gbs 3

Regional economic integration- reducing barriers within one region

Global economic integration - efforts to reduce trade (economic activity) and investment barriers around the globe

GATT- General agreement on tariffs and trade- multilateral agreements governing the international trade of goods (merchandise)

WTO- World Trade Organization-  title of multilateral trading system and the organization underpinning this system since 2005

NAFTA- North American Free Trade Agreement- economic integration between US, Canada, Mexico

Customs Union- One step beyond an FTA (free trade area), a customs union imposes common external policies on nonparticipating countries

Political Union - integration of political and economic affairs of a region

Common Market- Combining everything a customs union has, a common market additionally permits the free movement of goods and people

Economic Union- Having all the features of a common market, members also coordinate and harmonize economic policies (in areas such as monetary, fiscal, and taxation) to blend their economies into a single economic entity

Free Trade Area- (FTA)  Group of countries that remove trade barriers among themselves

SMEs- small to medium enterprises)- make up 95% of all businesses

-        Half of production comes from these enterprises

-        Small businesses account for 80% of new jobs

VRIO -  Is it valuable, rare, inimitable, embedded in organization- evaluate whether you should do something. Review what is special about what you do, company mission.

Country of origin effect- Positive or negative perception of firms and products from a certain country

Liability of foreignness- Inherent disadvantage foreign firms experience in host countries because of their nonnative status

Agglomeration- Location‐specific advantages that arise from the clustering of economic activities in certain locations

2W1H decisions

1.     What

2.     Why

3.     How

Cultural distance- Difference between two cultures along identifiable dimensions such as individualism

Institutional distance- Extent of similarity or dissimilarity between the regulatory, normative, and cognitive institutions of two countries

Geographic distance- pretty sure this is what it sounds like

First-mover advantages- Benefits that accrue to firms that enter the market first and that later entrants do not enjoy

Late mover advantages- Benefits that accrue to firms that enter the market later and that early entrants do not enjoy

Equity and non-equity modes of entry

-        Nonequity mode- Mode of entering foreign markets through exports and contractual agreements that tends to reflect relatively smaller commitments to overseas Markets

-        Equity mode- Mode of entering foreign markets through JVs and wholly owned subsidiaries that indicates a relatively larger, harder‐to‐reverse commitment

Three legs of micro-finance

1.  Microcredit

2. Microsavings

3. Microinsurance

Types of MED social collateral- ?

-              Social Networks

-              Trust and Relationships

-              Culture and social norms

-              Access to resources

Tension in CMED goals

-        The Inherent Tension

-        CMED organizations have been straining to achieve financial and spiritual goals simultaneously, and there appears to be a fundamental, continuing tension between profitability and sustainability and advancement of the local church. Not all CMED organizations operate with this tension, but this typically stems from their inclination toward one of these two goals and neglect of the other.

Sustainability in MED

-        Operational sustainability is a measure of whether a MED program can cover its current costs through its revenues. In other words, the MED program takes in more in the form of interest and fees than it spends in overhead to run the operation (cash‐flow).

-        Financial sustainability is a measure of whether a MED program would be profitable if all combined costs were considered. In other words, the program would still show a profit if it took into consideration various economic benefits it receives (subsidies and donations). The ultimate MED profitability measure is financial sustainability, and it is the goal of MED programs to become financially self‐sustainable

Types of risk in global expansion- ?

-              Market

-              Political

-              Social

-              Reputational

-              property

Foreign currency exchange-

-        Foreign exchange rate- Price of one currency in terms of another

-        Purchasing power parity (PPP)- Conversion that determines the equivalent amount of goods and services different currencies can purchase

-        Conversion is usually used to capture differences in cost of living between countries

The Big Mac index- economic tool (informally) to measure Purchase power parity between currencies. Uses the McDonald’s Big Mac as their universal benchmark (since it is standardized and available in many countries) (from chat)

Pure float- currency exchange system where the country’s currency is valued by supply and demand- no govt intervention (from chat)

-        Pure market solution to determine exchange rates (from slides)

Pegged exchange rate policy- fixed rate to another currency

-        Gold standard- System in which the value of most major currencies was maintained by fixing their prices in terms of gold

-        Common denominator- Currency or commodity to which the value of all currencies are pegged

-        Bretton Woods system- System in which all currencies were pegged at a fixed rate to US dollar

Capital flight- large scale movement of financial assets and capital out of a country- triggered by economic/political instability (from chat)

Bandwagon effect- effect of investors moving in the same direction at the same time (ie. If everyone else is doing it then so will I)