question

_______ is the buying and selling of goods or services

answer

Business

question

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

answer

global Business

question

__________ are corporations that own business in two or more countries.

answer

multinational corporations

question

_________ occurs when a company builds a new business or buys an existing business in a foreign country.

answer

direct foreign investment

question

National governments have traditionally preferred than consumers buy domestically made products in hopes that?

answer

such purchases would increase the number of domestic business and workers

question

Government use ________ to make it much more expensive or difficult for consumers to buy or consume imported goods.

answer

trade barriers

question

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

answer

protectionism

question

What are the two general kinds of trade barriers Governments use?

answer

tariff; and non tariff barriers

question

A_____ is a direct tax on imported goods.

answer

tariff

question

_____ Increase the cost of imported goods relative tho that of domestic goods.

answer

tariffs

question

_________ are non tax methods of increasing the cost or reducing the volume of imported goods.

answer

non tariff barriers

question

What are the 5 types of non tariff barriers?

answer

1-quotas 2-voluntary export restraints 3-government import standards 4-government subsidies 5-customs valuation/classification

question

_____ are specific limits on the number or volume of imported products

answer

quotas (allowing only a certain amount of something to be imported per year)

question

________ limit the amount of a product that can be imported annually

answer

voluntary export restraints (difference is that the exporting country rather than the importing country imposes restraints.)

question

Example of voluntary export restraints

answer

To protect brazilian auto manufacturers from less expensive mexican-made cars, the brazilian government convinced mexico to "voluntarily" restrict auto exports to Brazil to no more than $1.55 billion a year for three years.

question

In theory, __________ are established to protect the health and safety of citizens. In reality, such standards are often used to restrict or ban imported goods.

answer

government import standards

question

example of government import standards

answer

russia bands the importation of US beef, pork, and turkey, claiming that the meat is contaminated by a commonly used food additive.

question

many nations also use_____, such as long-term, low-interest loans, cash grants, and tax deferments, to develop and protect companies in special industries.

answer

subsidies

question

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

answer

customs classification

question

example of customs classification

answer

products are imported -must be examined and decided which category of nearly 9,000 categories it is categorized in -the category greatly affects the size of the tariff and whether the item is subject to import quotas

question

Most significant change in the 1990s was when 124 countries agreed to adopt the ?

answer

General Agreement on Tariffs and Trade (GATT)

question

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

answer

General Agreement on Tariffs and Trade (GATT)

question

GATT was replaced by the ______ in 1995.

answer

World Trade Organization (WTO)

question

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

answer

World Trade Organization (WTO)

question

Today, the WTO and its member countries are negotiating what's known as the?

answer

Doha Round

question

_____ seeks to advance trade opportunities for developing countries in area ranging from agriculture to services to intellectual property rights.

answer

Doha Round

question

The WTO, headquartered in Geneva, Switzerland.....

answer

-adminsters trade agreements -provides a forum for trade negations -handles trade disputes -monitors national trade policies -offers technical assistance and training for developing countries

question

The WTO has ____ member countries.

answer

159

question

The second major development that has reduced trade barriers has been the creation of _______, or zones in which tariff and non tariff barriers are reduced or eliminated for countries within the trade zone.

answer

regional trading zones

question

What are the largest and most important trading zones?

answer

-Europe (the Maastricht Treaty) -North America (The North American Free trade agreement) -Central America (Dominican republic central america free trade agreement) -South America (union of south american nations) -Asia (the association of southeast asia nations)

question

In 1992, Belgium, Denmark, france, germany, greece, ireland, italy, luxembourg, the netherlands, portugal, spain, and the UK adopted the_________.

answer

Maastricht treaty of europe

question

The purpose of the_______ was too transform their twelve different economies and twelve currencies into one common economic market, called the European Union (EU), with one common currency.

answer

Maastricht Treaty of Europe

question

Prior to the treaty of europe

answer

companies often had to file twelve different sets of paperwork pay twelve different tariffs produce twelve different version of their basic product to meet various government specification exchange money in twelve different countries

question

______ between the United States, Canada, and Mexico, went into effect on January 1, 1994.

answer

NAFTA; North American Free Trade Agreement

question

_____ has liberalized trade between countries so that businesses can plan for one market rather than for three separate markets.

answer

NAFTA

question

What is one of NAFTA's most important achievements?

answer

to eliminate most product tariffs and prevent the three countries from increasing existing tariffs or introducing new ones.

question

A regional trade agreement between Costa Rica, the Dominican republic, El Salvador, Guatemala, Honduras, Nicaragua, and the US.

answer

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

question

Regional trade agreement between Argentina, Brazil, Paraguay, Uruguay, Venezuela, Bolivia, Colombia, Ecuador, Peru, Guyana, Suriname, and Chile

answer

Union of South American Nations (UNASUR)

question

A regional trade agreement between Brunei, Darussalam, Cambodia, Indonesia, laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietname

answer

Association of Southeast Asian Nations (ASEAN)

question

A regional trade agreement between Australia, Canada, Chile, the People's Republic of China, Hong Kong, Japa, Mexica, New Zealand, Papua New Guinea, Peru, Russia, South Korea, Taiwan, the US, and all the members of ASEAN expect cambodia, Laos, and myanmar.

answer

Asia-Pacific Economic Cooperation (APEC)

question

What keeps prices higher in countries that have not been as open to foreign companies and products.

answer

-lack of choice -low level of competition

question

Why are free-trade agreements important?

answer

they increase choices, competition, and purchasing power and thus decrease what people pay for food, clothing, necessities, and luxuries

question

Why do trade barriers and free-trade agreements matter to managers?

answer

while they create new business opportunities, they also intensify competition, and addressing that competition is a managers job.

question

__________ means that a multinational company with offices, manufacturing plants, and distribution facilities in different countries used the same rules, guidelines, policies, and procedures to run all of those offices, plants and facilities.

answer

Global consistency

question

Managers at company headquarters value global consistency because?

answer

it simplifies decisions.

question

A company following a policy of ______ modifies its standard operating procedures to adapt to differences in foreign customers, governments, and regulatory agencies.

answer

local adaptation

question

_______ is typically preferred by local managers who are charged with making the international business successful in their countries.

answer

local adaptation

question

If companies lean too much toward ______, they run the risk of using management procedures poorly suited to particular countries' markets, cultures and employees

answer

global consistency

question

If companies focus too much on local adaptation they?

answer

run the risk of losing the cost effectiveness and productivity that result from using standardized rules and procedures throughout the world.

question

Besides determining whether to adapt organizational policies and procedures, a company must also determine ?

answer

how to organize itself for successful entry into foreign markets

question

When companies produce products in their home countries and sell those products to customers in foreign countries, they are ?

answer

exporting

question

What advantages does Exporting as a form of global business offer?

answer

-makes the company less dependent on sales in its home market -provides a greater degree of control over research, design, and production decisions.

question

What are the disadvantages of exporting as a form of global business?

answer

-many exported goods are subject to tariff and non tariff barriers that can substantially increase their final cost to consumers -transportation costs can significantly increase the price of an exported product

question

When an organization wants to expand its business globally without making a large financial commitment to do so, it may signal a __________ with a foreign business owner who pays the company a fee for the right to conduct that business in his or her country.

answer

cooperative contract

question

What are the 2 kinds of cooperative contracts?

answer

-licensing -franchising

question

Under a _______ agreement, a domestic company, the licensor, receives royalty payments for allowing another company, the licensee, to produce its products, sell its service, or use its brand name in a particular foreign market.

answer

licensing

question

One of the most important advantages of licensing is that?

answer

it allows companies to earn additional profits without investing more money.

question

What happens when foreign sales increase?

answer

the royalties paid to the licensor by the foreign licensee increase

question

Licensing also helps companies avoid what?

answer

tariffs and non tariff barriers

question

What is the biggest disadvantage associated with licensing?

answer

the licensor gives up control over the quality of the product or service sold by the foreign licensee.

question

What are other disadvantages of licensing?

answer

-licensees can eventually become competitors, especially when a licensing agreement includes access to important technology or proprietary business knowledge

question

A_____ is a collection of networked firms in which the manufacturer or marketer of a product of service licenses the entire business to another person or organization.

answer

franchise

question

For the price of an initial franchise fee plus royalties, franchisors provide?

answer

-franchisees with training -assistance with marketing and advertising -an exclusive right to conduct business in a particular location

question

Despite franchising's many advantages, franchisors face________ when they sell businesses to franchisees who are thousands of miles away.

answer

loss of control

question

Companies forming ______ combine key resources, costs, risks, technology, and people

answer

strategic alliances (Garmin makes satellite navigation devices Volvo makes leisure and commercial boat engines together they develop and market marine instrumentation, and navigation equipment)

question

The most common strategic is a __________?

answer

joint venture

question

When does a joint venture occur?

answer

when two existing companies collaborate to form a third company. (the two founding companies remain intact and unchanged except that together they now own the newly created joint venture)

question

Advantages of global joint ventures?

answer

-help companies avoid tariff and non tariff barriers to entry -companies participating bear only part of the costs and the risks of that business

question

Global joint ventures can be especially advantageous to who?

answer

smaller local partners who link up with larger, more experienced foreign firms

question

What do companies share in a joint venture?

answer

-costs -risks -profits

question

Managing global joint ventures can be difficult because they represent a merging of four cultures. What are the 4 cultures?

answer

-the country and the organizational culture of the first partner -the country and the organizational culture of the second partner

question

To be fair to all involved, each partner in the global joint venture will have?

answer

equal ownership and power

question

What are problems with global joint venture?

answer

-power struggles -lack of leadership

question

how can you prevent problems with global joint venture?

answer

-carefully develop detailed contracts that specify the obligations of each party

question

Approximately one-third of multinational companies enter foreign markets through __________?

answer

wholly owned affiliates

question

Unlike licensing arrangements, franchises, or joint venture, wholly owned affiliates are ?

answer

100 percent owned by the parent company

question

What is the primary advantage of wholly owned businesses?

answer

the parent company receives all of the profits and has complete control over the foreign facilities

question

What is the biggest disadvantage of wholly owned businesses?

answer

the expense of building new operations or buying existing businesses.

question

What 3 things have allowed companies to skip the phase model when going global?

answer

1- quick, reliable air travel 2-low-cost communication technologies 3- there is now critical mass of businesspeople with extensive person experience in all aspects of global business

question

With sales, employees, and financing in different countries, _______ are companies that are founded with an active global strategy.

answer

global new ventures

question

What are the two common factor all global new ventures share?

answer

-company founders successfully develop and communicate the company's global vision from inception -rather than going global one country at a time, new global ventures bring a product or service to market in several foreign markets at the same time

question

What is the most important factor in a an attractive business climate?

answer

access to a growing market

question

What are the 2 facts that help companies determine the growth potential of foreign markets?

answer

-purchasing power -foreign competitors

question

________ is measured by comparing the relative cost of a standard set of good and services in different countries.

answer

purchasing power

question

Countries with __________ of purchasing power are good choices for companies looking for attractive global markets.

answer

high and growing levels

question

The second part of assessing the growth potential of global markets involves?

answer

analyzing the degree of global competition

question

how can you analyze the degree of global competition?

answer

determined by the number and quality of companies that already compete in a foreign market

question

Companies do not have to _______ in each country they enter

answer

establish an office or manufacturing location

question

the criteria for choosing an office/manufacturing location are different from the criteria for entering a foreign market. Rather than focusing on costs alone, companies should consider?

answer

both qualitative factors, and quantitative factors

question

What are the 2 key qualitative factors

answer

-workforce quality -company strategy

question

What are quantitative factors?

answer

-kind of facility being built -tariff and non tariff barriers -exchange rates -transportation and labor costs

question

When conducting global business, companies should attempt to identify two types of political risk:

answer

-political uncertainty -Policy uncertainty

question

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

answer

Political uncertainty

question

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

answer

Policy uncertainty

question

_______ is the most common, and perhaps the most frustrating, form of political risk in global business.

answer

policy uncertainty

question

What strategies can be used to minimize or adapt to the political risk inherent in global business

answer

-avoidance strategy -control -cooperation

question

A _______ is used when the political risks associated with a foreign country or region are viewed as too great.

answer

avoidance strategy

question

What factors indicate greater political risk?

answer

-government instability -poor socioeconomic conditions -internal or external conflict -military involvement in politic -religious and ethnic tensions -high foreign debt as a percentage of gross domestic product -exchange rate instability -high inflation

question

Firms using a _______ strategy lobby foreign governments or international trade agencies to change laws, regulations, or trade barriers that hurt their business in that country.

answer

control

question

Another method for dealing with political risk is _________ , which involves using joint ventures and collaborative contracts, such as franchising and licensing.

answer

cooperation

question

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

answer

National culture

question

What is the first step in dealing with culture?

answer

to recognize that there are meaningful differences.

question

What are the 5 consistent cultural dimensions across countries?

answer

-power distance -individualism -masculinity and femininity -uncertainty avoidance -short-term vs long-term orientation

question

____ is the extent to which people in a country accept that power is distributed unequally in society and organizations.

answer

power distance

question

______is the degree to which societies believe that individuals should be self-sufficient.

answer

individualism

question

______ capture the difference between highly assertive and highly nurturing cultures.

answer

masculinity and feminiity

question

Masculine cultures emphasize?

answer

-assertiveness -competition -material success and achievement

question

Feminine cultures emphasize?

answer

- the importance of relationships -modesty -caring for the weak -quality of life

question

The cultural difference of uncertainty avoidance is the degree to which people in a country are?

answer

uncomfortable with unstructured, ambiguous, unpredictable situations

question

In countries with strong uncertainty avoidance people tend to be?

answer

aggressive and emotional and seek security rather than uncertainty

question

The cultural dimension of ________ addresses whether cultures are oriented to the present and seek immediate gratification or to the future an defer gratification.

answer

short-term/long-term orientation

question

Countries with short-term orientations are?

answer

consumer-driven

question

Countries with long-term orientations are?

answer

savings-driven

question

Cultural difference affect?

answer

-perceptions -understanding -behavior

question

recognizing______ is critical to succeeding in global business.

answer

cultural differences

question

If you become an ______, someone who lives and works outside his or her native country, chances are you'll run into cultural surprises.

answer

expatriate

question

What are the primary reasons to expatriate failure overseas?

answer

-difficulty adjusting to language, culture, and social differences

question

______ and ______ can reduce the uncertainty that expatriates feel, the misunderstandings that take place between expatriates and natives, and the inappropriate behaviors that expatriates unknowingly commit when they travel

answer

pre departure language and cross-cultural training

question

Expatriates who receive pre departure language and cross-cultural training....

answer

make faster adjustments to foreign cultures and perform better on their international assignments

question

What are the 3 methods that can be used to prepare workers for international assignments?

answer

-documentary training -cultural simulations -field experiences

question

______ focuses on identifying specific critical differences between cultures.

answer

documentary training

question

practicing adapting to cultural differences

answer

cultural simulations

question

______, a technique made popular by the US peace corps, places trainers in an ethnic neighborhood for three to four hours to talk to residents about cultural differences

answer

field simulation

question

what is the most important factor in determining the success or failure of an international assignment?

answer

how well an expatriate's spouse and family adjust to the foreign culture

question

_____ and _______ for families can lead to more successful overseas adjustment

answer

adaptability screenings; intercultural training

question

______ is used to asses how well managers and their families are likely to adjust to foreign cultures.

answer

adaptability screening

question

What are the 2 trade barriers?

answer

-tariff -non tariff barriers

question

what is included in non tariff barriers

answer

-quotas -voluntary export restraints -government import standards -subsidies -customs classification

question

What is GATT?

answer

General Agreement on Tariffs and Trade (1947-1995) Agreement to regulate trade among more than 120 countries "Substantial reduction of tariffs and other trade barriers and the elimination of tariffs"

question

regional trading zones

answer

-Maastricht treaty of europe -NAFTA -CAFTA-DR -UNASUR -ASEAN -APEC

question

Trade agreements....

answer

increase choices, competitions, and purchase power decrease prices

question

Free trade agreements create_____ but also intensify _______

answer

new business opportunities ; competition

question

When a multinational company has offices, manufacturing plants, and distribution facilities in different countries and runs them all using the same rules, guidelines, policies, and procedures.

answer

global consistency

question

when a multinational company modifies its rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies.

answer

local adaptation

question

what are the forms for global business?

answer

-expoting -cooperative contracts -strategic alliances -wholly owned affiliates

question

Selling domestically made products to foreign markets

answer

exporting

question

Advantages of exporting

answer

-makes company less dependent on domestic sales -gives company more control

question

disadvantages of export

answer

-goods subject to trade barriers -transportation costs

question

A domestic company, the licensor, receives royalty payments for allowing another company the licensee, to produce its product, sell its service, or use its brand name in a particular foreign market.

answer

licensing

question

advantages of licensing?

answer

-companies earn money without investing more money -companies can avoid trade barriers

question

disadvantages of licensing?

answer

-licensor gives up control over product quality -licensees can become competitors

question

A collection of networked firms in which the manufacturer or marketer of a product or service, the franchisor, licenses the entire business to another person or organization, the franchisee.

answer

franchise

question

advantages of franchise?

answer

-fast way to enter foreign markets -gives franchisor additional cash flow

question

disadvantages of franchise?

answer

-loss of control -culture bound

question

When companies combine key resources, costs, risks, technology, and people. Most common form is joint ventures.

answer

strategic alliances

question

advantages of strategic alliances?

answer

-companies avoid trade barriers -companies only bear part of the costs -partners can learn from each other

question

disadvantages of strategic alliances?

answer

-profits have to be shared -merging of cultures

question

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

answer

wholly owned affiliates

question

advantages of wholly owned affiliates?

answer

-parent company receives all of the profits and has complete control

question

disadvantages of wholly owned affiliates?

answer

-losses for parent company can be enormous

question

companies founded with an action global strategy

answer

global new ventures

question

2 factors in growing markets?

answer

-purchasing power -growth potential

question

What are the qualitative factors in choosing a location?

answer

-workforce quality -company strategy

question

what are the quantitative factors in choosing a location?

answer

-kind of facility being built -trade barriers -exchange rates -transportation and labor costs

question

2 ways to minimize political risk

answer

-political uncertainty -policy uncertainty

question

strategies for dealing with political risk

answer

-avoidance -control -cooperation

question

(strategies for dealing with political risk) avoidance

answer

divesting or selling business to avoid risk

question

(strategies for dealing with political risk) control

answer

active strategy to prevent or reduce political risks

question

(strategies for dealing with political risk) cooperation

answer

using joint ventures and collaborative contracts

question

What are the 5 dimensions of culture?

answer

-power distance -individualism -masculinity/femininity -uncertainty avoidance -short-term/long-term orientation

question

What is included in language and cross-cultural training?

answer

-documentary training -cultural simulations -field simulation training

question

assesses how well managers and families are likely to adjust to a foreign culture

answer

adaptability screening

question

Language and cross-cultural training for______ is just as or more important than

answer

family; training for employees

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