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ADMS 1000 Study Guide - Final Guide: Outsourcing, North American Free Trade Agreement, High Tech

Administrative Studies
Course Code
ADMS 1000
Jennifer Kuk
Study Guide

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PART 1 – 20 multiple choice (total 20 marks)
PART 2 – 3 SHORT ANSWER questions (total 20 marks)
PART 3 - 1 case followed by 3 questions (total 60 marks)
Session 7& 8 GLOBALIZATION (ch.6&8)
1. Define globalization
- 3 part definition
Expansion of degree and forms of cross-border transactions among people, assets, goods
and services
Growth in direct foreign investment across the world
Increase in economic interdependence – including the integration of world markets &
2. Reasons for going global
Push factors – Competition, more democracy, reduced trade barriers, improved
Pull factors – growth potential, need for resources – materials/people
3. Types/forms of global business
Outsourcing, Joint Ventures, Subsidiaries, Foreign Direct Investment, Licensing and
Franchising, Export & Imports, Mergers & Acquisitions
4. The mnc/borderless/transnational
- Definition
- It is an enterprise that operates manufacturing and marketing facilities in two or more
foreign countries controlling its operations from the firm’s home country

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- It is on the rise due to the gradual reduction in trade barriers among many nations of the
- Multinational corporations capitalize on national differences in the cost and quality of
MNC’s/MNE’s are global businesses
They are usually very large e.g. accounting for much of the world economy
Therefore their business activity can have serious positive or negative consequences for
local economies
HQ (headquarters) is usually located in the home country – usually in a developed
country, e.g. USA, France, Germany, UK & Japan.
Subsidiaries located in the host country – usually in the developing world.
Referring to MNC’s transnational corporations or borderless corporations (per our text)
simply underscores the increasing pervasive presence of MNC’s and the fact that they
easily cross many different borders.
Pros for the host country
- Economic development – e.g. employment
- Brings management expertise
- Introduces new technology and relevant training
- Develops trade
- Unites cultures & nations
- Supports global co-operation
- No allegiance to host country

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- Mobile profits
- Power held in host country e.g. R & D
- Difficult to control
5. Trade agreement – NAFTA
North American Free Trade Act
- To Reduce/eliminate tariff barriers on
- Almost all goods and services traded
- To facilitate cross-country investment
- To establish rules for government subsidies
- To establish universal rules for health,
- Safety & the environment
- To provide a common market among members
N - Business
A - Consumers
F - Employment
T - Trade
A - Culture
Free Trade Areas – all barriers to trade among members are removed. Retain autonomy in
selecting trade agreements with non-members, e.g. NAFTA, APEC
Pros and cons
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