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chapter 10 international cooperation among nations.docx

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McGill University
Management Core
MGCR 382
Sujata Madan

chapter 10 international cooperation among nations 2/17/2013 7:08:00 AM General agreements on Tariff and Trade( GATT) Rules: sponsoring multilateral negotiations to reduce tariff,quotas and other non-tariff barriers. o Most favored nation (MFN) principle—any preferential trantment granted to one country must be extended to all countries.  2 exceptions:  1. General system of preferences(GSP) : reduced rate to developing countries  2. For comprehensive trade agreement that promote economic integration, such as EU and NAFTA. The world trade orga( WTO)1995 switzerland 3 goals:  promote trade flows by encouraging nations to adopt nondiscriminatory, predictable trade policies  reduce remaining trade barriers  establish impartial procedures for resoulving trade disputes among members. Principles: Without discrimination, freer, predictable, more competitive, and beneficial for less developed countries Difference bet WTO and GATT:  1. GATT---promote trade in goods, WTO is much broader, trade in goods, in services, international intellectual property protection, and trade-related investmet  2. WTO enforcement power are stronger challenges:  the general agreement of trade in services(GATS)—reducing barriers to trade in services  agreement on trade related aspects of intellectual property rights( TRIPS)  trade related investment measures agreement(TRIMS) o affects: o trade-balancing rules: countries may not require foerigh investors to limit their imports of inputs to an amount equal to their exports of local production o foreign-exchange access: countries may not affect foreign investors’ access to foreign exchange o domestic sales requirements: countries may not require the investor to sell a percentage of a factory’s output in the local market  enforcement of WTO decisions Regional economic integration: FORMS: 1. free trade area : encourage trade among its members by eliminating trade barriers among them, eg NAFTA trade deflection: nonmembers deflect their exports to the member nation with the lowest external trade barriers. 2. customs union: combines the elimination of internal trade barriers among its members with the adoption of common external policies toward nonmember, eg zollverein (Germany), Mercosur Accord ( Brazil,Argentina..)  avoid trade deflection 3. common market: eliminating barriers that inhibit the movement of factors of production— labor, capital, and technology—among its members. Eg eu 4. economic union: full integration requires its members to coordinate their economic policies in order to blend their economies into a single entity. Eg. Euro 5. political union: complete political and economic intergration eg . i13 separate colonies operating into a new country, us IMPACTS: Firms lower production and distribution cost Expand customer base within the trading bloc Help firms compete internationally outside the trading bloc Threaten local forms European union—most important regional trading bloc 1957 treaty of Rome: France, Germany, Italy, Belgium, Netherlands, Luxembourg governing the EU  The European council – shapes the EU’S political priorites and policy agendas  THE Council of eu—most powerful decion- making body  The European commission—guardian of the treaties, administrative branch and manages budget  The europrean parliament—expand and power grow over time  The European court of justice  The legislative process Mutual recognition: if one member state determines that a product is appropriate for sale, then all other EU members are also obliged to do so under the provisions of the treaty of Rome Treaty of European union ( Maastricht treaty ) Euro NATTA -- 1994 reduce barrier to trade and investment among canada, mexico, and the us.  Screwdriver plant: a factory in which very little transformation of a product is undertaken Other free trade agreement in AMERICAN  the carribbean basin initiative  the central America-dominican republic free trade agreement  the mercosur accord  Andean community Trade aggrements in the Asia-pacific region  the Australia-new Zealand agreement  association of southeast Asian nations  the Asian pacific economic cooperation initiative African Initiatives s chap14 organizational design and control 2/17/2013 7:08:00 AM organizational design( structure) is the overall pattern of structural components and configurations used to manage the total orga.  Depends on firm’s size, strategy, tech and environ, culture  Ongoing process, change continually  1. Allocate orga resource, 2. Assign task to emoloyee, 3. Inform employee about firm’s rules, procedures and expectations 4. Collect and transmit infor (important to MNC)  corollary approach( delegate responsibility to individuals within an existing market  export department international division Global organizational design  Intergrate 3 types of knowledge : area knowledge, product knowledge, functional knowledge  5 most common forms: product, area, functional, customer, matrix  managerial approach: o ethnocentric approach:operate internationally the same way as domestic o polycentric approach: customize their operations for each foreign market they serve o geocentric approach: analyze the needs of customers worldwide and then adopt standardized operations for al markets they serve Global product design Most common form of organizational design by MNC  separate operating divisions within a firm  work best when the firm has diverse product lines or it is sold in diverse markets  if products are related M form design  Multidivisioal,  unrelated  H form design  holding eg, Samsung Global Area design  Organize the firm’s activities around specific areas or regions of the world  Particulary userful for firms with a polycentric or multidomestic corporate philosophy  Mostly likely to be used by a firm whose products are not readily transferable across regions, whose strategy is marketing driven rather than predicted on manufacturing efficiencies or tech innovation or reputation of its brand name products  disadvantages o Not suitable for product lines undergoing rapid tech change o Sacrifice cost efficiencies from global production o Diffusion of tech o Duplication of resources o Make coordination across areas expensive o Discourage global product planning Global Functional design Calls for a firm to create departments or divisions that have world wide responsibility for the common orga functions—finance, operations, marketing, r&d and HR  Used by MNC that have relatively narrow or similar product line  Result U form orga unity eg. Lenovo, british airways  Practically only when the firm has relatively few products or customers  Used by many firms engaged in extracting and processing natural resources, such as mining and energy industry Global Customer design  Used when a firm serves different customers, each with specific needs calling for special attention or expertise  Lead to duplication of resource if each customer group needs its own area and functional specialist  Coordination is difficult Globl matrix design ( most complex form)  The result of superimposing one form of organization design on top of an existing, different form  The resulting design is quite fluid, with new matrix dime
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