Exam 2 chap 5 Flashcards
get a good grade (185 cards)
1
Q
What is a multinational corporation?
A
A company that is heavily engaged in international trade, beyond exporting an importing.
2
Q
What does a multinational corporation moves?
A
resources, goods, services, and skills
3
Q
Where does a multinational corporation moves?
A
- across national boundaries
- don’t care which country the headquarters is located in
4
Q
Multinational develop their global business in stages? True or False
A
True
5
Q
What are the stages of the multinational?
A
- companies operate in one country and sell in others
- multinationals set up foreign subsidiaries to handle sales in one country
- Multinationals operate an entire line of business in another country
- Engage in a virtual operation
6
Q
Stage 4 of multinational has evolved primarily due to what?
A
the internet and involved mostly high-tech companies.
7
Q
US-based multinationals earn what abroad?
A
a large percentage of their total revenue.
8
Q
Current global innovation leaders are?
A
- Apple
- Alphabet
- Amazon
- Gilead
9
Q
What is subject to controversy? (under multinational)
A
The role of multinational corporations in developing nations
10
Q
The ability of multinational to do what can benefit any country?
A
- to tap financial, physical and human resources from all over the world
- and combine them economically and profitability
11
Q
What is capital intensive?
A
- Using more capital than labor in the production process
- does not substantially increase employment
12
Q
What causes multinational to bring production back to the USA (home)?
A
political pressure
13
Q
what technology is transferred to developing nations?
A
capital intensive
14
Q
Does supply chain create more problems than advantages for multinationals firms? true or False
A
True.
Problems:
- partners stealing
- copying the firm’s technology
- complex government regulations
- harassment from officials
- lower global profits
15
Q
Define global marketing?
A
Marketing that targets markets throughout the world.
16
Q
How do small firms invest in global marketing?
A
via internet
17
Q
US toughest competition comes from where?
A
foreign companies
18
Q
What is global vision?
A
recognizing and reacting to international marketing opportunities, using effective global marketing strategies, and being aware of threats from foreign competitors in all markets.
19
Q
What is the foundation of a successful global vision?
A
a corporate structure that provides a continual flow of fresh ideas
ex: Otis company
20
Q
Over the past 2 decades, world trade has climbed from ________
A
$200 billion a year to more than $18 trillion in merchandise exports
21
Q
Otis company
A
- the largest manufacturer of people moving products
- include elevators, escalators…
- employ more than 64,000 people around the world
- product offer in more than 200 countries
- world leader
22
Q
Global marketing is a one-way street? True or False
A
False.
Global marketing is NOT a one-way street, foreign competitors (almost every industry) compete in the USA as well.
23
Q
What is GDP
A
Gross domestic product
24
Q
Define Gross domestic product?
A
is the total market value of all final goods and services produced in a country for a given period ( a year or quarter of a year)
25
what does the world final refer to?
refers to final product that are sold
26
Does GDP count ONLY final goods and services in its valuation of a country's production? True or False
True
27
Traditionally what type of companies as attempted to compete worldwide?
Large companies
28
Have small and medium companies started pursuing international markets?
- yes.
| - some are even started to play a critical role in driving export growth
29
what is SBA?
Small business administration
30
What does small business administration provide?
- support for small business that export or desire to start exporting.
- provide a 90% guarantee to a leader.
- replay with a loan.
31
What is outsourcing?
sending US job abroad.
| - controversial subject over the years
32
What is a key driver in outsourcing?
companies see cost saving.
33
According to executives what does outsourcing lead to?
corporate growth, efficiency, productivity, and revenue growth
34
what is the negative side of outsourcing?
factories closed as work is outsourced
35
What are the 4 industries affected by outsourcing?
- technology
- call centers
- human resources
- manufacturing
36
what is inshoring?
returning production jobs to the USA
37
What else has contributed to inshoring?
shrinking development and manufacturing timelines
38
what has rapid consumer product innovation forced?
the need to keep production designers, marketing researchers, logistics experts, and manufacturers in close proximity.
- goal work quickly as a team.
39
What is the traditional economic theory of globalization?
relies on competition to drive down prices and increase product and service quality.
40
what type of countries does business goes to produce what they need?
countries that operate most efficiently, have lower labor cost, and/or have the technology to produce what is needed.
41
benefits of globalization?
- expands economic freedom
- spurs competition
- raises a nation's productivity and living standards if it opens itself to the global market
- offers access to foreign capital, global export markets, and advanced technology
- promotes higher labor and environmental standards
- acts as a check on government power
42
benefits of globalization for developed countries?
- offers access to foreign capital, global export markets, and advanced technology
43
check on governmental power means___
it is more difficult for governments to abuse the freedom and property of their citizen
44
what should globalization be credited for?
helping millions out of poverty and for improving standard of living of low-wage families
45
A key tenet of globalization is ____
Free trade
46
Free trade is ___
trade among nations without barriers or restrictions
47
Countries restrict trade and create barriers to boost exports and limits imports? True or False
True
48
How can less competition for local business happen?
if a country can boost export and limit imports
49
What is trade adjustment assistance?
Payment made to workers who have lost their jobs to foreign competition
50
Does globalization lead to people being laid off from their jobs?
yes.
| - workers do not always find jobs in other industries.
51
Should a company consider entering the global market place?
yes.
| - only after its management has a solid grasp of the global environment
52
What are the reasons why a firm GO GLOBAL?
- earn additional profits (most important)
- offer a unique product or technological advantage no available to international competitiors
- excess capacity
- saturated domestic market
- potential for economies of scales
53
What are strategic alliances?
multinational firms that form a partnership. helps them penetrate global markets
54
The 5 methods of entering the global markets are
- in order of risk from least to most:
1. exporting
2. licensing and franchising
3. contract manufacturing
4. joint venture
5. direct investment
55
What is exporting?
selling domestically produced products to buyers in other countries
- least risky alternative and least complicated
56
What is Buyer for export?
an intermediary in the global market that assumes all ownership risk and sells globally for its own account.
57
What is an export broker?
a traditional broker who brings buyer and seller together
58
what is an export agent?
foreign sale agent/distributors who live in a foreign country and perform the same functions as domestics manufacturer's agent, helping with international financing, shipping and ...
59
instead of selling directly to foreign buyers, who can a company sell to?
they can sell to intermediaries located in its domestic market.
60
What is the most common intermediary?
export merchant.
| AKA: buyer for export.
61
How is a buyer for export treated___
like a domestic customer by the domestic manufacturer.
62
What are the 3 types of intermediaries?
- buyer for export
- export broker
- export agent
63
who assumer all the risk in export brokers/
manufacturer
64
Who retains the title for export brokers?
manufacturer
65
Export Broker operate primarily in ____
agricultural product and raw materials
66
What is licensing?
the legal process whereby a licensor allows another firm to use its manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge
67
how much risk with licensing?
little risk
68
A licensor should make sure of what?
They, maintain sufficient control over the licensee's activities to ensure proper quality, pricing, distribution and ...
69
Franchising is a form of ___
licensing
70
What should a franchisee do?
Pay a one-time fee and a percentage of sales to the franchisor for the opportunity to sell the company's goods or services.
71
Some franchises have to adapt to local cultures? True or False/
true.
72
2 common ways of maintaining effective control over licensees are:
- shipping one or more critical component from the USA
- locally registering patents and trademarks to the USA firms
** not to the licensee.
73
Firms that do not want to engage in licensing or global marketing can engage in?
contract manufacturing
74
contract manufacturing is___
private-label manufacturing by a foreign company.
75
under contract manufacturing, a foreign company produced what?
a certain volume of product to specification, with domestic firms' brand name on the good.
76
Joint venture
when a domestic firm buy parts of a foreign company or joints with a foreign company to create a new entity
77
What industry uses a lot of contract manufacturing?
pharmaceuticals
78
Can a joint venture be lucrative?
yes, but it can also be risky
79
is it true that joint venture partners may not agree on management strategies and policies?
yes. it is true
80
What is the only way a government will allow a foreign company to enter its country?
with joint venture
81
what does joint venture enable the local firms or government to acquire?
managerial skills and new technology
82
direct investment?
happens when a business in one country invests in a business interest in another country
83
Firm make foreign direct investment by acquiring what?
An interest in an existing company or by building new facilities
84
What country receive the most foreign investment?
USA
85
Dumping is____
The sales of an exported product at a price lower than that charged for a similar product in “home” market of the exporter.
86
Dumping can be viewed as what kind of discrimination?
Price discrimination
87
Reason why dumping happens?
- trying to increase an overseas market share
- temporarily distributing products to overseas markets to offset slack demand at home
- lowering unit cost by exploiting large -scale production
- attempting to maintain stable princess during periods of exchange rate fluctuations
88
Economist view dumping as harmful only when?
It involves predatory practices ( try to eliminate competition and gain monopoly)
89
Define countertrade
It is a form of trade in which all or part of the payment for goods or services is in the form of other goods or services.
- form of barter (swapping goods for goods)
90
Countertrade is a fast-growing way to conduct global business? True or False
True
91
Name two common type of countertrade?
- barter
| - compensation agreement
92
Does countertrade only involve goods or services?
No. It can sometime involve cash
93
Explain compensation agreement
Company provides technology and equipment for a plant in developing nation and agree to take full or partial payment in goods produced by that plant.
** plant (factory)
94
Multinational corporations operate somewhat differently in each country in what way?
Strategy they provide = different product features, packaging, and advertising.
95
Define Ted Levitt
- A Harvard professor
- described a trend he calls “global marketing” with a different meaning.
- for ted: communication and technology have made the world smaller
- he sees: the emergence of global markets for standardized product on a huge scale, as opposed to segmented foreign markets with different products
96
Define global marketing standardization
Production of uniform product that can be sold the same way all over the world
Ex: smartphones and tables are standardized product, expect the language displayed.
97
Global marketing standardization enables companies to do what?
- lower production and marketing cost
98
What is global marketing standardization success based on?
Based on variation and not on offering the same product everywhere
99
Name one method of variation in global marketing standardization?
Multi-domestic strategy
100
What is multi-domestic strategy?
When a multinational firm enable individual subsidiaries to compete independently in domestic markets
Translation: company essentially tailors their products to each specific country with close attention to customers, religion, and more.
101
Companies with separate subsidiaries in other countries can be said to operate using multi-domestic strategy? True or False
True
102
Name the external environment faced by global marketers
- culture
- economic development
- the global economy
- political structure and actions
- demographic makeup
- natural resources
103
What is culture
Set of values shared by the citizen of a society
| - it determines what is socially acceptable
104
What does culture underlines?
- The family
- the educational system
- religion
- the social class system
105
What does cultural blunders (error) lead to?
Misunderstanding and perception of rudeness or even incompetence
Ex: hand shake in India is different than usa
106
Is language an important aspect of culture?
Yes.
Even cause problems for marketers, because have to translate brand name, slogans, ...
107
Is it important to develop and implement marketing mixes that reflect a cultural understanding of the target market countries?
Yes.
Each country has its own unique customs and traditions that determine business practices and influence negotiations with foreign customers
108
What type of industries are found in developed countries?
Complex and sophisticated industries
109
What type of industries are found in less developed nations?
Basic industries
110
How is the income level in developed countries?
- higher
| - large income mean greater purchasing power and demand
111
What is GNI?
Gross national income
112
What does gross national income measure?
The ability of a country’s citizens to buy various goods and services
113
What is balance of trade?
The difference between the value of a country’s export and the value of its imports over a given period.
Export - Import
114
What is balance of payments
The different between a country’s total payment to other countries tries and its total receipts from other countries.
payment - receipts
115
How to know if a country has favorable balance trade?
Have more export than import
116
How to know a country has unfavorable trade?
Import more than export
117
How was the USA economy in the past?
- large economy
118
How did the USA economy in the past used to move?
Global market tended to move up or down depending on its health
119
Is it still true today?
Yes. It is still true, but less than in the past
120
Define BRICS
- Brazil
- russia
- India
- china
- South Africa
121
Who plays an important role in the development of the BRICS countries?
Politics
122
Brazil
Political scandal and recession
123
Russia
Economic sanctions and over-dependence on energy exports
124
Government policies run the gamut (range) from ____
No private ownership and minimal individual freedom to little central government and maximum personal freedom
125
Why is government-opened industries decreasing?
Because rights of private property are increasing.
126
What permits business to grow and prosper?
Regulations
| Ex: data reliable
127
Can regulation overturn business and make it virtually impossible for them to operate?
Yes.
128
What can affect business laws?
International politics
| Ex: china investigated American multinational companies, trump vowed to be done with NAFTA
129
Where are the least regulated and most efficient economics?
- place with well-established common law traditions
| Ex: Australia, canada, New Zealand, uk, usa, Hong Kong, Singapore.
130
Define tariff
A tax levied (fee) on goods entering a country
131
Define quota
A limit on the amount of a specific product that can enter a country
132
Define boycott
The exclusion of all products from certain countries or companies
133
Define exchange control
A law compelling a company earning foreign exchange from its exports to sell it to a control agency
134
What are the most common legal structure affecting trade?
- tariff
- quota
- exchange control
- boycott
- market grouping ( aka: common trade alliance)
- trade agreement
135
What is trade agreement
An agreement to stimulate international trade
136
What is market grouping?
Happens when several countries a agree to work together to form a common trade area that enhance trade opportunities
137
What is market grouping other name?
Common trade alliance
138
What is the best market grouping?
EU
139
What is Mercosur?
Largest Latin American trade agreement
140
Mercosur include which countries?
- Argentina
- Bolivia
- Brazil
- Chile
- Columbia
- Ecuador
- Paraguay
- Peru
- Uruguay
- Venezuela
All the South American countries, except the Guyanas.
141
What is the largest Latin American trade agreement?
Mercosur
142
Uruguay Round?
A trade agreement that has dramatically lowered trade barriers worldwide.
- created the world trade organization
143
When was the Uruguay round adopted
1994 - signed by 162 nations
144
What does the Uruguay round covers?
- covers services
- intellectual property rights
- trade related investment measures ( such as exchange controls)
145
What changes did the Uruguay round made?
- entertainment, pharmaceuticals, integrated circuits and software (ex: protect trademarks)
- financial, legal, and accounting services (cam under international trading rules for the first time)
- agriculture (EU reducing farm subsidies “paying agri people”)
- textiles and apparel (strict quotas from developing countries)
- a new trade organization ( world trade organization & general agreement on tariffs and trade)
146
What does WTO (world trade organization) mean?
A trade organization that replaced the old General Agreement on tariffs and trade (GATT)
147
What is GATT?
General agreement on tariffs and trade - a trade agreement that contained loopholes enabling countries to avoid trade-barrier reduction agreements
148
Is there time limits on WTO (World trade agreements)?
Yes. Certain time frame to resolve a dispute
149
Where did the latest round of Wold trade agreement start?
2009 - Doha, Qatar
150
Why was the world trade agreement paralyzed?
Because the developing countries and the developed economies were not willing to make concessions
151
What is t TFA ?
Trade facilitation agreement
152
Define trade facilitation agreement?
A world trade organization agreement that aims to cut customs-related red tape and ease the flow or trade between countries
Translation: transit of goods between countries boarders to be faster
153
What did the failed Doha lead to?
Other coalitions (alliances)
154
List the other coalitions the failed Doha lead to
- the transatlantic trade and investment partnership (between usa and eu)
- trans-Pacific partnership (TPP) new trade rules for 12 participating countries
- pacific alliance
155
What countries compose to pacific alliance?
- Columbia
- Chile
- Peru
- Mexico
156
TFA (trade facilitation agreement) reduce trade cost by____
11-15 %
157
What does NAFTA mean?
Agreement between Canada, USA, and Mexico
158
What is the world largest free trade zone?
NAFTA
159
What did NAFTA resulted in?
Low-skilled and assembly line jobs moving from the usa to Mexico
160
Define foreign direct investment
A business investment in a foreign country, either by establishing business operations or by acquiring business assets in that country
Ex: ford build factory in Mexico -> direct investment
161
What is CAFTA-DR?
Dominican Republic-central America free trade agreement
162
Define the Dominican Republic- Central America free trade agreement?
A trade agreement (2005) that includes:
- Costa Rica
- Dominica republic
- El Salvador
- Guatemala de
- Hondura
- Nicaragua
- USA
163
Since 2015 what happens to the goods exported to CAFTA-DR?
All consumer and industrial goods exported are no longer subject to tariffs
164
What does Dominican Republic-central america free trade agreement covers?
- Intellectual property rights
- transparency
- electronic commerce
- telecommunications
165
EU
Free trade zone encompassing 28 European countries
166
EU is not only a free trade zone, it is also a _____
Political and economic community
167
Who is after the usa as largest economy ?
EU
168
What does EU guarantee?
- freedom of movement of people, goods, services, and capital between member states
169
Does EU maintain a common trade policy with outside nations and regional development policy?
Yes.
170
What is World Bank?
An international bank that offers Lowe-interest loans to developing nations
171
Group of twenty (G-20)
A forum for international economic development that promotes discussion between industrial and emerging-market countries on key issues related to global economic stability
172
IMF (international monetary funds)
An international organization that acts as a lender of last resorts, providing loans to troubled nations, and also works to promote trade through financial cooperation
Short version: loans to members nations that are unable to meet their budgetary expenses
Last resort for boring money (ex: Greece)
173
What was the original reason for world bank?
To help the nations build infrastructure, but now the world bank loans to help developing nations relieve their debt burdens
174
Members of the G-20?
- Argentina, Australia, Brazil, canada, china, EU (France, Germany, Italy) Indonesia, japan, Mexico, russia, Saudi Arabia, South Africa, Republic of Korea, turkey, UK, USA
175
Will UK pay fees for existing the EU?
Yes. A lot of money
176
What are the 3 groups that will generate about 1/2 the world’s consumption growth?
- retiring and elderly in developed countries
- china’s working age pop
- north America’s working age pop
177
Natural resources creates what?
- international dependencies
- huge shifts of wealth
- inflations and recession
- export opportunities if resources are abundant
- stimulus for military intervention
178
What is the first step in creating global marketing mix?
- having a good understanding of global target market
179
Information gathering on foreign markets with research is based on what?
The 4 Ps.
- price
- product
- promotion
- place (distribution)
180
Product decision strategies are:
- product adaption: alter the basic product to meet local conditions
- product invention: create a new product for the market or drastically change the existing product
- one product, one message: develop a single product for all markets ( may backfire with different cultures)
181
Promotion adaption
- keep the same basic product but change the promotion strategy
- language barriers, translation problems, cultural differences
182
Place (distribution)
- need adequate distribution
| - decision may need to be changed for each foreign market
183
Pricing
- unique problem
- consider: transport cost, tax, insurance, tariffs, how much will consumer spend and make sure they pay the price
- simplify a product to lower the price: ( don’t assume lower-income countries will accept lower quality)
184
Define exchange rate
- the price of one’s country currency in terms of another country’s current
- include floating exchange market rate
185
What is floating exchange market rate?
- a system in which price of different currencies move up and down based on the demande for the supply of each currency
