Unit 3 Flashcards
(54 cards)
Why do organizations go into the Global Economy
Resource supplies, product markets, and competition.
Globalization
The process of growing
interdependence among the global economy.
International Management
Managing operations in more than one country.
Global manager
Understanding of political and cultural challenges
Europe
A political and economic alliance between European countries.
The Americas
The North American Free Trade Agreement (NAFTA) containing USA, Canada, & Mexico.
Maquiladoras
Foreign manufacturing plants that operate in Mexico with special privileges.
Asia and the Pacific Rim
China and India are major contributors to global trade due to their growing economies and large consumer markets.
China, Japan, & India
Are the largest economic powers in the world.
ASEAN
Association of South-East Asian Nations.
Africa
Some parts of Africa face economic and political instability, while others are attracted by foreign investment.
SADC
Southern African Development Community
International Business
Conducts business across national boundaries.
5 reasons why Companies go international?
- Profit
- Customers
- Suppliers
- Capital
- Labour
Common Forms of International Business
- Market Entry Strategies (Global Sourcing, Exporting & Importing, Licensing & Franchising)
- Direct Investment Strategies (Joint Ventures, Foreign Subsidiaries)
Market Entry
Involve the sale of goods/service to foreign markets.
Global Sourcing
Buying parts for supplies from international companies.
Importing
Purchasing goods/services
Exporting
Selling goods/service
Licensing
Contracting to make/sell registered trademarks.
Franchising
Purchasing or selling brands or trademarks.
Direct Investment
Requires major capital commitments but creates rights of ownership and control over foreign operations.
Joint Ventures
Two companies merge to become one.
Foreign Subsidiaries
Permanent, in-person establishments and businesses (Brick + Motor) with employees.
