MGMT370 Chap. 5
Trading Company (Mentioned in Trading Companies, a level of organizational involvement in global business)
-A company that acquires goods in one country and sells them to buyers in another country. -They handle all activities required to move products from one country to another. -They also offer consulting, marketing research, advertising, insurance, product research & design, warehousing, and foreign exchange services to companies interested in selling their products in foreign markets.
Outsourcing (Mentioned in Direct Investment, a level of organizational involvement in global business)
-A form of direct investment. -Outsourcing involves transferring manufacturing or other functions (such as data processing) to countries where labor and supplies are less expensive. -Ex: Many American computer, apparel, and athletic shoe makers have transferred production to Asian countries, where labor costs are lower than in the United States.
Franchising (Mentioned in Licensing and Franchising, a level of organizational involvement in global business)
-A form of licensing in which a company (the franchiser) agrees to provide a franchisee a name, logo, methods of operation, advertising, products, and other elements associated with the franchiser's business, in return for a financial commitment and the agreement to conduct business in accordance with the franchiser's standard of operations. -Examples of franchisers are McDonald's, Holiday Inn, and many other companies.
World Trade Organization (WTO) (Mentioned in International Trade Facilitators)
-A global association of member countries that promotes free trade. -The WTO essentially establishes the rules of the game for trade among these numerous nations. -Additionally, WTO helps to resolve disputes, such as dumping conflicts between two countries.
Strategic Alliance (Mentioned in Joint Venture and Strategic Alliances, a level of organizational involvement in global business)
-A partnership formed to create competitive advantage on a worldwide basis. -In some industries, such as automobiles, mobile phones, and computers, strategic alliances are becoming the predominant means of competing. -International competition is so fierce and the costs are so high that few firms have the individual resources to go it alone. Thus, individual firms that lack the resources essential for international success may seek to collaborate with other companies. -Ex: The agreement between Japan's Sony Corporation and the Swedish telecommunication company Ericsson to make mobile phones. This alliance combines Sony's consumer electronics expertise with Ericsson's technological leadership in the telecommunications industry.
Global Business (Globalization)- Globalization-
-A strategy in which organizations treat the entire world or major regions of it as the domain for conducting business. -Refers to the shift toward a more integrated and interdependent world economy.
Licensing (Mentioned in Licensing and Franchising, a level of organizational involvement in global business)
-A trade agreement in which one company (the licensor) allows another company (the licensee) to use its company name, products, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee, or royalty. -This is a way for a company to enter the international marketplace without spending large sums of money abroad and hiring or transferring personnel to handle overseas affairs. -This also minimizes problems associated with shipping costs, tariffs, and trade restrictions.
North American Free Trade Agreement (NAFTA) (Mentioned in The North American Free Trade Agreement section)
-An agreement within the countries in North America which went into effect January 1, 1994. -This agreement effectively merged Canada, the United States, and Mexico into one market of about 400 million consumers.
Organization of Economic Cooperation and Development (OECD) (Mentioned in International Trade Facilitators)
-An international economic organization comprised of 30 countries that accept the basic principles of free-market economies and representative democracy. -Recommends and promotes policies to improve the well-being of consumers and societies across the world.
Self-Reference Criterion (Mentioned in the Managing Global Business Section)
-An obstacle within global adaptation to different business environment. -Involves an often unconscious referencing to the way things are done in one's own culture and experiences in making global business decisions.
Direct Investment (Mentioned in Direct Investment, a level of organizational involvement in global business)
-Companies that want more control and are willing to invest considerable resources in international business may consider direct investment. -Direct investment is the purchase of overseas production and marketing facilities. -With direct investment, a company may control the facilities outright, or it may be the majority stockholder in the company that controls the facilities. -Ex: Ford own subsidiaries and manufacturing facilities in many foreign countries.
European Union (EU) (Mentioned in the European Union section)
-Established in 1958 to promote the movement of resources and products among member nations. -It is an economic and political union of 28 member nations that are located primarily in Europe.
Countertrade Agreements (Mentioned in Exporting and Importing, a level of organizational involvement in global business)
-Exporting sometimes takes place through this. -This is exporting that involves bartering products for other products instead of for currency.
Association of Southeast Asian Nations (ASEAN) (Mentioned in Association of Southeast Asian Nations section)
-Headquartered in Jakarta, Indonesia and is comprised of ten Southeast Asian countries. -The goal of these ten countries is to promote economic growth and overall progress in the area via trade and security.
Infrastructure (Mentioned in Economic Environment)
-How a country's level of development is largely determined by this. -It is the physical facilities that support its economic activities, such as roads, airfields, power plants, schools, hospitals, and many other forms of support of economic activities.
Contract Manufacturing (Mentioned in Contract Manufacturing, a level of organizational involvement in global business)
-Occurs when a company hires a foreign company to produce a specified volume of the firm's product to specification. -The final product carries the domestic firm's name.
Gross Domestic Product (GDP) (Mentioned in Economic Environment)
-One of the most common ways to measure a country's economic development. -It is the market value of a nation's total output of good and services for a given period. -The US has the largest GDP of any country currently. -GDP per capita is GDP in relation to population.
Southern Common Market (Mercosur) (Mentioned in the Southern Common Market section)
-Represents a political and economic agreement among southern countries.
General Agreement on Tariffs and Trade (GATT) (Mentioned in International Trade Facilitators)
-The general agreement on tariffs and trade established by the WTO which provided as a forum for tariff negotiations that was agreed and signed by 23 nations.
Multi-national Corporation (MNC) (Mentioned in Multinational Corporation section)
-The most committed or highest level of international business involvement. -Ex: IBM
Joint Venture (Mentioned in Joint Ventures and Strategic Alliances, a level of organizational involvement in global business)
-When a company that wants to do business in another country finds a local partner (occasionally, the host nation itself) to share the costs and operation of the business. -Common to use with less-developed countries. -Ex: The independent oil and gas exploration and production firm heritage Oil partnered with Nigeria's Bayelsa Oil Company called Petrobay Energy. This joint venture will allow Heritage Oil to gain more of a foothold in the Nigerian oil and gas industry.
Dumping (Mentioned in Tariffs and Trade Restrictions)
A common reason why countries set quotas is for dumping. Dumping occurs when a country or business firm sells products at less than what it costs to produce them. Ex: US set a tariff on Chinese solar panels after an investigation claimed that Chinese companies were dumping solar panels with extremely low prices.
Cartel (Mentioned in Political Environment)
A group of firms or nations that agree to act as a monopoly and not compete with each other.
Tariff
A tax by a nation for importing or exporting goods.
Import Tariff (Mentioned in Tariffs and Trade Restrictions)
A tax levied by a nation on goods bought outside its borders and imported into the country. MOW- A tax issued by a country if you bought good outside of the country's borders and then brought them into the country.
Webb-Pomerene Export Trade Act (Mentioned in Legal Environment)
Allows selected American firms desiring international trade to form monopolies in order to compete with foreign cartels.
U.K. Bribery Act (Mentioned in Legal Environment)
An anti-bribery law which makes all organizations with business operations in the United Kingdom can be held liable for bribery, even if the bribery did not occur within the United Kingdom. This act is different that FCPA because FCPA is limited to bribing foreign officials, where the U.K. Bribery Act covers any type of bribery. Businesses can also be held responsible if their joint-venture partners or subsidiaries are caught in the act of bribery.
International Monetary Fund (IMF) (Mentioned in International Trade Facilitators)
Basic mission is to oversee the international monetary system and help ensure stable currencies and exchange rates throughout the world.
World Bank (Mentioned in International Trade Facilitators)
Formally known as the International Bank for Reconstruction and Development, it was established and supported by the industrialized nations in 1946 to loan money to underdeveloped and developing countries.
Exchange Controls (Mentioned in Tariffs and Trade Restrictions)
Restrictions on the amount of a particular currency that may be bought or sold.
International Business
The buying, selling, and trading of goods and services across national boundaries.
Quota (Mentioned in Tariffs and Trade Restrictions)
The maximum number of units of a particular product that may be imported into a country.
Importing (Mentioned in Exporting and Importing, a level of organizational involvement in global business)
The purchase of goods and services from a foreign source.
Exchange Rate (Mentioned in Economic Environment)
The ratio at which one nation's currency can be exchanged for another nation's currency or for gold.
Exporting (Mentioned in Exporting and Importing, a level of organizational involvement in global business)
The sale of goods and services to foreign markets.
Embargo (Mentioned in Tariffs and Trade Restrictions)
The suspension of trade in a particular product by the government. May be established for political, health, or religious reasons. Ex: US forbids the importing of cigars from Cuba for political reasons.
Foreign Corrupt Practices Act (FCPA) (Mentioned in Legal Environment)
This act made direct payoffs and bribing of foreign companies illegal for American companies. Some companies may want to bribe foreign companies to influence the policy decisions of foreign governments, but this act makes it illegal.
