FVC1 Global Business - WGU Study Guide

FVC1 Global Business - WGU Study Guide Leave the first rating Students also studied Terms in this set (69) Save International Business Final 96 terms Dylan1238050 Preview Econ

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International Trade: Comparative & ...

25 terms c3goralskiPreview Chapte Teacher lbe What are the characteristics of globalization?Removal of trade barriers, Promote free trade, Removal of cultural barriers, Interdependence, Technological innovation How do major international institutions facilitate globalization?International Monetary Fund system (IMF) - to Promote global financial stability; World Bank - to help reconstruct developing nation economies and end extreme poverty; World Trade Organization (WTO) - to promote trade in agriculture, services, inventions and intellectual property Why is it important for political leaders and institutions to be transparent in responding to global competition?Promotes a competitive market structure. Greater levels of trade and investment and promotes overall globalization What are key policy measures that make globalization sustainable?Transparency, Removing trade barriers, Channel information about market conditions, goods, services, and participants, Define property rights and contracts, Promote competition and innovation in markets What are ways that technology bridges the global digital divide?Decreases communication costs What is the rationale of specific anti-globalization arguments?There cannot be a guarantee that quality of life for all people will increase, or that all changes caused by globalization will be positive. Globalization creates winners and losers, Job losses and income stagnation, Loss of local control over economic policies and development, Disappearance of old industries, related erosion of communities What are the benefits of trade?Greater amount of choice in the availability of goods and services, Greater quantity of goods and services, Greater variety of goods and services, Lower prices for goods and services, Generates jobs, Technological development, Increased standard of living

What are the major international trade theories? Mercantilism, Absolute Advantage, Comparative Advantage, H-O theory - factor endowments, Factor-Price Equalization, Porter's Diamond Model What is the impact of trade policy on various stakeholders such as businesses, consumers, and governments?Trade policy has a direct impact on the value of volume of a country's imports and exports. Tariffs - taxes on imports, Quota - limit the number of imports.What is the rationale for managing trade?Socio-economic Rationale - Free trade can have a negative impact on a society's

welfare: Counter-trade, Export cartels, Infant Industry Argument, Ethics and

safety; Geo-political Rationale - Sacrifice some efficiency for the greater good of

the country: National security, Strategic industries, Embargoes (punish

unacceptable behavior) What are the costs of regional economic integration? Undermines the most-favored-nation status rule, Imposes laws and regulations that are uniform, Eliminates jobs and increases unemployment in protected industries, Loss of sovereignty, national independence and identity, Reduces the powers of the national government, Increases the probability of rising crime associated with illegal drugs and terrorism What are key aspects of economic geograpy?Spacial Transformation: Process of allowing efficient geographical distribution of

business activities within and among countries; Economical Geography: To make

the best use of the size and location of the countries involved.

• Stages of IntegrationFree Trade Area, Customs Union, Common Market, Economic Union, Political

Union What are the reasons why countries pursue regional integration?Enhanced social welfare, Creation of greater business opportunities, Global competitiveness, Increased value for consumers, Shared values, Peace within region, Common security against possible external threats What are the characteristics of each regional integration bloc?NAFTA - US, Canada, Mexico (only in 1st stage of integration); EU - European Union (most advanced stage of integration), ASEAN - Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, Cambodia (Australia, New Zealand, India, China, Japan, South Korea); MERCOSUR - Argentina, Brazil, Paraguay, Uruguay, ANDEAN - Bolivia, Chile, Colombia, Ecuador, Peru; DR-CAFTA - Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua What is meant by the balance of payments for a country? Statement of account that summarizes all transactions between residents of one

country and the rest of the world for a given period of time. Current Account:

Driven by the activities of consumers and business - Trade or goods balance,

Services balance, Income balance, Net transfers; Financial Account: US owned

assets abroad, Foreign owned assets in the US, Net financial derivatives What are the components of the foreign exchange market?Spot market - Spot rate, real time; Future market - Future rate, for more standardized currencies; Forward market - Forward rate, for all other currencies What are the critical components of culture?Language, Religion, Customs and manners, Education, Value and attitudes, Aesthetics, Material elements

What are the primary sources that can be used to learn about foreign countries?Talking to employees who have lived or worked abroad, Executives who have traveled to other countries, Training programs, Consulting firm What is the secondary source that can be used to learn about foreign countries?Reading What are the facets of culture that are significant for doing business in various countries, including East Asian, Arabian, and Latin American countries?

Japan: Slight bow, shake hand, Do business with high ranking employees, No

direct eye contact, Group oriented; Korea: Inwa, Elder generation receives full

respect; China: Guanxi - Attending to the relationships between subordinates and superiors; Arabian Countries: Left hand is unclean, Reluctant to do business with women, Arab business reps may frequently diverge from original topic, Don't be overly effusive when praising the possessions of Arab hosts, Do not try to inquire

about the wives of Arab business reps; Latin American Countries: Not so

conscious about time, Like to develop personal relationships first What are ways that culture influences product management and marketing?Product management - Change product to better serve foreign market, E.g.Barbie; Marketing - Pay attention to numbers, color, wording in advertisement, E.g. Taco Bell chihuahua; Management style - Who to hire and how to manage foreign employees What are the business implications for conducting international business in different economic ideologies?Communism - Government or State owns and controls all major factors of production, Philosophically an economically classless society; Socialism - Government plays a strong role in the economy and may own stakes in certain businesses (healthcare), Looking out for the welfare of society as a whole; Capitalism - Businesses are privately owned, strong individual incentives exist, Government plays very little role in the economy What are key political risk when conducting global business?Micropolitical risk - Government confiscation of assets, Change in government views of industries; Macropolitical risk - Changes in government, Social unrest, Terrorism What are the reasons why intellectual property protections are critical in today's global business environment?Property rights enable buyers and sellers to conduct transactions with a high degree of trust. Ensures there's an incentive to create intellectual property and conduct research and development How to protect intellectual property?Patents - Grants exclusive/monopoly rights to the inventor, excluding other from marketing, selling or using the invention; Copyrights - Exclusive legal rights that authors, playwrights, publishers, artists, composers, performers, photographers, and other have to publish and disseminate their work. Trademarks - Unique identifiers of a business - Phrase, name, word, picture, logo, symbol, etc What is the relationship between ethics and economic progress?For business activity to occur trust is essential. Fair dealings, honest communication What is the function of corporate social responsibility? A company's obligation to society, including the welfare of a wide range of

stakeholders: Customers, Employees, Suppliers, Creditors, Lenders, Investors.

Create a balance between private profits and public goods What are some famous scandals and the events related to each scandal?East India Company, Enron, WorldCom, Vivendi, Parmalat, Teapot Dome, Ponzi

What are the reasons for having internal controls that facilitate ethical behavior?Comprise a system of rules and procedures designed to ensure the accuracy and reliability of financial and accounting information. Preventing accidental errors and intentional misrepresentation from occurring. Identifying errors and irregularities after they occur so that corrective action may be taken What are specific strategies for entering emerging market economies in given scenarios?Export-Import (lowest risk), Licensing, Franchising, Strategic Alliance, International Joint Venture, Merger and Acquisition, Wholly owned subsidiary (highest risk) What are reasons why multinational enterprises (MNEs) invest abroad?Gain competitive advantage, Maximize shareholder wealth, Increase revenues, Cut costs, Diversify operations to minimize risk What are the benefits of foreign direct investment from a host country perspective?Significant financial inflows, Creates new jobs, Allows access to new technologies, Facilitates transfer of important management and employee skills, Increases domestic competition and choice, Generates tax revenues for government services, reduces poverty, accelerates economic development What are the costs of foreign direct investment from a host country perspective?Rush to exploit natural resources which may sacrifice environmental quality, health and social fabric of host country, Exploiting the labor force, preventing human capital development and tarnishing the image of the country, Lack of corporate social responsibility, Political interference by the parent county when things do no go the way the foreign country wants How can countries successfully attract foreign direct investment?By implementing transparent government structures What are the purposes for writing mission statements? Outlines why the company exists and what it strives to accomplish, Provide general guidelines for the company's strategy formulation, control functions and decision-making processes, How the business typically defines their overall goals What are the 4 basic types of longer-term strategic implementation?Prospectors, Defenders, Reactors, Anlyzers What is the role that knowledge management and systems play in addressing various impediments to strategic implementation of global business?Tacit knowledge, Explicit knowledge. Organizational control often hinges upon the ability to convert tacit knowledge in to explicit knowledge so that foreign operations have a full understanding of what is expected of them How do specific control systems affect global business? Bureaucratic control - Rules, policies, hierarchy of authority, written documentation, reward system to influence employee behavior and assess performance; Interpersonal control - Personal contact; Output control - Involves establishing specific goals on given metrics and then measuring to what extent these goals have been achieved at certain time intervals How does organization culture influence organization activities in given scenarios?Represents the implementation of a different business or culture path for an organization, There will often be considerable resistance to such change, Most effective when pushed form the top down What is meant by stateless corporations?Work is sourced wherever it is most efficient and the corporation transcends nationally altogether