IBM 301 Lecture Notes - Lecture 5: Trade Adjustment Assistance, Gross Domestic Product, Offshoring

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Chapter 5: Developing a Global Vision
Rewards of Global Marketing and the Shifting Global Business Landscape
Global marketing: marketing that targets markets throughout the world
Global vision: recognizing and reacting to international marketing opportunities, using
effective global marketing strategies, and being aware of threats from foreign competitors
in all markets
The foundation of a successful global vision is a corporate structure that provides
a continual flow of fresh ideas
Global marketing is not a one-way street, foreign competitors compete in the U.S. as well
Importance of Global Marketing to the U.S.
Gross domestic product (GDP): is the total market value of all final goods and services
produced in a country for a given period
Final refers to final products that are sold, not to intermediate products used in the
assembly of a final product
GDP counts only final goods and services in its valuation of a country’s
More small- and medium-sized companies export goods from the United States
Job Outsourcing and Inshoring
Outsourcing: sending U.S. jobs abroad
Leads to corporate growth, efficiency, productivity, and revenue growth
Inshoring: returning production jobs to the United States
Rapid consumer product innovation forces the need to keep product designers,
marketing researchers, logistics experts, and manufacturers in close proximity
Shrinking development and manufacturing timelines have further contributed to
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
Costs of Globalization
Countries restrict trade and create barriers to boost exports and limit imports
Globalization leads to people being laid off from their jobs
Workers do not always find jobs in other industries
Payments made to workers who have lost their jobs to foreign competition is
called trade adjustment assistance
Multinational Firms
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Multinational corporation: a company that is heavily engaged in international trade,
beyond exporting and importing
Moves resources, goods, services, and skills across national boundaries without
regard to the country in which its headquarters is located
Stages of multinational global business development:
Operate in one country and sell into others
Set up foreign subsidiaries to handle sales in one country
Operate an entire line of business in another country
Engage in virtual operation
Are Multinationals Beneficial?
The role of multinational corporations in developing nations is a subject of controversy
Ability of multinationals to tap financial, physical, and human resources from all over the
world and combine them economically and profitably can benefit any country
Capital intensive: using more capital than labor in the production process
Does not substantially increase employment
political pressure also causes some U.S. multinationals to bring production back home
Global Marketing Standardization
Global marketing standardization: production of uniform products that can be sold the
same way all over the world
Multidomestic strategy: when multinational firms enable individual subsidiaries to
compete independently in domestic markets
Companies with separate subsidiaries in other countries can be said to operate
using a multidomestic strategy
Culture is the common set of values shared by the citizens of a society that determines
what is socially acceptable
Culture underlies the family, the educational system, religion, and the social class system
Cultural blunders lead to misunderstandings and perceptions of rudeness or even
language is an important aspect of culture
Each country has its own unique customs and traditions that determine business
practices and influence negotiations with foreign customers
Economic Factors
In general, complex and sophisticated industries are found in developed countries and
basic industries are found in less developed nations
Gross national income (GNI) per capita is one measure of the ability of a country’s
citizens to buy various goods and services
Balance of trade: the difference between the value of a country’s exports and the value of
its imports over a given period
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