This is a 5-6 pages eassy about management called Interview Experience and Synthesis Paper.

Global Management

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LEARNING OUTCOMES

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1 Discuss the impact of global business and the trade rules and agreements that govern it

2 Explain why companies choose to standardize or adapt their business procedures

3 Explain the different ways that companies can organize to do business globally

LEARNING OUTCOMES

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4 Explain how to find a favorable business climate

5 Discuss the importance of identifying and adapting to cultural differences

6 Explain how to successfully prepare workers for international assignments

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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

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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

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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

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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)

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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

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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

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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

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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

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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

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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

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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

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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

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• 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

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• 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

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• 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

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• Strategic alliance • Joint venture • Wholly owned affiliates • Global new ventures • Purchasing power • Political uncertainty • Policy uncertainty • National culture • Expatriate

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