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Chapter 3

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Global Management Studies
GMS 200
Tsogbadral Galaabaatar

GMS Chapter 3  Global economy: resources, markets and competition are worldwide in scope.  Globalization: is the process of growing interdependence among elements of the global economy.  Global Management: involves managing operations in more then one country.  Global manager: is culturally aware and informed on international affairs.  Global business: conducts commercial transactions across national boundaries.  Global sourcing: Materials or services are purchased around the world for local use.  Exporting: local products are sold abroad foreign customers  Importing: involves the selling in domestic markets of products acquired abroad.  Licensing agreement: A local firm pays a foreign firm for rights to make or sell its products  Franchising: A fee is paid to a foreign business for rights to locally operate using its name, branding and methods  Foreign direct investments: building, buying all, or buying part ownership of a business in another country.  Insourcing: A job creation through foreign directs investment.  A joint venture: operates in a foreign country through co-ownership by foreign and local partners.  Global strategic alliance: is a partnership in which foreign and domestic firms share resources and knowledge for mutual gains.  Foreign subsidiary: is a local operation completely owed by a foreign firm.  Greenfield investments: Builds an entirely new operation in a foreign country.  Political risk: is 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 distributions that can threaten the value of a foreign investment.  World Trade Organization: member nations agree to negotiate and resolve disputes about tariffs and trade restrictions. Sharpen competition, motivate innovation, and breed success.  Most favored nation status: Gives a trading partner most favorable treatment for imports and exports  Tariffs: Taxes government levy on imports for abroad.  Protectionism: is a call for tariffs and favorable treatment to protect domestic firms from foreign competition.  NAFTA: is the North American Free Trade Agreement linking Canada, United States and Mexico in an economic alliance.  European Union: a political and economic alliance of European countries.  The Euro: is the common European currency.  Global Corporations: or MNC is a multinational business with extensive operations in more then one country.  A transnational corporation: is a MNC that operates worldwide on a borderless basis.  Sustainable development: meets the needs for the present without hurting future generations.  Culture: is a shared set of beliefs, values and patterns of behavior common in a group of people.  Culture shock: is the confusion and discomfort a person experiences when is an unfamiliar culture.  Ethnocentrism: is the tendency to consider ones culture superior to others.  Culture intelligence: is the ability to accept and adapt to new cultures.  Comparative management: studies how management practices differ among countries and cultures. Why companies go global:  Profits: Global operations offer greater profit potential. 
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