GMS 200 Lecture Notes - Lecture 8: Global Sourcing, Franchising, Ethnocentrism

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 200
• Professor: Lori Anne Heckbert

Document Summary

In our global economy, resource supplies, markets, and competition are worldwide. Why companies go global: profits greater profit potential, customers new markets to sell products, suppliers new resources for products and services, capital access to financial resources, labour lower labour costs. Global sourcing is the process of purchasing resources around the world for local use. Licensing refers to a firm paying for the rights to make or sell a product. Franchising refers to paying a foreign business to locally operate using its name, brand, and methods. Foreign direct investment (fdi) involves investing in a foreign business. Insourcing refers to job creation as a result of fdi. A joint venture is a co-ownership in which foreign and local relations cooperate. A foreign subsidiary is a local operation completely owned/operated by a foreign firm. Tariffs or taxes limit this freedom: tariffs are meant to protect local firms from foreign competition and save local jobs.