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Flashcards in Ch1: Globalization Deck (19)
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1

globalization

refers to the shift toward a more integrated and interdependent world economy

2

globalization of markets

refers to the merging of historically distinct and separate national markets into one huge global marketplace

3

globalization of production

refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production

4

factors of production

labor, energy, land, capital

5

The Emergence of Global Institutions

institutions are needed to help manage, regulate, and police the global marketplace and to promote the establishment of multinational treaties to govern the global business system

6

global institutions (5)

1. world trade organization
2. IMF
3. United Nations
4. World Bank
5. G20

7

World Trade Organization

policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states

8

IMF

often seen as the lender of the last resort to nation-states whose economies are in turmoil and currencies are losing value against those of other nations

9

United Nations

preserving peace through international cooperate and collective security

10

World Bank

promotes economic development via low interest loans for infrastructure projects

11

G20

forum through which major nations tried to launch a coordinated policy response to the 2008-2009 global financial crisis

12

drivers of globalization (2)

- decline in barriers to the free flow of goods, services, and capital
- technological change

13

international trade

occurs when a firm exports goods or services to consumers in another country

14

foreign direct investment (FD)

occurs when a firm invests resources in business activities outside its home country.

15

the role of technological change (3)

1. microprocessors and telecommunications
2. internet and world wide web
3. transportation technology

16

stock of foreign direct investment

refers to the total cumulative value of foreign investments

17

multinational enterprise

is any business that has productive activities in two or more countries. Since the 1960s, two notable trends in the demographics of the multinational enterprise have been (1) the rise of non-U.S. multinationals and (2) the growth of mini- multinationals.

18

KOF Index of Globalization (3)

1. economic
2. social
3. political
3 measures

19

baseline profitability

eight factors to predict the total pretax return investors may expect