BUS250 Chapter 8 - Global Management

global business

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

multinational corporation

a corporation that owns businesses in two or more countries

direct foreign investment

a method of investment in which a company builds a new business or buys an existing business in a foreign country

trade barriers

government-imposed regulations that increase the cost and restrict the number of imported goods

protectionism

a government’s use of trade barriers to shield domestic companies and their workers from foreign competition

tariff

a direct tax on imported goods

nontariff barriers

nontax methods of increasing the cost or reducing the volume of imported goods

quotas

a limit on the number or volume of imported products

voluntary export restraints

voluntarily imposed limits on the number or volume of products exported to a particular country

government import standard

a standard ostensibly established to protect the health and safety of citizens but, in reality, is often used to restrict imports

subsidies

government loans, grants, and tax deferments given to domestic companies to protect them from foreign competition

customs classification

a classification assigned to imported products by government officials that affects the size of the tariff and the imposition of import quotas

General Agreement on Tariffs and Trade (GATT)

a worldwide agreement that reduced and eliminated tariffs, limited government subsidies, and established protections for intellectual property

World Trade Organization (WTO)

the only international organization dealing with the global rules of trade between nations; its main function is to ensure that trade flows as smoothly, predictably, and freely as possible

regional trading zones

areas in which tariff and nontariff barriers on trade between countries are reduced or eliminated

global consistency

when a multinational company has offices, manufacturing plants, and distribution facilities in different countries and runs them all using the same rules, guidelines, policies, and procedures

local adaptation

modifying rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies

exporting

selling domestically produced products to customers in foreign countries

cooperative contract

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

licensing

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

franchise

a collection of networked firms in which the manufacturer or marketer of a product or service, the franchisor, licenses the entire business to another person or organization, the franchisee

strategic alliances

an agreement in which companies combine key resources, costs, risks, technology, and people

joint venture

a strategic alliance in which two existing companies collaborate to form a third, independent company or engage in a clearly defined business activity

wholly owned affiliate

foreign offices, facilities, and manufacturing plants that are 100% 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

purchasing power

the relative cost of a standard set of goods and services in different countries

political uncertainty

the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events

policy uncertainty

the risk associated with changes in laws and government policies that directly affect the way foreign companies conduct business

national culture

the set of shared values and beliefs that affects the perceptions, decisions, and behavior of the people from a particular country

expatriate

someone who lives and works outside his or her native country