Global Business Final

-       How would you develop a manager’s global framework

• MGF serves as a lens through which managers can navigate this complex environment.

• Be knowledgeable about countries and regions and understand the impact of their firms.

• With MGF you make decisions based on facts and knowledge.

• Develop a global mindset that permeates all aspects of strategy and business operations.

• Acquire regional and country intelligence.

-       How are economies classified?

GDP - Gross domestic product - value of all goods and services produced in a country in a single year, based on an official accounting.

GNP - the value of goods and services produced by the residents of a country no matter where it is produced.

Per capita gdp - gdp divided by the population

GDP Per Person PPP adjusted for purchasing power accounts for the purchasing power of local residents in a country.

-       What is a developed world?

• Developed economies are characterized as postindustrial countries.

• Typically have high per capita income, competitive industries, transparent legal environments and well-developed infrastructure.

• Ex. Japan

-       What is a developing world?

• refers to countries that rank lower on various classifications

• may lack infrastructure and competitive industries.

• Ex. MENA

-       What are the emerging markets?

• transitioning from developing to developed.

• Considered attractive opportunities for investment.

• BRICS

-       What is PPP

• Purchasing Power Parity

• economic theory that adjusts the exchange rate between countries to ensure a good is purchased for the same price in the same currency.

• Some countries have a higher cost of living than others, this effects how many goods consumers can buy.

-       Describe HDI

• Human Development Index

• Indicator focuses on whether people’s needs are satisfied and whether the needs are equally met across the local population.

• Measures satisfaction in three areas: long and healthy life expectancy, equal access to education, livable standard of living in the form of income.

What are the 4 P’s in Marketing?

Product

Price

Promotion

Place

-       What are the fundamentals of global marketing

• The best way to reach those international customers is with marketing knowledge for the 4 P’s.

• Fine-tune and adjust each element to meet the needs of the market, and to create the best outcome for the company.

• Market segmentation - dividing a larger market into smaller markets that share a common characteristic

• Research your target market.

• Gray markets exist because of price discrepancies between different markets.

• Counterfeit markets aim to deceive the buyer.

-       What are the tradeoffs between standardized and customized products and promotions

straight product extension means company does not need to invest in new R&D or manufacturing but the products may not be well suited to local needs and may be more costly due to higher labor costs in the US.

Product adaption vs product extension vs product invention

country of origin effect - customers using the country where the product was made as a barometer for evaluating the product.

product adaption requires really understanding the nuances of local market and customer needs.

-       What are the fundamentals of distribution

• global sourcing involves buying materials/components from around the world for use in the company’s products. quality and low cost. sole-source vs multisource.

• distribution management choices: partner, acquire, build from scartch ( most costly and time consuming).

• Developed vs emerging markets can have different infrastructure and logistical resources.

-       Review the differences between international distribution and purely domestic distribution

• International distribution is more complex because it involves crossing borders, dealing with multiple regulations, currencies, cultures, and longer logistics routes. Companies must handle customs, tariffs, documentation, exchange-rate risk, and adapt products/marketing to local preferences. -

• Distribution channels also rely more on intermediaries (export agents, local distributors), and overall risk and cost are higher compared to simpler, uniform domestic distribution.

-       What are the advantages and disadvantages of global branding

• advantages - economies of scale in production and packaging, lower marketing costs, leveraging power and scope.

• disadvantages - customer needs differ across countries, as do legal and competitive environments.

-       Revisit the four major functions of the POLC Framework for management

• Planning - determining a course of action

• Organizing - developing structure to achieve goals

• Leading - influencing others to take action

• Controlling - monitoring performance to meet the standards of the organization

What is the role of R&D in innovation and how are managers impacted

• to develop new products, services or procedures to grow and expand.

• applied research commercializes basic research findings.

-       How are intellectual property rights treated and litigated around the world

• intellectual property rights vary by country, each nation seeks to protect the interest of its companies and citizens first.

• The WIPO helps coordinate IPR policies and actions among UN member countries.

-       Review R&D and how the decision is made on where it is located.

• Companies evaluate:

• a nation’s institutions

• a nation’s investment in education

• a nations ICT infrastructure

• The sophistication of the market (access to investors and credit)

• business sophistication (innovation ecosystem and openness to compensation).

Ensure you understand IP and why it is important for companies to protect their IP

IP is a huge competitive advantage, must protect to reap the benefits.

-       What does foreign exchange consist of?

foreign exchange is money denominated in the currency of another country. An exchange rate is defined as the rate at which the market converts one currency into another.

-       How are exchange rates determined?

Quoting currency indicates how much of one currency it takes to buy another.

Base currency and quoted currency. how much to obtain one unit of the base currency and how much will be received.

-       Understand what peg their currency to us dollar means

when a country fixes its exchange rate to another currency, often the US dollar. Often to maintain economic stability.

-       What are the different parts of global capital markets

• Primary market - where new securities are issued and funds are received directly.

• Secondary market - where securities are traded.

• International equity markets - companies sell stock. consists of all stock traded outside the issuing companies home country.

• international bond markets - includes all bonds sold by companies, govs, and entities outside their home country.

• eurocurrency markets

• offshore centers - country or territory where there are few rules governing the financial sector as a whole and lower overall taxes.

-       Be able to recognize impacts of the global capital markets on international business through expansion.

• expanision of global markets has expanded international venture capital.

• Venture capitalists include people or investment firms that make venture investsments and bring expertise.

• Expanded global market offers VC’s access to new investors, a wider selction of firms, more exit strategies, opportunities to merge or be acquired.

-       Make certain you understand the mechanics of international venture capital acquisition.

VC’s establish a venture fund with monies from institutions and high net worth individuals. Use the fund to invest in early, growth stage companies, hoping for a big return. invest in high risk and investments are not liquid.

Define Angel Investors

a wealthy individual who provides capital to early stage startups in exchange for ownership or convertible debt. Often acts as a mentor with industry expertise rather than just a source for funds.