Global Management Pt.1 (EXAM 2)

Question 1

Global business

Answer 1

buying and selling goods and services from different countries

Question 2

Multinational corporation

Answer 2

corporation that owns businesses in two or more countries

Question 3

Direct foreign investment

Answer 3

investment in which a company builds a new business or buys an existing business in a foreign country

Question 4

Trade barriers

Answer 4

government-imposed regulations that increase the cost and restrict imported goods

Question 5

Prtoctectionism

Answer 5

government’s use of trade barriers to shield domestic companies and their workers from foreign competition

Question 6

Tariff

Answer 6

direct tax on imported goods

Question 7

Nontariff barriers

Answer 7

nontax methods of increasing the cost or reducing volume of imported goods

Question 8

What are the types of nontariff barriers?

Answer 8

1. quotas
2. voluntary export restraints
3. government import standard
4. subsides
5. customs classification

Question 9

Quotas

Answer 9

limit on number or volume of imported products

Question 10

Voluntary exported restraints

Answer 10

voluntarily imposed limits on the number or volume of products exported

Question 11

Government import standard

Answer 11

standard ostensibly to protect the health and safety of citizens but often used in restrict imports

Question 12

Subsides

Answer 12

loans, grants, and tax deferments given to domestic companies to protect them from foreign competition

Question 13

Customs classification

Answer 13

classification that affects the size of the tariffs

Question 14

General agreement on tariffs and trade (GATT)

Answer 14

worldwide trade agreement that reduced and eliminated tariffs, limited government subsides, established protections for intellectual property

Question 15

World Trade Organization (WTO)

Answer 15

• international organization dealing with the global rules of trade
• ensure that trade flows as smoothly, predictably, and freely as possible

Question 16

Regional trading zones

Answer 16

areas in which tariff and nontariff barriers on trade between countries are reduced or eliminated

Question 17

Maastricht Treaty of Europe

Answer 17

Europe

Question 18

United States–Mexico–Canada Agreement (USMCA)

Answer 18

US, MX, CA

Question 19

Dominican Republic– Central America Free Trade Agreement (CAFTA-DR)

Answer 19

Central America & the Caribbean

Question 20

Southern Common Market (MERCOSUR)

Answer 20

South America

Question 21

Association of Southeast Asian Nations (ASEAN)

Answer 21

Asia

Question 22

Asia-Pacific Economic Cooperation

Answer 22

Asia

Question 23

Tripartite Free Trade Agreement (TFTA)

Answer 23

Africa

Question 24

Free Trade Agreements caused…

Answer 24

• increase choices, competition and purchasing powers
• decrease in expenditures
• create new business opportunities and intensify competition
• managers are responsible to address the competition

Question 25

Global consistency

Answer 25

multinational company has facilities in different counties and runs them all using the same rules, guidelines, policies, and procedures

Question 26

Why is Global consistency valued?

Answer 26

it simplifies decisions

Question 27

What risks do Global consistency have?

Answer 27

using management procedures poorly suited to particular countries markets, cultures, and employees

Question 28

Local adaptation

Answer 28

modifying rules to adapt to difference in foreign customers, governments, and regulatory agencies

Question 29

What risks do local adaptation have?

Answer 29

losing cost effectiveness and productivity that result from using standardized rules and procedures

Question 30

What values do local adaptation bring?

Answer 30

locally sourcing inputs is desired

Question 31

Exporting

Answer 31

selling domestically produced products to customers in foreign countries

Question 32

Cooperative contract

Answer 32

foreign business owner pays a fee for the right to conduct business in their country

Answer 33

agreement where a domestic company (license) receives royalty payments. Licensee produce the licensor's product sell its service or use its brand

Question 34

Franchise

Answer 34

A collection of networked firms where the manufacturer or marketer of a product (the franchisor), licenses the entire business to another person (the franchisee)

Question 35

Strategic Aliances

Answer 35

agreement in which companies combine key resource, costs, risks, technology, and people

Question 36

Joint venture

Answer 36

strategic alliance in which two companies collaborate to form a third independent company can be challenging due to multiple cultures

Question 37

(T/F): Joint companies avoid tariff and nontariff barriers

Answer 37

True

Question 38

Do companies participating in a joint venture bear only part of the costs and the risks of that business?

Answer 38

Yes

Question 39

(T/F): Joint companies doesn't need to share profits as well as costs/risks

Answer 39

False

Question 40

Wholly owned affiliates

Answer 40

foreign offices and manufacturing plants that are 100 percent owned by parent company

Question 41

Pros of wholly owned affiliates

Answer 41

parent company receives all of the profits and has complete control over the foreign facilities

Question 42

Cons of wholly owned affiliates

Answer 42

expense of building new operations or buying existing businesses

Question 43

Global new ventures

Answer 43

companies that are founded with an active global strategy and have sales, employees, and financing in different countries

Question 44

What occurs because of global new ventures

Answer 44

easy transportation, low-cost communication technologies, and experienced businesspeople