FBLA Global Business Study Guide

Heckscher-Ohlin Theory

Countries will export goods that make intensive use of locally abundant factors of production and import goods that make intensive use of locally scarce factors of production.

Globalization of Markets

Moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into one global market.

Balance of Payments

the difference between the money a country pays out to and receives from other nations

Freight Forwarder

The firm that arranges shipping of goods to customers in other countries

EU Members

Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK. (28 members)

Interdependency

The quality or condition of being interdependent, or mutually reliant on each other. This describes the global economy.

Expropriation

Occurs when a public agency takes private property for a purpose deemed to be in the public interest

Expatriate

A person who lives outside their native country

Largest US Trading Partners

Top 5: Canada, China, Mexico, Japan, Germany

Largest WORLD exporters

Top 5: China, EU USA, Germany, Japan

Largest WORLD importers

Top 5: USA, EU, China, Germany, Japan

ISO 9000

A series of standards, developed and published by the International Organization for Standardization (ISO), that define, establish, and maintain an effective quality assurance system for manufacturing and service industries.

QS 9000

QS 9000 is a company level certification based on quality system requirements related specifically to the automotive industry, essentially all suppliers to the US automakers need to

implement a QS 9000 system. These standards were developed by Ford, GM and Chrysler.

Common Market

When countries join together to eliminate duties and other trade barriers, allow

companies to invest freely in each other's country, and allow workers to move freely across borders,

they are said to have

20,000

The United States Department of Commerce calculates that every $ 1 billion in exports of manufactured goods creates _______ jobs.

Recovery

In the ________ section of the business cycle, an increasing number of people find jobs and more businesses begin to invest in new inventory

Reengineering

To redesign or to restructure

Small businesses

________________ differ from large businesses when going international primarily in the influence of the founder

Small Businesses

____________ emphasize exporting

Fronting Loans

One technique that firms use to transfer funds across borders is transfer prices, royalty payments/fees and ________.

Functional Structure

Sections are set up according to purpose (ex - sales, marketing, production etc.). Good for small business, but creates lack of communication between sections.

Divisional Structure

A company has sections within regions or product lines. Good for large companies with a wide geographic reach, but again creates lack of communication between sections.

Matrix Structure

Blend of divisional and functional structures, with sections divided by both purpose and region/product line (etc). Used by large, multinational companies.

Controlling Interest

A firm has a controlling interest in another business entity when it owns more than 50 percent of that entity's voting stock.

Cultural Controls

Achieving control by persuading subordinates to identify with the norms and value

systems of the organization (self-control).

Multinational Corporation

Maintains operations in multiple countries

Transnational Corporation (Borderless Organization)

An MNC that has eliminated structural divisions that impose artificial geographic barriers

5 Major Areas of Business Management

Production, Finance, Information Systems, Marketing, HR

International Organization for Standardization (ISO)

an international standard-setting body

composed of representatives from various national standards organizations.

Total quality management (TQM)

The continuous process of reducing or eliminating errors in manufacturing, streamlining supply chain management, improving the customer experience and ensuring that employees are up-to-speed with their training. Created by the Japanese.

Tailored Logistics

when companies use various logistics approach to target various groups of their customers.

High-context cultures

relational, collectivist, intuitive, and contemplative. This means that people in

these cultures emphasize interpersonal relationships. Developing trust is an important first step to

any business transaction.

Decline

Union membership in the US has been in a steady _______.

Political Parties

A significant feature of unions in European countries is their close relationship with __________.

Low

Compared to most developed countries in the world, union membership in the United States is _____

Western

International law is based off of _______ civilization.

Essential components of a valid contract

Offer and Acceptance, Intention to Create a Legal Relationship, Lawful Consideration, Capacity of Parties

Offer and Acceptance

In order to create a valid contract, there must be a 'lawful offer' by one party and 'lawful acceptance' of the same by the other party.

Intention to Create Legal Relationship

In case, there is no such intention on the part of

parties, there is no contract. Agreements of social or domestic nature do not contemplate legal relations.

Capacity of parties

The parties to an agreement must be competent t contract. If either of the parties does not have the capacity to contract, the contract is not valid.

civil law (legal code)

a code of laws that is constantly updated to specify all matters before a court adopted by a state or nation (many things pre-covered), eg. Roman law

statutory law

the written law established by enactments expressing the will of the legislature, as distinguished from the unwritten law or common law

common law

a system of law based on historical cases and precedent rather than codified law, look towards past cases and past rulings to determine current

Theocratic Law

This system is based on religious teachings, as they are enshrined in the religious scriptures. Islamic law is the most widely practiced religious legal system in today's world. USED IN Islamic Nations

Handwritten

When a contract contains ambiguous terms, U.S. courts will uphold ________ terms over typewritten or printed terms.

Copyright

protects the original works of authors, composers, playwrights, artists, and publishers for their lifetime + 50 years

Forbearance

an employee of a United States corporation promises to refrain from doing something that the employee has a legal right to do

Federal Trade Commission (FTC)

main federal agency enforcing consumer protection laws, uses "industry guides" and trade regulations

Parties

The entities involved in the agreement

Consideration

It spells out what each party stands to gain from the business agreement

Terms and Conditions

Specify the rights and obligations of each party

Duties

(In terms and conditions) Specific obligations required to be performed by each party

Rights

(In terms and conditions) The privileges to which each party is entitled

Dates

(In terms and conditions) Indicate important deadlines

Payment

(In terms and conditions) Specify the amount and method of money given.

Confidentialiaty

(In terms and conditions) Parties agree not to share specific information that could harm one another

mentally incompetent

A contract may be deemed invalid if one of the parties was _____________ at the time of entering the agreement.

Legal Purpose

A business contract must be for a ________ considered valid

Infant Industry

A new industry in a developing nation that must be protected

Arbitration

The use of an mediator to settle a dispute.

Mediation

An attempt to resolve disputes between nations

Litigation Risk

The possibility that legal action will be taken because of an indivdual's or corporation's actions, inactions, products, services, or other events

Foreign Corrupt Practices Act

Prohibits bribing foreign officials

Federal Trade Commission Act

Bans false or misleading advertising

Flammable Fabrics Act

Regulates the manufacture of highly flammable clothing, all US imports must meet this standards.

International Court of Justice

The primary judicial branch of the United Nations, can only bring countries to court

Endorsement

If a company wishes to remove or add something to its insurance policy

Business Communication

the sharing of information between people within an enterprise that is performed for the commercial benefit of the organization. In addition, business communication can also refer to how a company shares information to promote its product or services to potential consumers

Seven major elements of the communication process

(1) sender (2) ideas (3) encoding (4) communication channel (5) receiver (6) decoding and (7) feedback.

Ethnocentrism

the belief that one's own cultural group is somehow innately superior to others.

Spoon

Problems in business communication conducted across cultures often arise when participants from one culture are unable to understand culturally determined differences in communication practices, traditions, and thought processing. At the most fundamental level,

problems may occur when one or more of the people involved clings to an ethnocentric view of how

to conduct business. (Just a reminder, the answer is spoon)

Communication Barriers

Language, Environment and Technology, Social Organization and History, Conceptions of Authority, Nonverbal Communication

Types of Workplace Communication

Memos, Reports, Global Information System

Memos

Internal communicaton purposes, clear and concise, on the shorter side

Reports

In depth research into a given issue/problem

Global Information System

An information system which is developed and/or used in a global context

Maintenance

The roles of managers regarding a global information system include understanding that a global information system evolves over time and requires continual _____________ and refinement

Export Management Company

Export specialists who act as an export marketing department for client firms

Export Trading Company

An independent company that provides support services for firms engaged in exporting. This may include warehousing, shipping, insuring and billing on behalf of the client

Internalization Approach

Marketing imperfection approach to foreign direct investment

Experience Curve

Systematic production cost reductions that occur over the life of a product

Experience Curve Pricing

Aggressive pricing designed to increase volume and help the firm realize experience curve economies.

Multipoint Pricing

Occurs when a pricing strategy in one market may have an impact on a rival's pricing strategy in another market.

Predatory Pricing

Reducing prices below fair market value as a competitive weapon to drive weaker competitors out of the market ("fair" being cost plus some reasonable profit margin).

Cross Cultural Literacy

Understanding how the culture of a country affects the way business is practiced.

Geographical Pricing

Price adjustments required because of the location of the customer for delivery of products.

Captive Product Pricing

Sets the price range for one product low but compensates for that price by pricing the supplies needed to operate that product high.

Test Market

A geographic region or demographic group used to gauge the viability of a product or service

Market Research

The action or activity of gathering information about consumers' needs and preferences

Product Planning

Product mix, product item, product line.

Product Mix

All the dirrent products that a company makes or sells.

Product Line

A group of closely related products manufactured or sold by a business.

Product Item

A specific model, brand, or size of a product within a product line.

FOB (Free on Board)

A trade term requiring the seller to deliver goods on board a vessel designated by the buyer. The seller fulfills its obligations to deliver when the goods have passed over the ship's rail.

Free

When used in trade terms, the word ______ means the seller has an obligation to deliver goods to a named place for transfer to a carrier.

CIF (Cost Insurance and Freight)

A trade term requiring the seller to arrange for the carriage of goods by sea to a port of destination, and provide the buyer with the documents necessary to obtain the goods from the carrier.

Unimportant

When packaging a good for shipment, the branding and design to the eye is ___________

Pull Strategy

A marketing strategy emphasizing mass media advertising as opposed to personal selling.

Push Strategy

A marketing strategy emphasizing personal selling rather than mass media advertising

Push

_________ promotional strategies work well for lower cost items, or items where customers may make a decision on the spot.