GMS 200 Study Guide - Canadian Business, Pizza Hut, Fidelity Investments

299 views6 pages
Published on 30 Apr 2012
Course
Chapter 3: Global Dimensions of Management
Global Management: involves managing operations in more than one country
Global Economy: in which resources, markets, competition is worldwide in scope
Globalization: the process of growing independence among elements of the global economy
Global Manager: culturally aware and informed on international affairs
Why do companies go global?
- Profits Global operations offer greater profit potential
- Customers Global operations offer new markets to sell products
- Suppliers Global operations offer access to needed products and services
- Capital Global operations offer access to financial resources
- Labour Global operations offer access to lower labour costs
Common forms of global business:
Market entry strategies global sourcing, exporting and importing, licensing and franchising
Direct investment strategies joint ventures, foreign subsidiaries
Global Sourcing: the process of purchasing materials, manufacturing components or business services from around the world
Exporting: local products are sold to foreign countries
Importing: involves the selling in domestic markets of products acquired abroad
Licensing Agreement: a local firm pays a fee to a foreign firm for rights to make or sell its products. It refers to offering a firm’s know-
how or other intangible asset to a foreign company for a fee, royalty, and/or other type of payment
- Advantages of Licensing
* The need for local market research is reduced
* The licensee may support the product strongly in the new market
- Disadvantages of Licensing
* Can lose control over the core competitive advantage of the firm
- The licensee can become a new competitor to the firm
Franchising: fee is paid to a foreign business for rights to locally operate using its name, branding, and methods. For example: firms
such as McDonald’s, Wendy’s, Subway and others sell facility designs equipment, product ingredients and recipes, and management
systems to foreign investors while retaining certain product and operating controls.
Foreign Direct Investment: building, buying all, or buying part ownership of a business in another country
Insourcing: job creation through foreign direct investment
Joint Venture: operates in a foreign country through co-ownership by foreign and local partners
Global Strategic Alliance: a partnership in which foreign and domestic firms share sources and knowledge for mutual gains
Foreign Subsidiary: a local operation completely owned by a foreign firm
Greenfield Investment: builds an entirely new operation in a foreign country
Global Business Environments
Political Risk: the potential loss in value of a foreign investment due to instability and political changes in the host country
Political-Risk Analysis: tries to forecast political disruptions that can threaten the value of a foreign investment
- Global managers must be prepared to deal with differences between home-country and host-country laws and politics
- Global firms are expected to abide by local laws, some of which may be unfamiliar
- Common legal problems faced by international businesses involve incorporation practices and business ownership; negotiating and
implementing contracts with foreign parties; handling foreign exchange, and intellectual property rights patents, trademarks and
copyrights
World Trade Organization (WTO): a global organization whose member nations, currently 153 of them, agree to negotiate and resolve
disputes about tariffs and trade restrictions. It was established to promote free trade and open markets around the world.
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 6 pages and 3 million more documents.

Already have an account? Log in
Most Favoured Nation Status: gives a trading partner most favourable treatment for imports and exports
Tariffs: basically taxes that governments levy on imports for abroad
Protectionism: call for tariffs and favourable treatments to protect domestic firms from foreign competition
NAFTA: North American Free Trade Agreement linking Canada, the United States and Mexico in an economic alliance. It creates a
trade zone with minimal barriers, which frees the flow of goods and services, workers, and investments among the three countries.
European Union: a political and economic alliance of European countries. It links 27 countries that agree to support mutual economic
growth by removing barriers that previously limited cross-border trade and business development
Euro: common European currency
Global Corporations: also called multinational corporations is extensive operations in more than one foreign country
Transnational Corporation: an MNC (Multinational Corporations) that operates worldwide on a borderless basis
MNC host country relationships:
The potential host country benefits of MNCs include larger tax bases, increased employment opportunities, technology transfer,
introduction of new industries, and development of local resources.
What should go right?
Mutual benefits: shared opportunities with potential for growth, income, learning, development
What can go wrong?
Host-country complaints about MNCs: excessive profits, economic domination, interference with government, hire best local talent,
limited technology transfer, disrespect for local customs.
MNC complaints about host countries: profit limitations, overpriced resources, exploitative rules, foreign exchange restrictions,
failure to uphold contracts.
Corruption: engaging in illegal practices to further one’s business interests
Child Labour: the full time employment of children for work otherwise done by adults
Sweatshops: employ of workers of very low wages for long hours and in poor working conditions
Sustainable Development: meets the needs of the present without hurting future generations
Culture: a shared set of beliefs, values, and patterns of behaviour common to a group of people
Culture Shock: the confusion and discomfort a person experiences when in an unfamiliar culture
Ethnocentrism: the tendency to consider one’s culture superior to others
Culture Intelligence: the ability to accept and adapt to new cultures
Low-Context Culture: emphasize communication via spoken or written words
High-Context Culture: rely on nonverbal and situational cues as well as on spoken or written words in communication
Monochronic Cultures: people tend to do one thing at a time
Polychronic Cultures: time is used to accomplish many different things at once
Proxemics: how people use space to communicate
Ecological Fallacy: assumes that generalized cultural value applies equally well to all members of the culture
Values and National Cultures:
- Geert Hofstede identified four cultural dimensions: power distances, uncertainty avoidance, individualism-collectivism, and
masculinity-femininity (and later studied a fifth dimension called time orientation)
Hofstede’s cultural dimensions
- Hofstede (1980) - book culture’s consequences
o Survey of 72215 IBM employees in 40 nations
o Between 1962 and 1973
- Individualism vs. Collectivism
o Degree to which people in a country refer to act as individual rather than as members of groups
- High vs. Low Power Distance
o Degree of inequality among people which the population of the country considers as normal
- Masculine vs. Feminine
o Degree to which tough values like assertiveness, performance, success and competition (associated with the role of
men in most societies) prevail over tender values like the quality of life, maintaining warm personal relationships,
service and care for the weak (associated with the role of women in most societies)
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 6 pages and 3 million more documents.

Already have an account? Log in

Document Summary

Global management: involves managing operations in more than one country. Global economy: in which resources, markets, competition is worldwide in scope. Globalization: the process of growing independence among elements of the global economy. Global manager: culturally aware and informed on international affairs. Profits global operations offer greater profit potential. Customers global operations offer new markets to sell products. Suppliers global operations offer access to needed products and services. Capital global operations offer access to financial resources. Labour global operations offer access to lower labour costs. Market entry strategies global sourcing, exporting and importing, licensing and franchising. Direct investment strategies joint ventures, foreign subsidiaries. Global sourcing: the process of purchasing materials, manufacturing components or business services from around the world. Exporting: local products are sold to foreign countries. Importing: involves the selling in domestic markets of products acquired abroad. Licensing agreement: a local firm pays a fee to a foreign firm for rights to make or sell its products.

Get OneClass Grade+

Unlimited access to all notes and study guides.

YearlyMost Popular
75% OFF
$9.98/m
Monthly
$39.98/m
Single doc
$39.98

or

You will be charged $119.76 upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.