expanding their consumer base. Companies can minimize costs through cheaper resources and lower wages. Investors can decrease their risk by diversifying. Investing capital in firms can lead to growth and subsequently increased jobs. Financial incentives: provide a combination of insurance, loans, and tax breaks. Improve or enhance local infrastructure. By reducing bureaucracy and regulatory requirements. Human capital development: improve their workforce through education and job training. Reduce uncertainty: reassure businesses that the local operating conditions are stable, transparent (i.e., policies are clearly stated and in the public domain), and unlikely to change.

What are the various strategies and associated risks for entering foreign markets?

Explain the risks and rewards associated with exporting, franchising, licensing, strategic alliance, joint ventures, acquisition and wholly owned subsidiaries. Entry Strategies: Export-Import (Lowest risk). Easy, can be done over the internet. Competition is generally keen, and the profit margins may not be high. Low control, low local knowledge, potential negative environmental impact of transportation. Licensing: a company or individual provides the foreign partner with the necessary means (patented technology, copyright, process, trademark, etc.) to manufacture and sell its products in the target country for an annual license fee. No upfront cost. Need strong regulatory environment (IP and contract law) to make sure licensing agreement can be enforced. Franchising: obligates the parent firm to provide specialized equipment and/or services to the franchisee (e.g., product specification and adaptation, pricing, promotion, and distribution strategies), and sometimes to fund some startup costs. The franchisee pays an annual fee, which is generally based upon sales generated and seed money provided for the venture. Strategic Alliance or Partnership: marriages of convenience between two or more firms that stand to gain revenues (or market share) through cooperation with each other for specific reasons and for a given period. Challenge- any member could quit at any point. International Joint Venture: A business that is jointly owned (implies shared equity). Jointly operated by two or more firms (usually one from the host country and the other from another country). Pooling of resources (labor, capital, technology, and management) to penetrate a host country as well as foreign markets, generate and split profits, and share the commercial risk. The local partner will be most knowledgeable about the domestic economic, cultural, and political environments. Merger and Acquisition: the home country firm will purchase the host country firm and implement its own international business strategy. Viewed as a local company, known and established operations. Fast entry. Wholly owned subsidiary (highest risk): build and operate its own new facilities (also called ―green field plants) overseas. These wholly-owned subsidiaries of home country firms generally require large capital investment.

Define 3 exchange rate policies and give an example of each.

Floating Exchange Regime: currency freely fluctuates according to market forces. Positives: automatically adjust to economic circumstances, allows a country to dampen the impact of shocks and foreign business cycles and preempt the possibility of having a balance of payments crisis. Negatives: Unpredictability, leading to forex fluctuation risks. Fixed (Pegged) Exchange Regime: value is tied to the value of another single currency, a basked of other currencies, or to another measure of value (gold). Positives: stabilizes currency value to pegged currency so that trade and investments between the two countries is easier and more predictable. Reduces forex risk. Negatives: Not always stable, leads to speculation, less flexibility. Pegged Floating Exchange Regime: hybrid of floating and fixed exchange regimes, pegged to some band or value, which is either fixed or periodically adjusted. Crawling bands, Crawling pegs, Pegged with horizontal bands.

Define 4 types organizational structures. List advantages and disadvantages for each.

Functional/ Departmental Structure- groups people together who hold similar positions, perform similar tasks, or use the same kinds of skills. Advantages: allows greater operational efficiency and specialization. Each group of specialists can operate independently with management acting as the point of cross-communication between functional areas. Disadvantages: may not communicate with one another, potentially decreasing flexibility and innovation. Functional structures may also be susceptible to tunnel vision. Divisional Structure- groups people together to serve the needs of products, markets, or geographical regions. Advantages: work best for companies with a wide variety of products or geographic regions. Greater operational flexibility. Concentrate efforts and expertise. failure of one division does not directly threaten the other divisions. In the multidivisional structure, subsidiaries benefit from the use of the brand and capital of the parent company. Disadvantages: may not communicate with one another, potentially decreasing flexibility and innovation. Cost. Functional structures may also be susceptible to tunnel vision. Matrix Structure: Groups people simultaneously by function and by division. Advantages: allows team members to share information more readily across task boundaries. Allow for specialization that can both increase depth of knowledge and assign individuals according to project needs. Disadvantages: increased complexity in the chain of command when employees are assigned to both functional and project managers. Higher manager-to-worker ratio, which can, in turn, increase costs or lead to conflicting employee loyalties. Blurred authority can result in reduced agility in decision-making and conflict resolution. Teams Structure: composed of people with complementary skills working together for a common purpose. Less hierarchical, with shared leadership and objectives. Often used by technical companies, like google. Advantages: increased creativity and productivity and mutual accountability. Generates a variety of expertise. Disadvantages: difficult to motivate individual employees when only team accomplishments are rewarded. There is increased risk for interpersonal conflicts.

Explain the trade-offs between global integration and local responsiveness. Use the global integration and local responsiveness level to measure the export, standardization, multidomestic and transnational strategies. Identify when to use which strategy.

Global Integration is the degree to which the company is able to use the same products and methods in other countries. Local Responsiveness is the degree to which the company must customize its products and methods to meet conditions in other countries. Standardization Strategy treats the whole world as one market with little meaningful variation • One product/ marketing campaign for all markets • Produces efficiencies by centralizing many common activities. Export Strategy is • Exports products around the globe • Not interested in global expansion • Same product for all markets. Multidomestic Strategy customizes products or processes to the specific conditions in each country • management is centralized in the home country, but country managers are given latitude to make adaptations • sacrifice scale efficiencies for responsiveness to local conditions • country managers understand local laws, customs, and tastes, and they can decide how to best meet them. Transnational Strategy combines a standardization strategy and a multidomestic strategy • used when a company encounters significant cost pressure from international competitors but must also offer products that meet local customer needs • difficult to maintain because the company needs to achieve economies of scale through standardization but also be flexible to respond to local conditions.

What is globalization?

Globalization is defined as international integration arising from the exchange of world views, products, ideas, and other aspects of culture.

What is hedging? What are four contracts to hedging foreign exchange risks? Differentiate them.

Hedging is a risk management strategy employed to offset losses in investments by taking an opposite position in a related asset. The reduction in risk provided by hedging also typically results in a reduction in potential profits. Hedging strategies typically involve derivatives, such as options and futures contracts. Forward contract- is a customized contract between two parties to buy or sell an asset at a specified price on a future date. A forward contract can be used for hedging or speculation, although its non-standardized nature makes it particularly apt for hedging Futures contract- is a legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future. Futures contracts are standardized for quality and quantity to facilitate trading on a futures exchange. Option contract- is defined as "a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer". An option contract is a type of contract that protects an offeree from an offeror's ability to revoke their offer to engage in a contract. Swap contract- derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments. Most swaps involve cash flows based on a notional principal amount such as a loan or bond, although the instrument can be almost anything.

What are the significant cultural features in China and Latin American countries?

How can these features impact business operation in those areas? China: Guanxi- is a relationship based on reciprocity. China is a relationship based society. Relationships, extend well, beyond the personal side and can drive businesses as well. With guanxi, a person invests with relationships much like, one would invest in capital. One example of the benefits of building up Guanxi is where you look at something like the joint venture of Volkswagen and its partners in China, which has developed a good reputation and relationship with suppliers and this special relationship translate into a preferred status for shipments and quality parts, which has both helped Volkswagen to be successful and China, as well as their partners. Latin America: hierarchical business, develop personal relationship, and the concept of time- businesses typically are hierarchical in their structure with decisions being made from the top down. Developing trust and gaining respect in the business environment is all about forging and maintaining particularly personal relationships. This often includes quite a bit of socializing. Another important factor influencing the business culture is the concept of time. In Latin America, we come across a term, which is translated to "time is space." More often than not situations, take precedence over schedules. And many people unfamiliar with Latin American customs, especially those from highly time, conscious countries, such as the United States, and Canada as well as those from northern Europe may find a lack of punctuality and more fluid view of time frustrating. In Latin America it is more useful to see the unhurried approach as an opportunity to develop good relations.

What are the different forms of international business?

Imports: a good or service brought into one country from another. Exports: a good or service produced in one country then gets marketed to another country. Import-export is the most fundamental and the largest international business activity, and it is often the first choice when the businesses decide to expand abroad as it is the easiest way to enter the market with a small outlay of capital. Licensing is one of the other ways to expand the business internationally. Licensing is the arrangement between a firm, called licensor, allows another one to use its intellectual property such as brand name, copy right, patent, technology, trademark and so on for a specific period of time. The licensor gets benefits in terms of the royalty. The company may choose to sell the products under the licensing when the domestic production costs are too high, strict government regulations, or the company wants to sell and produce standardized products everywhere. Franchising is closely related to licensing. Franchising is a parent company (franchiser) gives right to another company (franchisee) to do business using the franchiser's name and products in a prescribed manner. Franchising is different from the licensing in terms of the franchisees have to follow much stricter guidelines. Moreover, licensing is more about the manufacturers while franchising is more popular with restaurants, hotels, and rental services. A strategic partnership or alliance is a positive aspect of the cooperation of two or more companies in different countries are joined together for mutual gain. A joint venture is a special type of strategic alliance, where the partners across globe collectively found a company to product goods and services. The cooperation between the companies allow them to share the production cost, technologies, development, and sales networks. The resources will be pooled to mutual advantages and put the companies in win-win situations. Foreign direct investment is a company's physical investment such as into the building and facilities in the foreign country, and acts as a domestic business with a full scale of activity. Companies practice FDI to get benefits from cheaper labor costs, tax exemptions, and other privileges in that foreign country. The host country will get benefits by the introduction of new products, services, technologies, and managerial skills. Also, FDI helps facilitate progressive internal policy reforms of the host country and enhance the economic situation.

What are the World Bank's major functions, goals and criticisms?

Initial Goal: support reconstruction of Europe after the WWII. 1950-1960—focused on large infrastructure projects. 1970—assist poorer nations to improve life quality. World Bank aimed at restructuring economies, promoting investment, and reducing poverty. Provides long-term loans used for development projects. Helps resolve disputes related to foreign direct investment. The major goal here is to fight poverty. Criticisms of the World Bank: Imbalance in the leadership, Enforced conditionality causes harm to developing countries, Privatization of Healthcare, Environmental damage caused by funded projects.

Define transfer pricing and fronting loans. Describe how they impact the tax payment for companies.

MNCs use varying strategies to minimize taxes paid: Transfer pricing- transfer pricing refers to the rules and methods for pricing transactions within and between enterprises under common ownership or control. Fronting loans- sometimes is referred to as link financing, is a parent-to-subsidiary loan channeled through a financial intermediary, usually a large international bank. Tax haven- is a country or place with very low "effective" rates of taxation for foreign investors. In some traditional definitions, a tax haven also offers financial secrecy.

List and explain each international trade theory. Focus on the features of each theory.

Mercantilism: Only gain with a trade surplus. "I sold more goods to the rest of the world than I bought from the rest of the world, so I win with trade!" Gold and Silver are important to a country's wealth. Trade surplus: more export, less import. Modern thinking- Neo-mercantilism: Countries promote a combination of protectionist policies and restrictions and domestic industry subsidies. Absolute Advantage: Brazil can produce more coffee AND corn than the United States. Brazil has the Absolute Advantage. Specialization determined by absolute advantage to increase production efficiency. Comparative Advantage: Brazil is giving up fewer opportunities than the U.S., to produce coffee. And the U.S. has a lower opportunity cost for producing corn, than Brazil. What should they do? Limited resources lead to opportunity cost. Lower opportunity cost determines comparative advantage. H-O Theory (factor propositions): H & O, state that the reason Brazil is better with coffee and US with corn is because of what we have to work with in each country. Factors of production: labor, land, natural resources, capital, and technology. Country Similarity Theory: Firm-based theory that incorporates brand, customer loyalty, technology, and quality into the understanding of trade flows. Consumers in countries that are in the same or similar stage of development would have similar preferences. Companies first produce for domestic consumption. When they explore exporting, companies often find that markets that look similar to their domestic one, in terms of customer preferences, offer the most potential for success. Global Strategic Rivalry Theory: Focuses on firm's competitive advantage. Barriers to entry, R&D (Research and Development), IP rights (Intellectual Property rights), Economies of scale, Control of resources.

Define and elaborate on 3 ways to protect intellectual properties.

Patents, trademarks, copyright. Patents are protections of inventions and innovations for a limited period of time, five to 20 years. Examples include the iPhone and Levatol, a high blood pressure medication. Trademarks include any word, name, symbol or any distinguishing ID used in commerce. Examples include the name McDonald's and the Nike swoosh. Copyrights are protections provided to artists over original works, including literary, dramatic musical and artistic creations. The World Intellectual Property Organization (WIPO). First of all, the WIPO was implemented by the United Nations as a global policy relating to intellectual properties in 1967. Today, it helps to mediate many IP disputes. For instance, if companies from two countries claim a patent over a certain pharmaceutical, the WIPO may resolve the dispute by allowing both companies to sell their products worldwide except in each other's countries. Trade-Related Aspects of Intellectual Property Rights (TRIPS) is the WTO agreement, which focuses on the protection that countries agree to give intellectual property created in another country. This is especially important when we think of things like licensing agreements and franchising.

What are the risks associated with investing, financing and foreign exchange in global business?

Political risks - trying to determine the stability of a country, current government and also the stability of its relationships with other countries. It can be a threat to your intellectual property and to the security of your personnel. Global and Country-specific. Global risks would affect operations everywhere in the world. Country-specific - micro and macro. Countries within a specific company. Macro affects the entire organization or world-wide. Micro affects only a particular company or industry. Legal risks - whether or not laws are actually being enforced. Societal and cultural risks Financial / economic Risk- simple economic risk relates to countries. Currency risks Spot rate-two currencies exchange rate between two currencies right now. Spot rate means the rate right now. An example would be if we did a Google search to convert US dollars to Euro. Transaction risk - current fluctuations. It's always changing. It is the risk associated with buying and selling. Translation risk- the risk that's involved in writing a report. Current-rate method- is the most popular and you basically just translate using all the values and all the subsidiaries for the reports purposes. Temporal method- when you base your rate that you're going to use when you write your report on when the asset was acquired. You acquired it for what the exchange rate and spot rate was at that time.

Identify the reasons and strategies that governments restrict FDI.

Protect local industries and critical resources (petroleum, minerals, metals). Preserve national and local culture. Maintain political and economic independence and control economic growth. Foreign ownership of strategically important industries could lower the competitive advantage of the nation (petroleum). Foreign investors could also take advantage of the company they are investing in and take away all valuable assets then leave the country (mining). Job losses to host countries that have cheaper labor costs. Specify ownership restrictions. Home country governments can increase tax rates and sanctions to keep companies from offshoring. Mandatory partnerships with host country businesses. Nationalization of critical industries such as petroleum.

Define regional economic integration

Regional economic integration is an agreement among nations to reduce or eliminate trade barriers among the nations at a minimum and to have a single political, economic, and trade policy identity at its maximum.

What is the 4th industrial revolution? Explain

The Fourth Industrial Revolution- is a way of describing the blurring of boundaries between the physical, digital, and biological worlds. It's a fusion of advances in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and other technologies.

Differentiate the Kyoto Protocol and the Paris Agreement.

The Kyoto Protocol operationalizes the United Nations Framework Convention on Climate Change by committing industrialized countries and economies in transition to limit and reduce greenhouse gases (GHG) emissions in accordance with agreed individual targets. The Paris Agreement (2016) - this is the first legally binding global climate deal. This agreement proposes concrete steps for keeping long term global temperature increases at or below two degrees Celsius of pre-industrial levels. This agreement, the Paris Agreement, was formally ratified in October 2016. Unlike the Kyoto Protocol, which established legally binding emissions reduction targets (as well as penalties for noncompliance) for developed nations only, the Paris Agreement requires that all countries—rich, poor, developed, and developing—do their part and slash greenhouse gas emissions.

What's the function of the Sarbanes-Oxley Act?

The Sarbanes-Oxley Act of 2002 arose in response to the Enron and WorldCom scandals. The Sarbanes-Oxley Act addresses financial accountability issues requiring public companies to adopt and disclose a code of business conduct and ethics. It also provides whistleblower protections.

What is the difference between the world is flat view and the CAGE analysis?

The World is Flat really means due to the use of technology and internet now adays, it's just so easy for companies to share information. Like I can upload everything on One Drive. There is no barrier at all. CAGE analysis is the opposite of Friedman's point of view. Although countries have been working hard to reduce the barrier, barriers are still there. C is for Culture, A is for Administration, G is for Geography and E is for Economics. Culture really means if 2 countries' cultures are so different, it's less likely for them to trade with each other. Administration refers to countries who are administratively alike. For example, you know United Kingdom, Australia, and Canada are historically related. It's more likely for them to trade with each other and also for countries. Geography refers to physical distance between 2 countries. The further these 2 countries are away from each other, the less likely for them to trade with each other because of the shipping costs. Economics refers to standard of living. So, if Country A and Country B are so different in standard of living, such as the United States and Somalia, it is less likely for them to trade with each other because the products that United States wants to export may not be demanded in Somalia. It might be more expensive.

What is meant by the digital divide and how can technology bridge gaps to promote globalization?

The digital divide describes the discrepancy in access to information technology between populations (countries, regions). The economic divide- also known as the digital divide. The "digital divide" refers to the fact that certain parts of the population have substantially better opportunities to benefit from the new economy than other parts of the population. Stage 1: Economic Divide-the digital divide is manifested in the fact that some people can't afford to buy a computer. Although politicians always talk about this point, it's growing more irrelevant with each passing day — at least in the industrialized world. We should recognize that for truly poor developing countries, computers will remain out of the average citizen's reach for 20 years or more. Reduction in cost of technology- now everyone can afford the technology. Usability Divide- Stage 2: Usability Divide- Far worse than the economic divide is the fact that technology remains so complicated that many people couldn't use a computer even if they got one for free. Many others can use computers, but don't achieve the modern world's full benefits because most of the available services are too difficult for them to understand. Empowerment Divide- Stage 3: We have the knowledge needed to close the usability divide, and I remain hopeful that we'll get the job done. The empowerment divide, however, is the hard one: even if computers and the Internet were extraordinarily easy to use, not everybody would make full use of the opportunities that such technology affords. Participation inequality is one exponent of the empowerment divide that has held constant throughout all the years of Internet growth: in social networks and community systems, about 90% of users don't contribute, 9% contribute sporadically, and a tiny minority of 1% accounts for most contributions. The importance of smart phone technology- One of the most important use of smart phones is that they ensure safety. Families can easily communicate with each other while away. To cap it up, mobile technology is here to stay and holds a lot more features in the future to meet even the most of our basic needs and to make life a lot easier. Incentive to build digital infrastructure - Digital Infrastructure underpins the digital, cultural, and social infrastructures to develop places where people want to live, work and visit. Over the next few decades our digital networks will be the enabling infrastructure that drives economic growth and productivity.

What are the reputable primary and secondary sources for learning about foreign cultures?

Training: Documentary training - which is textbook and classroom, learning, which examines the differences among cultures to mitigate potential. Documentary training takes a while. You know, it takes a while to train yourself or to get trained. Cultural Simulation Training - duplicates, possible scenarios employees may encounter such as reprimanding a host country's employee. This involves role playing in the host country or involving host country natives. This one could be done quickly... a couple of hours. Field Simulation Training - the employee visits a particular area in the host county such as being dropped in a rural area with limited resources or the entire family is moved into temporary housing to meet with and socialize with neighbors, and they use the local transportation. This can take, say, a couple of weeks. And, then there is independent self-study which is an important, viable option. Self-guided learning: Primary sources - these are basically first hand accounts by people who have lived in the culture, experienced the culture. You find this with expatriates. Primary sources also include raw data travel, journals, blogs, videos, vlogs. Secondary sources - offer explanations and interpretations of information. So, they tend to pull together primary sources and come up with the things like reports and digests.

List and explain the types of tariffs.

VER stands for Voluntary Export Restraint. Import tariff is imposed on a product imported from foreign countries to change like, really control or reduce the import volume and protect the domestic business. Export tariff. Why would a government impose a tariff on things that they export to countries? Because they want to limit the quantity of this product exported to the international market so that they can push the price of this product to go up. Like, OPEC purposefully limits the quantity of the crude oil that they can export each day. Those Middle Eastern countries are the suppliers of the crude oil. By limiting the quantity of supply, they can push the price to go up. That's why they're so wealthy. Protective tariff will protect the domestic business, which is pretty much the same as the import tariff. And revenue tariff is imposed to help the government collect tax revenue because it's just a tax. Specific tariff is a flat rate tax imposed on an imported product. Ad-valorem tariff is a percentage based tariff, based on the value of that product. Compound tariff is a combination of specific and ad-valorem tariff. And for quota, there are two types of quotas. Absolute quota and tariff-rate quota. A quota really is the quantity restriction on a product that can be imported from a country. And tariff quota is kind of combination of tariffs and quota. Voluntary export restraint means an exporting country has voluntarily agreed to reduce the quantity that this country can export to a foreign country just to avoid further harsher punishment by the other country.

What are the sources of financial investment used by small companies? List and explain VC, Angel investor, FFF, and Crowdsourcing Small companies/Start-up Company Funding:

Venture capital- is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks and any other financial institutions. Angel Investors- is an individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. Angel investors usually give support to start-ups at the initial moments and when most investors are not prepared to back them. Friends, Family or Fools (FFF)- If you're struggling to raise investment from angel investors, the next fallback is FFF funding - Friends, Family and Fools. You can always raise a few tens of thousands of pounds from this source no matter how early you are. Crowdsourcing- is a sourcing model in which individuals or organizations obtain goods and services, including ideas, voting, micro-tasks and finances, from a large, relatively open and often rapidly evolving group of participants.

Define and differentiate the vertical and horizontal legal structure.

Vertical Structure Law - Top down. Common Law and the Uniform Commercial Code in the United States. Enforced conditionality causes harm to developing countries. Privatization of Healthcare. Horizontal Structure Law - Equal agreements. Laws between sovereign states—treaty based. Example: The UN Convention on Contracts for the International Sale of Goods (CISG)

What are the concerns on free trade's impact on manufacturing jobs in developed nations and labor rights in developing nations?

With free trade: Possible job loss in certain industries, Trade affects wages, Labor standards and working conditions are concerned. Proponents of workers' rights argue that trading nations should be held to strict labor standards—and they offer two quite different justifications for their view. The first is a moral argument whose premise is that many labor standards, such as freedom of association and the prohibition of forced labor, protect basic human rights. Foreign nations that wish to be granted free access to the world's biggest and richest markets should be required to observe fundamental human values, including labor rights. In short, the lure of market access to the United States and the European Union should be used to expand the domain of human rights. The key consideration here is the efficacy of labor standards policies. The second argument for strict labor standards stresses not the welfare of poor workers, but simple economic self-interest. A trading partner that fails to enforce basic protections for its workers can gain an unfair trade advantage, boosting its market competitiveness against countries with stronger labor safeguards.

List three international labor conventions that help protect workers. Explain the applicable feature of each labor convention.

Worst Forms of Child Labour Convention, 1999 - defines a child as a person under the age of 18. It aims to eliminate all practices of child slavery or those similar to slavery, such as the sale and trafficking of children, debt bondage, using children as child soldiers, child prostitution. The Maritime Labour Convention (MLC), 2006 - Also known as Seafarer's Bill of Rights. Establishes seafarer rights to decent working conditions. Seafarers include those with jobs in hotels, those who provide passenger services on cruise ships and commercial yachts. Domestic Workers Convention, 2001 - details specific rights and protections for domestic workers working both in their home country and as migrant workers, lists clear conditions under which domestic workers are entitled to reparations at the end of employment, established protections, it also established protections from abusive practices

What is the rationale for governments to utilize trade barriers to manage trade?

Your answer should include examples such as sanctions, dumping, health and safety, etc. Make sure to include a full list. Sanctions is a political reason. The important or a famous example of that would be the embargo between U.S. and Iran, and between U.S. and North Korea. Because they don't like each other. They are politically unfriendly to each other. That's why there are sanctions. They don't trade with each other. They manage that. Dumping means a country's company can dump a certain product into our country's market at a price that is even lower than the production cost of that product. Infant industry argument is more of an economic reasoning. Why it's economic reasoning? Because the government would use a high tariff to protect infant industry. Infant industry is like a baby industry. It's at the beginning stage of development, not mature enough to face global competition and free trade. If you let free trade to occur, foreign businesses are going to wipe out this industry in your country. And if you don't want to totally rely on importing this product from countries forever, you have to develop your own industry. And that's why the Chinese government has used 100% tariff on foreign made cars to protect their infant industry. The reason is for the long term economic development purpose. Health and safety is more social. So, this is related to people's human rights. Okay if we see that country is using child labor to produce a certain product, we might threaten that we're going to stop importing that product from your country, unless you improve the working condition for the workers. Limiting outsourcing is trying to protect the domestic jobs. Global monopoly is trying to avoid those big foreign companies coming over to your market to monopolize that market. And national security is more of a political reasoning. Tariffs and quotas and subsidies could always be used to manage the trade. So, as you can see, generally, there was three different types of reasons to limit international trade, political, economic or social and there are different examples.

What is supply chain?

is flow of goods and information from the source to the final consumer.