GMS 200 Chapter Notes - Chapter 3: Southern African Development Community, Foreign Direct Investment, Insourcing

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 200
• Professor: Franklin Ramsoomair

Document Summary

Reasons why businesses go global: profits, customers, suppliers, capital, labour. Global business conducts commercial transaction across national boundaries. Foreign direct investment (fdi) building, buying all, or buying part ownership of a business in another country: insourcing job creation through foreign direct investment, outsourcing. Greenfield investment builds an entirely new operation in a foreign country. Complications in the global business environment: legal and political systems. Political risk the potential loss in value of a foreign investment due to instability and changes in the host country. Political-risk analysis tries to forecast political disruptions that can threaten the value of a foreign investment. Local legal systems complex and unfamiliar laws can create problems: trade agreements and trade barriers. Established to promote free trade and open markets around the world. Sharpen competition, motivate innovation, and breed success. World trade organization member nations agree to negotiate and resolve disputes about tariffs and trade restrictions. Tariffs taxes governments levy on imports from abroad.