Business Process Management: Globalization & Local Economies Flashcards Preview

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Flashcards in Business Process Management: Globalization & Local Economies Deck (16):
1

Globalization

distribution of industrial and service activities across an increasing number of nations.

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Globalization is measured by:

world trade as a percentage of GDP- The greater the percentage the greater the degree of globalization

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Factors that drive globalization

a) Improvements in Transportation
b) Technological Advancements
c) Deregulation of International Financial Markets
d) Organizational/Operational Options for International Business

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Globalization Promotes Specialization

Economies of scale are larger in a global economy.
-Businesses have more choices.
-Specialization that leverages comparative advantage

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Motivations for International Business Operations

1) Comparative Advantage
2) Imperfect Markets-limited by the regulatory barriers or limited by the physical immobility
3) Product Cycle - Starting with the initial development of the product to meet needs in the domestic markets

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Methods of Conducting International Business Operations

1) international Trade- exporting/importing products or services

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Licensing

Entities that provide the right to use processes or technologies in exchange for a fee

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Franchising

entities whose marketing service or delivery startegy provides training and related service delivery resources in exchange for a fee

9

Joint Venture

take advantage of comparative advantage of one or both of the participants in marketing or delivering a product

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Direct foreign investment

go buy a company and make them a subsidary

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Relevant Factors of Globalization

Political and Legal Influence
Potential for Asset Expropriation
Taxes and Tariffs
Limitations imposed by Govt.
Content or Value Added Limits-NAFTA
Foreign trade zones
Economic Systems

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Inherent Risks of International Business Operations

Exchange Rate Fluctuations
Foriegn Economies
-Interest Rates
-Inflation
-Exchange Rates

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Defining National Power

-geography
-Population
-Resources
-Economy
-Military
-Diplomacy

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Functional Interdependence

Need participation and cooperation to have globalizations

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Systemic Interdependence

acknowledges that all members of the global community share the planet earth

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Dynamics of the Balance of Power

1) Developed vs. Emerging Nations
2) Trade Deficits
3) Balance of Power