CH 4 Flashcards
(28 cards)
What is globalization?
The trend of the world economy toward becoming a more interdependent system
What are some pros of globalization?
- “friction of distance” decreased because of the internet, high speed travel, and other innovations
- economies of scale (save more in costs as you produce more)
- rapid technological improvements
What are some cons of globalization?
- job losses in USA
- threats to information security
- loss of control over quality and standards
- hidden/unanticipated costs
What is a multinational corporation?
aka multinational enterprise
A business with operations in several countries
ex: McDonalds, Walmart, Amazon, Apple
What is a multinational organization?
aka NGO= non-governmental organization
A nonprofit organization with operations in several countries
ex: RedCross
What are ethnocentric managers?
aka parochialism
A narrow view in which people see things solely through their own perspective
“we know best”
Ethnocentric managers believe that their native country, culture, language, and behavior are superior to all others
What are polycentric managers?
“they know best”
Polycentric managers take the view that native managers best understand personnel and practices in their home countries, and so the home office should defer to them
What are geocentric managers?
“what’s best is what’s effective, regardless of origin”
Geocentric managers accept that there are differences and similarities between home and foreign personnel and practices and that they should use which ever techniques are most effective
What are 5 approaches to expand internationally? (from low risk & investment to high risk & investment)
LOW RISK & INVESTMENT
1. global outsourcing (aka offshoring)
2. importing, exporting, and countertrading
3. licensing (for manufacturing companies) & franchising (for service companies)
4. joint ventures
5. wholly owned subsidiaries
HIGH RISK & INVESTMENT
What is global outsourcing?
Using suppliers outside the United States to provide labor, goods, or services
What is importing, exporting , and countertrading?
importing: a company buys goods outside the country and resells them domestically
exporting: a company produces goods domestically and sells them outside the country
countertrading: bartering goods for good
What is licensing and franchising?
licensing: I allow a foreign company to pay me a fee in order for them to distribute my company’s products or services
franchising: a form of licensing in which I allow a foreign company to pay me a fee and share some of its profit in return for using my brand name and package of materials and services
What are joint ventures?
aka strategic alliance
Two organizations that have joined forces to realize strategic advantages that neither would have if operating alone
What are wholly owned subsidiaries?
A foreign subsidiary that is totally owned and controlled by another organization.
What are some major trading blocs?
- NAFTA (North American Free Trade Agreement)
a trading bloc consisting of the US, Canada, and Mexico, encompassing 444 million people - USMCA (United States-Mexico-Canada Agreement)
Includes new chapters covering digital trade, anticorruption, and regulatory practices - EU (European Union)
Consist of 27 trading partners in Europe - APEC (Asia-Pacific Economic Cooperation)
group of 21 Pacific Rim countries, most with a Pacific coastline (U.S., Canada, China) - ASEAN (Association of Southeast Asian Nations)
rading bloc of 10 countries in Southeast Asia. - Mercosur: largest trading bloc in Latin America
- CAFTA-DR (Central America Free Trade Agreement)
Central America, including the Dominican Republic
What is culture?
Shared set of beliefs,
values, knowledge, and
patterns of behavior
common to a group of
people
What is a low context culture vs high context culture?
low context: Shared meanings primarily derived from written and spoken words. Includes U.S., Great Britain, Scandinavia, Germany
high context: Rely heavily on situational cues for meaning when communicating
with others. Includes China, Korea, Japan, Mexico, many Arab countries
What are the nine dimensions of the globe project?
- power distance
- uncertainty avoidance
- institutional collectivism
- in-group collectivism
- gender egalitarianism
- assertiveness
- future orientation
- performance orientation
- human orientation
What is power distance?
The degree to which a society’s members expect power to be unequally shared
What is uncertainty avoidance?
The extent to which a society relies on social norms and procedures to alleviate the unpredictability of future events
What is institutional collectivism?
The extent to which individuals are encouraged and rewarded for loyalty to the group as opposed to pursuing individual goals
What is in-group collectivism?
The extent to which people should take pride in being members of their family, circle of close friends, and their work organization
What is gender egalitarianism?
The extent to which a society should minimize gender discrimination and inequalities
What is assertiveness?
The extent to which a society expects people to be confrontational and competitive as opposed to tender and modest
