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GMS__

6 Pages
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Department
Global Management Studies
Course Code
GMS 200
Professor
Shavin Malhotra

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Chapter 5: Global Dimensions of Management
International Management and Globalization
x Global Economy: resources, markets, and competition are worldwide in scope
x Globalization: the process of growing interdependence among elements of the global economy
x International Management: Involves managing operations in more than one country
x Global Manager: Culturally aware and informed about international affairs
Europe
x European Union: a political and economic alliance of European countries
x Euro: the common European currency
The Americas
x NAFTA: The North American Free Trade Agreement linking Canada, the United States, and
Mexico in an economic alliance
x Maquiladora: foreign manufacturing plants that operate in Mexico with special privileges
Asia and the Pacific Rim
x China and India becoming powerhouses
x Similarities: economies that are growing at more than three times the average rate of other
industrialized countries, big populations,
x Asian countries represent a third of the global marketplace
Africa
x Experiencing economic recovery
x Good resources
x Outsourcing
International Business Challenges
x International Business: conducts commercial transactions across national boundaries
Why Companies go International
1. Profits
2. Customers
3. Suppliers
4. Captial
5. Labour
www.notesolution.com
Forms of International Business
x Market entry strategies: involve the sale of goods or services to foreign markets but do not
require expensive capital investments
x Direct investment strategies: require major capital commitments but create rights of ownership
and control over operations to the foreign country
Market Entry Strategies
x Global Sourcing: materials or services are purchased around the world for local use
x Exporting: local products are sold abroad
x Importing: process of acquiring products abroad and selling them in domestic markets
x Licensing agreement: one firm pas a fee for rights to make or sell another company’s products
x Franchising: a fee is paid for rights to use another firm’s name and operating methods
Direct Investment Strategies
x Joint ventures: operates in a foreign country through co-ownership with local partners
o Equity purchases and/or direct investments by a foreign partner
o Joining together to make an entirely new business
o Strategic alliances that help partners gain things through co-operation that otherwise
would be difficult to achieve independently
x Foreign subsidiary: is a local operation completely owned by a foreign firm
x Greenfield ventures: formed through direct investment in start-up operations
Complications in the Global Business Environment
x Competitive
x Different legal environments
x World Trade Organization: member nations agree to negotiate and resolve disputes about
tariffs and trade restrictions
x Most favoured nation status: gives a trading partner most favourable treatement for imports
and exports
x Protectionism: is a call for tariffs and favourable treatments to protect domestic firms from
foreign competition
Multinational Corporations
x Multinational corporation: a business with extensive international operations in more than one
foreign country
Types of Multinational Corporations
x Transnational corporation: is an MNC that operates worldwide on a borderless basis
www.notesolution.com

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Description
Chapter 5: Global Dimensions of Management International Management and Globalization N Global Economy: resources, markets, and competition are worldwide in scope N Globalization: the process of growing interdependence among elements of the global economy N International Management: Involves managing operations in more than one country N Global Manager: Culturally aware and informed about international affairs Europe N European Union: a political and economic alliance of European countries N Euro: the common European currency The Americas N NAFTA: The North American Free Trade Agreement linking Canada, the United States, and Mexico in an economic alliance N Maquiladora: foreign manufacturing plants that operate in Mexico with special privileges Asia and the Pacific Rim N China and India becoming powerhouses N Similarities: economies that are growing at more than three times the average rate of other industrialized countries, big populations, N Asian countries represent a third of the global marketplace Africa N Experiencing economic recovery N Good resources N Outsourcing International Business Challenges N International Business: conducts commercial transactions across national boundaries Why Companies go International 1. Profits 2. Customers 3. Suppliers 4. Captial 5. Labour www.notesolution.com Forms of International Business N Market entry strategies: involve the sale of goods or services to foreign markets but do not require expensive capital investments N Direct investment strategies: require major capital commitments but create rights of ownership and control over operations to the foreign country Market Entry Strategies N Global Sourcing: materials or services are purchased around the world for local use N Exporting: local products are sold abroad N Importing: process of acquiring products abroad and selling them in domestic markets N Licensing agreement: one firm pas a fee for rights to make or sell another company’s products N Franchising: a fee is paid for rights to use another firm’s name and operating methods Direct Investment Strategies N Joint ventures: operates in a foreign country through co-ownership with local partners o Equity purchases and/or direct investments by a foreign partner o Joining together to make an entirely new business o Strategic alliances that help partners gain things through co-operation that otherwise would be difficult to achieve independently N Foreign subsidiary: is a local operation completely owned by a foreign firm N Greenfield ventures: formed through direct investment in start-up operations Complications in the Global Business Environment N Competitive N Different legal environments N World Trade Organization: member nations agree to negotiate and resolve disputes about tariffs and trade restrictions N Most favoured nation status: gives a trading partner most favourable treatement for imports and exports N Protectionism: is a call for tariffs and favourable treatments to protect domestic firms from foreign competition Multinational Corporations N Multinational corporation: a business with extensive international operations in more than one foreign country Types of Multinational Corporations N Transnational corporation: is an MNC that operates worldwide on a borderless basis www.notesolution.com Pros and Cons of Multinational Corporations Host Country Issues N Potential host-country benefits: o Larger tax bases o Increased employment opportunities o Technology transfers o Introduction of new industries o Development of local resources N Potential host-country costs: o Complaints that MNCs extract excessive profits o Dominate the local economy o Interfere with the local government o Do not respect local customs o Fail to help domestic firms develop o Hire the most talented of local personnel o Do not transfer their most advanced technologies Home Country Issues N Outsourcing, cut backs, closes domestic operations to shift work to lower-cost international destinations Ethical Issues for Multinational Corporations N Corruption: involves illegal practices to further one’s business interests N Sweatshops: employ workers at very low wages for long hours, and in poor working conditions N Child Labour: is the full-time employment of children for work otherwise done by adults N Sustainable development: meets the needs of the present without hurting futur
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