Chapter 7 Management

question

The buying and selling of goods and services
answer

business
question

the buying and selling of goods and services from people of different countries
answer

global business
question

corpartions that own businesses in two or more countries
answer

mutlinational corporations
question

occurs when a current company buildsn anew business or acquires a new business in a foreign country
answer

direct forieng investment
question

Why do governments use trade barriers?
answer

to make it more expensive or difficult to buy or consume imported
question

the use of trade barriers to protect local economies and their workers from foreign competition
answer

protectionism
question

a direct tax on imported goods
answer

tariff
question

nontax method of increasing the cost or reducing the volume of imported goods
answer

nontarriff barrier
question

specific limit on the amount of imported products
answer

quota
question

a voluntary exporting quota set by a country due to the improting country threating the use of quotas
answer

voluntary export restraints
question

established to protect the health of citizens
answer

government import standards
question

as products are imported they are examined by customs agent who cedides which category the product lies in
answer

customs classification
question

the 5 nontarriff barriers
answer

1) Quotas 2) Voluntary export restraints 3) Government import standards 4) Subsidies 5) customs classifications
question

General Agreement on Tariffs and Trade
answer

An agreement to regulate trade among 120 countries to reduce tariffs and restrictions on trade
question

What was the general agreement on Tariffs and Trade replaced by?
answer

The World trade organization
question

tariff and non-tariff barriers are reduced or eliminated within these zones
answer

regional trading zones
question

world trade organization
answer

replacement for the general agreeement on tariffs and trade and is the adminsitration for trade agreements between countries
question

How are trade disputes between countries settled?
answer

By an arbitration panels of the WTO
question

Do countries at the WTO have veto power?
answer

Not anymore
question

maastricht treary
answer

formed the european union by combining twelve different european currencies and economies into one
question

NAFTA
answer

liberalized trade between US CANADA and mexico
question

CAFTA – DR
answer

central american free trade agreement: US, dominciin republic, and central america
question

UNASAR
answer

union of south american nations: permits free movement between nations by creating a common infastructure and interoceanic highway that establishes the region as a single market by elimainting tariffs
question

ASEAN
answer

association of southeast asian nations
question

APEC
answer

asia pacific economic cooperation
question

The two largest and most important trading groups in ASIA
answer

1) APEC 2) ASEAN
question

increase choice, competition, and purchasing power and decrease prices
answer

trade agreements
question

the two choices when a company decides to go global
answer

consistency or adaption
question

does consistency or adaption simplify decisions?
answer

consistencyn
question

modifying your standards to adpat to differences in foreign customers, government, and regulatory agencies
answer

adaption
question

the steps for the phase model of going global
answer

1) exporting 2) Cooperative contracts 3) Strategic alliances 4) Wholly owned affiliates
question

selling domestically made products to foreign markets
answer

exporting
question

Advantages of exporting
answer

1) Makes company less dependant on domestic sales 2) gives company more control
question

Disadvantages of exporting
answer

1) Goods subject to trade barriers (tariff and non tariff) 2) Transportation Costs
question

A domestic company, the licensor, allow a foreign company, the licensse to produce its product, provide its service, or use its brand name in a foriegn market for royalty payments
answer

licencing – cooperative contracts
question

Advantage of licensing
answer

1) earn money without investing more money 2) companies can avoid trade barriers
question

Disadvantages of licensing
answer

1) give up control over product qualtiy 2) Licensses can become competitors
question

A collection of networked firms in which the manufacturer or marketer of a product or service, the franchiser, licenses the entire businesss to another person or organization, the franchise
answer

Franchising – 2nd type of cooperative contract
question

Advantages of franchising
answer

1) Fast way to enter a foriegn market 2) Gives franchiser additonal cash flows
question

Disadvantages of Cooperative contracts
answer

1) Loss of control 2) Culture Bound
question

When companies combine key resources, costs, risk, technology, and people
answer

strategic alliance
question

When two existing companies collaborate to a form a third company
answer

joint venture
question

Advantages of strategic alliances
answer

1) Companies avoid trade barriers 2) Companies only bear part of the costs 3) Partners can learn from each other
question

Disadvantages of strategic alliances
answer

1) Profits have to be shared 2) Merging of cultures
question

Foreign offices, plants, or facilities that are 100 percent owned by the parent company
answer

wholly owned affiliates
question

advantages of wholly owned affiliaties
answer

1) parent company recieves all of the profits and has complete control
question

Disadvantages
answer

1) losses for the parent company can be enormous
question

Companies that are founded with an active global strategy
answer

Global new ventures
question

Companies that are founded with an active global strategy 2 characteristics
answer

1) their leaders communicate their global strategy from incpetion 2) Bring a product or service to market several foriegn markets at a time
question

The key metric in deciding where to go global
answer

Growth potential
question

The two factors that create growth potential
answer

1) Foriegn competition 2) Purchasing power
question

measured by comparing the cost of a standard set of goods in several countries
answer

purchasing power
question

Qualitative factors that affect location strategy
answer

1) Workforce Quality 2) Company Strategy
question

Quantitative factors that affect location strategy
answer

1) Kind of facility being built 2) trade Barriers 3) Exchange rates 4) Transportation and labor rates
question

The two types of political risk in conducting global business
answer

1) Political uncerainty 2) Policy unceratinty
question

political uncertainty
answer

Risk in major changes to political regimes
question

Policy uncertainty
answer

refers to the risk assocaited with chaanges in laws and government policies
question

used when the risks of conducting business in a foriegn conutry are too great
answer

avoidance strategy
question

active strategy to prevent or reduce political risks
answer

control
question

makes use of joint ventures and collaborative contracts to deal with political risk
answer

cooperations
question

divesting or selling businesses to avoid risk
answer

avoidance
question

limits a company’s exposure to risk associated with foreign ownership of a business
answer

cooperation
question

The set of share values and beleifs that affects the perceptions, decsions, and behavior of the people from a particular country
answer

national culture
question

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

power distance
question

the degree to which societies believe that individuals should be self-sufficent
answer

individualism
question

captures the difference between highly assertive and highly nurturing cultures
answer

masulinity and feminity
question

the degree to which peolpe in a country are uncomfortable with unstructued, ambigous, and unpredicatabel situations
answer

uncertainty avoidance
question

adderesses wherether cultuers are orietnated to the presnet and seek immediate gratification or to the futrue and defer graitication
answer

short term/long term orientation
question

expatriate
answer

someone who lives and works outside his or her native country
question

The chance of success of expatriates can be increased by
answer

1) cross cultural training 2) consideration of spouse 3) Consideration of family 4) consideration of dual career issues
question

training for expatriates that focuses on special critical diffeences between cultures
answer

documentary training
question

training for expatraites in which they practice adpating to cultural differenes
answer

cultural simulations
question

placing trainees in ethical neighborhood for three hours to talk to residents about cultural differences
answer

field simulation training
question

assesses how well managers and family are likely to adapt to foriegn cultures
answer

adaptability screeing

Get instant access to
all materials

Become a Member