Forms of global businesses

ksk1q8o

Chapter_8.ppt

Home >Human Resource Management homework help >Forms of global businesses

MGMT8 | CH3

Chapter 8

Chapter 8 MGT 201

MGMT8 | CH3

Impact of Global Business

Multinational corporation: Owns businesses in two or more countries

Direct foreign investment: Company builds a new business or buys an existing business in a foreign country

MGMT8 | CH3

Trade Rules

Trade barriers: Government-imposed regulations that increase the cost and restrict the number of imported goods

Tariff: Direct tax on imported goods

Nontariff: Nontax methods of increasing the cost or reducing the volume of imported goods

Quota

Voluntary export restraints

Government import standard

Subsidies

Customs classification

MGMT8 | CH3

Trade Agreements

General Agreement on Tariffs and Trade (GATT): Worldwide trade agreement

Reduces and eliminates tariffs

Limits government subsidies

Establishes protections for intellectual property

World Trade Organization (WTO): Deals with global rules of trade between nations

Ensures that trade flows as smoothly, predictably, and freely as possible

MGMT8 | CH3

Regional Trading Zones

Areas in which barriers on trade between countries are reduced or eliminated

Maastricht Treaty of Europe

North American Free Trade Agreement (NAFTA)

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

Union of South American Nations (UNASUR)

Association of Southeast Asian Nations (ASEAN)

Asia-Pacific Economic Cooperation (APEC)

MGMT8 | CH3

Global Consistency and Local Adaptation

Global consistency: Multinational company conducting business in different countries using the same rules, guidelines, policies, and procedures

Involves risk of using management procedures poorly suited to particular countries

Local adaptation: Modifying rules, guidelines, policies, and procedures to adapt to differences in foreign countries

Involves risk of losing the cost effectiveness and productivity

MGMT8 | CH3

Forms of Global Business

Exporting: Selling domestically produced products to customers in foreign countries

Cooperative contract

Agreement in which a foreign business owner pays a company a fee for the right to conduct that business in his or her country

Licensing: Agreement in which a domestic company receives royalty payments for allowing another company to produce the licensor’s product, sell its service, or use its brand name in a specified foreign market

MGMT8 | CH3

Forms of Global Business

Franchising: Collection of networked firms in which the manufacturer licenses the entire business to another person or organization

Strategic alliances: Agreement in which companies combine key resources, costs, risks, technology, and people

Joint venture: Two existing companies collaborate to form a third, independent company

MGMT8 | CH3

Forms of Global Business

Wholly owned affiliates

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

Global new ventures

New companies that are founded with an active global strategy and have sales, employees, and financing in different countries

MGMT8 | CH3

Finding the Best Business Climate

Attractive global business climate

Positions the company for easy access to growing markets

Effective but cost-efficient place to build an office or manufacturing facility

Minimizes the political risk to the company

Factors that determine the growth potential of foreign markets

Purchasing power

Foreign competitors

MGMT8 | CH3

Finding the Best Business Climate

Criteria for choosing an office location

Qualitative factors

Work force quality and company strategy

Quantitative factors

Tariff and nontariff barriers, exchange rates, transportation and labor costs

Global business requires firms to identify political uncertainty and policy uncertainty

MGMT8 | CH3

Becoming Aware of Cultural Differences

National culture: Set of shared values and beliefs

Affects the perceptions, decisions, and behavior of people from a particular country

Consistent cultural dimensions across countries

Power distance, individualism

Masculinity, uncertainty avoidance

Short-term versus long-term orientation

MGMT8 | CH3

Preparing for an International Assignment

Chances for a successful international assignment can be increased through:

Language and cross-cultural training

Consideration of spouse, family, and dual-career issues

SUMMARY

MGMT8 | CH3

Global business is the buying and selling of goods and services by people from different countries

Free-trade agreements create new business opportunities, and intensify competition

Forms of global business include exporting, cooperative contracts, strategic alliances, wholly owned affiliates, and global new ventures

KEY TERMS

MGMT8 | CH3

Global business

Multinational corporation

Direct foreign investment

Trade barriers

Protectionism

Tariff

Nontariff barriers

Quota

Voluntary export restraints

Government import standard

Subsidies

Customs classification

General Agreement on Tariffs and Trade (GATT)

World Trade Organization (WTO)

KEY TERMS

MGMT8 | CH3

Regional trading zones

Maastricht Treaty of Europe

North American Free Trade Agreement (NAFTA)

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

Union of South American Nations (UNASUR)

Association of Southeast Asian Nations (ASEAN)

Asia-Pacific Economic Cooperation (APEC)

Global consistency

Local adaptation

Exporting

Cooperative contract

Licensing

Franchise

KEY TERMS

MGMT8 | CH3

Strategic alliance

Joint venture

Wholly owned affiliates

Global new ventures

Purchasing power

Political uncertainty

Policy uncertainty

National culture

Expatriate

MGMT8 | CH3