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Chapter 5

Chapter 5

10 Pages
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Department
Global Management Studies
Course Code
GMS 200
Professor
Sui Sui

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Chapter 5/ Lecture 4and5
Global Dimension of management
1.What are the international management challenges of globalization?
What are the key concepts in the challenges of globalization?
i.Global economy: resources, markets, and competition are worldwide in
scope.
ii.Globalization: the process of growing interdependence among elements of
the global economy
iii. International management: involves managing operations in more than one
country.
iv.Global manager: culturally aware and informed about international affairs.
What are the potential challenges and opportunities that these areas face in the
context of the global economy?
What are the important business and economic agreements among these areas?
Europe
i.European Union (EU)
oPolitical and economic alliance European countries that agreed to
support mutual economic growth
oKey agreements
oCommon currency
The Americas
i.North American Free Trade Agreement (NAFTA)
oAgreement for free flow of goods and services between the Canada,
Mexico and United states
ii.Free Trade of the Americas (FTAA) Alaska to Chile
oA proposed free-trade zone
www.notesolution.com
oMaquiladoras
a.Foreign Manufacturing plants that are allowed to operate in
Mexico with special privileges in return for employing Mexican
labor
Asia and the Pacific Rim
i.Economic power of China and Japan
ii.Growth in other pacific Rim countries
oSouth Korea, Taiwan, Singapore
oMalaysia, Thailand, Vietnam, and the Philippines
oIndia
iii.Asian countries represent a third of the global market place
Africa
i. Increased attention to stable countries
ii.Post-apartheid South Africa
iii.South African Development Community (SADC) links 15 countries in trade
and economic development.
2.What are the forms and opportunities of international business?
What are the reasons for engaging in international business?
i.Profits: global operations offer greater profit potential
ii.Customers: global operations offer new markets to sell new products
iii.Suppliers: global operations offer access to raw material
iv.Capital: global operations offer access to financial resources
v.Labor: global operations offer access to lower labor costs
Market entry strategies
i.Sales of goods or services to foreign markets
ii.Do not require expensive investments
www.notesolution.com
Types of market entry strategies
i.Global sourcing: materials or services are purchased around the world for
local use.
ii.Exporting:
iii. Importing
iv.Licensing Agreement: one firm pays a fee for rights to make or sell another
company’s products.
v.Franchising: fee is paid for rights to use another firms name and operating
methods.
Direct investment strategies
i.Major capital commitments
ii.Rights of ownership and control over foreign operations
Types of direct investment strategies:
i. Joint ventures: agreements that operates in a foreign country through co
ownership with local partners
ii.Foreign subsidiaries: is a local operation completely owned by a foreign
firm
Figure 5.2 Common forms of international business from market entry to direct
investment strategies
What are the criteria for choosing a joint venture partner?
i.Familiarity
ii.Local workforce
iii.Future expansion
iv.Local market
v.Profit
www.notesolution.com

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Description
Chapter 5/ Lecture 4and5 Global Dimension of management 1. What are the international management challenges of globalization? • What are the key concepts in the challenges of globalization? i. Global economy: resources, markets, and competition are worldwide in scope. ii. Globalization: the process of growing interdependence among elements of the global economy iii. International management: involves managing operations in more than one country. iv. Global manager: culturally aware and informed about international affairs. • What are the potential challenges and opportunities that these areas face in the context of the global economy? • What are the important business and economic agreements among these areas? • Europe i. European Union (EU) o Political and economic alliance European countries that agreed to support mutual economic growth o Key agreements o Common currency • The Americas i. North American Free Trade Agreement (NAFTA) o Agreement for free flow of goods and services between the Canada, Mexico and United states ii. Free Trade of the Americas (FTAA) – Alaska to Chile o A proposed free-trade zone www.notesolution.com o Maquiladoras a. Foreign Manufacturing plants that are allowed to operate in Mexico with special privileges in return for employing Mexican labor • Asia and the Pacific Rim i. Economic power of China and Japan ii. Growth in other pacific Rim countries o South Korea, Taiwan, Singapore o Malaysia, Thailand, Vietnam, and the Philippines o India iii. Asian countries represent a third of the global market place • Africa i. Increased attention to stable countries ii. Post-apartheid South Africa iii. South African Development Community (SADC) links 15 countries in trade and economic development. 2. What are the forms and opportunities of international business? • What are the reasons for engaging in international business? i. Profits: global operations offer greater profit potential ii. Customers: global operations offer new markets to sell new products iii. Suppliers: global operations offer access to raw material iv. Capital: global operations offer access to financial resources v. Labor: global operations offer access to lower labor costs • Market entry strategies i. Sales of goods or services to foreign markets ii. Do not require expensive investments www.notesolution.com • Types of market entry strategies i. Global sourcing: materials or services are purchased around the world for local use. ii. Exporting: iii. Importing iv. Licensing Agreement: one firm pays a fee for rights to make or sell another company’s products. v. Franchising: fee is paid for rights to use another firm’s name and operating methods. • Direct investment strategies i. Major capital commitments ii. Rights of ownership and control over foreign operations • Types of direct investment strategies: i. Joint ventures: agreements that operates in a foreign country through co ownership with local partners ii. Foreign subsidiaries: is a local operation completely owned by a foreign firm Figure 5.2 Common forms of international business – from market entry to direct investment strategies • What are the criteria for choosing a joint venture partner? i. Familiarity ii. Local workforce iii. Future expansion iv. Local market v. Profit www.notesolution.com • What are the complications in the global business environment? i. Complex, dynamic, and highly competitive ii. Global business executives iii. World Trade Organization 3. What are multinational corporations and what do they do? A multinational corporation (MNC) is a business with extensive international operations in more than one foreign country • What are the mutual benefits for host country and MNC? i. Shared growth opportunity ii. Shared income opportunity iii. Shared learning opportunity iv. Shared development opportunity • Host country complaints about MNCs i. Excessive profits ii. Domination of local economy iii. Interference with local government iv. Hiring the best local talent v. Limited technology transfer’ Figure 5.3 what should go right and what can go wrong in MNC-host country relationships • MNC complaints about host countries i. Profit limitations ii. Overpriced resources iii. Exploitative rules iv. Foreign exchange restrictions www.notesolution.com v. Failure to uphold contracts • Ethical issues for MNCs: i. Corruption – illegal practices that further one’s business interests ii. Sweatshops – employing workers at low wages for long hours and in poor working conditions iii. Child labor – full time employment of children for work otherwise done by adults iv. Sustainable development – meeting current needs without compromisi
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