D270 Midterm - James Davis

Globalization

Process of broadening interdependent relationships among people who are divided among people who are divided into national boarders

international business

commercial transactions between 2+ countries

forces behind globalization

1. technology

2. trade

3. services that support intern. business

4. consumer pressure

5. global competition

6. changing political situations and gov policies

7. expanded cross-national cooperation

negative effects of globalization

1. threats to national sovereignty

2. small countries feel threatened

3. cultural homogenity threatens uniqueness

193

how many countries in the world

portfolio investment

non-controlling investment of stocks and loans

constortium

2+ people investing in a business

direct exports

shipping directly to customers from home market. costs = low, easy to initiate, no shared ownership,

high shipping cost, no local adaption

exporting via a local distributer

entering an agreement for a local distributor to sell goods produced in home market in a new market,

cost=low, control=low, some local adaption, limited financial return, lack of control

licensing

entering an agreement for local manufacturer to produce/sell goods in a new market,

cost=low, control-low, gov mech = ownership of sales

Sales operation

setting up a sales team in a new market to sell goods produced in home market,

cost = mod, control=mod

equity investment

Buying minority stake in an existing firm in a new market, entering in an agreement to work in that market

aquisition

purchasing a majority stake in an existing firm operating in a new market

outsourcing

a company allowing another to do one part of their business, usually within the same country

offshoring

the relocation of business processes and services to a lower-cost foreign location

physical factors

geography and demographic influences

institutional factors

political and legal policies, behavioral/economical forces

competitive environment

competitors, available resources, markets`

interdependance

creates opportunities for firms and managers

culture q

shared values attitudes and beliefs

determinants of culture

religion, political philosophy, economic philosophy, education, language, social structure

key factors of cultural behavior

professional specialty, social structure, corporate culture, level of experience, individual personality

natural culture

acquired, gradual, shared, ethnocentric, hard to change, relative

Polycentrism

autonomy in each country

ethnocentrism

home culture is superior

geocentrism

combination of ethnocentrism and polycentrism

individualism/collectivism index

reflects the preferences of behavior that promote self-interest

power distance index

measures tolerance of social inequality

political and legal system determinants

history (colonialism, influence, etc) and economic circumstances (poverty, wealth, and freedom)

individualism

rights and rule of the individual over group

Laissez-faire

No government intervention in business

collectivism

group goals>individual goals

political ideology

how a country governs

political freedom

how elections occur, extent of individual and group freedom, legitimacy of rule of law

Representative Democracy

protect individual freedom and equal law protections

multi-party democracy

3+ parties govern separately or together

parliamentary democracy

representative of legislative branch

secularism

transition from capitalism to socialism (sweden and norway)

Autoritarianism

submission to authority, resistance = punishment

facism

single party controls people's minds, souls, existance

secular

single party government controls elections, supresses ideology and limits freedom

xenophobia

fear of immigrants

systematic political risk

change in policy that affects all companies but doesn't reduce profits

procedural political risk

cost of getting things done

distributive political risk

expropriation, no property rights

catastrophic political risk

civil disorder, devastates business environments

constitutional law

guarantees open and political order

criminal law

protects social order

civil and commercial law

ensure fair and efficient business transactions

theocratic law

all legal activity given to religious leaders

mixed system

country uses 2+ legal systems