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COB 300A- Management
Chapter 4
72
Management
Undergraduate 3
05/04/2011

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Term
global village
Definition
the shrinkage of time and space as our travel of the electronic media has made it much easier for people of the global community to communicate with one another
Term
e-commerce
Definition
the buying and selling of products and services through computer networks
Term
$136 billion
Definition
how much is total U.S. e-commerce?
Term
global business
Definition
the buying and selling of goods or services by people from different countries
Term
international management
Definition
the management of business operations conducted in more than one country
Term
the international business environment
Definition
the fundamental tasks of business management, including the financing, production, and distribution of products and services, do not change in any substantive way when a firm is transacting business across international borders; however, a manager will experience greater difficulties and risks when performing management functions on a global scale
Term
1) Wal-Mart- warehouse concept in Hong Kong (4 lb. jar of peanut butter)
2) coors light- "turn it loose" (spanish)
3) Nike "just do it" (diff. languages)
4) United Airlines- white carnations in Hong Kong (white represents death)
Definition
examples of businesses not translating well into other countries
Term
globalization strategy
Definition
a ___ strategy means that its product design and advertising strategies are standardized throughout the world; this approach is based on the assumption that a single ____ market exists for most consumer and industrial products; the theory is that people everywhere want to buy the same products and live the same way; one product-everywhere (ex. Coca-Cola or Levi jeans
Term
transnational strategy
Definition
seeks to achieve both global integration and national responsiveness; although increased competition means they must achieve global efficiency, growing pressure to meet local needs demands national responsiveness; most large multinational corporations w/diverse products will attempt to use a partial multi-domestic strategy for some product lines and global strategies for others (mixed global and locally adjusted products for each country)
Term
multi-domestic
Definition
competition in each country is handled independently of industry competition in other countries; marketing, advertising, and product design are modified and adapted to the specific needs of each country; separate products for each country (ex. French do not drink OJ for breakfast, laundry detergent used to wash dishes in Mexico, ppl in the middle east prefer toothpaste that tastes spicy)
Term
methods of global entry
**1-8 high complexity, high commitment as you go up
**9-10 medium-low complexity, high commitment
Definition
1) outsourcing
2) exporting
3) licensing
4) franchising
5) alliances (joint ventures)
6) direct investing (buying existing companies)
7) wholly-owned subsidiaries (buying a full company)
8) greenfield venture
9) 50-50 partnership
10) camter trade (involves raw materials)
Term
outsourcing
Definition
global ___ means engaging in the international division of labor so that manufacturing can be done in countries with the cheapest sources of labor and supplies
Term
exporting
Definition
the corporation maintains its production facilities within the home nation and transfers its product for sale in foreign countries; exporting enables a country to market its products in other countries at modest resource cost and with limited risk
Term
licensing
(licensor; licensee)
Definition
a corporation (the ___) in one country makes certain resources available to companies in another country (___); resources include technology, managerial skills, and/or patent and trademark rights; they enable the ___ to produce and market a product similar to what the ___ has been producing
Term
franchising
Definition
a form of licensing in which the ____ provides foreign ____ w/ a complete package of material and services, including equipment, products, product ingredients, trademark and trade name rights, managerial advice and a standardized operating system
Term
joint venture
Definition
the most popular type of direct investment is to engage in strategic alliances and partnerships; a company shares costs and risks with another firm, typically in the host country, to develop new products, build a manufacturing facility or set up a sales and distribution network; a partnership is often the fastest, cheapest, and least risky way to get into the global game
Term
wholly-owned affiliate
Definition
direct acquisition of an affiliate may provide cost savings over exporting by shortening distribution channels and reducing storage and transportation costs; local managers also have heightened awareness of economic, cultural, and political conditions
Term
greenfield venture
Definition
the most costly and risky direct investment; a company builds a subsidiary from scratch in a foreign country; the advantage is that the subsidiary is exactly what the company wants and has the potential to be highly profitable
Term
export
Definition
ship goods produced in one country to be sold in another country
Term
import
Definition
bringing goods into an economy that are produced outside that economy
Term
Federal Trade Commission
Definition
what is the FTC?
Term
90%
Definition
To label products "Made in the U.S.A.", the FTC requires at least ___ percent American parts to be used in the product
Term
maquiladora
Definition
plant owned by an American company, located in Mexico, that sells goods to American
Term
trade barrier
Definition
any form of governmental or operational activity or restriction that renders importation of some goods into a country difficulty or impossible
(examples: tariffs, regulations, inspections)
Term
tariff
Definition
federal tax on imports or exports usually imposed either to raise revenue (revenue ___) or to protect domestic firms from import competition (import ___)--> a tax to help local businesses
Term
non-tariff trade barriers
Definition
quotas, voluntary export restrictions, government standards, government subsidiaries, customs valuation/classification, embargoes
Term
quotas
Definition
imposed limit upon the quantity of a good that may be brought into a country or economy over a period of time; can be imposed by the government, foreign governments, or producers themselves
Term
voluntary export restrictions
Definition
limit on the # of imported products, imposed by the exporting country
Term
government standards
Definition
product requirements that serve to limit the import of goods
Term
government subsidiaries
Definition
governemnts supporting local businesses directly (gov't. pays a farmer not to plant)
Term
customs valuation/classification
Definition
putting things in product categories, then restricting these categories (classifying)
Term
embargoes
Definition
no import of a particular product
Term
North American Free Trade Agreement
Definition
what does NAFTA stand for?
Term
NAFTA
Definition
establishes liberal trading b/t the U.S., Canada, and Mexico; requires the gradual removal of tariffs and other trade barriers; created 2nd largest trading zone in the world
Term
Free Trade Area of the Americas
Definition
would create the world's largest trading zone, which will include North, South, and Central America; proposed agreement--unite 36 countries in North and South America (supposed to be done in 2005)
Term
EU (European Union)
Definition
27 nation alliance creating a single marketplace and the Euro; eliminate existing barriers b/t countries; implement the Euro as a common currency
Term
WTO (World Trade Organization); formerly GATT- General Agreement on Tariffs and Trade
Definition
liberalizes trade among many nations and provides a framework for trade dispute resolution; handles trade disputes; monitors trade policies
Term
CAFTA (Central America Free Trade Agreement); includes Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua
Definition
the first step in creating the Free Trade Area of the Americas; market liberalization for the majority
Term
purchasing power
Definition
economists look at a set of items in different countries and compare; comparison of a standard set of goods and services in different countries--> more means greater growth potential
Term
degree of global competition
Definition
the # and quality of companies already in the market --> means less growth potential
Term
quantity factors
Definition
work force availability; company strategy, does workforce company strategy
Term
quality factors
Definition
costs and barriers hiring employees; employee education and experience
Term
political uncertainty
Definition
risk major changes in laws and government politics directed at businesses
Term
policy uncertainty
Definition
risk associated with changes in laws and government, ___ directed at businesses
Term
1) avoidance
2) control
3) cooperation
Definition
name 3 strategies for minimizing political risk
Term
avoidance
Definition
risks are too great
Term
control
Definition
reduce risk (limitations on company)
Term
cooperation
Definition
limited risk (help and support business)
Term
1)growing markets
2)choosing an office/manufacturing location
3)minimizing political risk
Definition
what do you consider when choosing a business climate?
Term
economic development
Definition
countries can be categorized as either "developing" or "developed." The developing countries are referred to as less-developed countries (LDC's). Per capital income is used to classify countries as developed or developing
Term
per capital income
Definition
the income generated by the nations production of goods and services divided by the total population
Term
TRUE.
Definition
True or False.

Most businesses are headquartered in the wealthier, economically advanced countries.
Term
infrastructure
Definition
a country's physical facilities that support economic activities make up it's ___; includes transportation facilities such as airports, highways, and railroads; energy-producing facilities such as utilities and power plants; and communication facilities such as telephone lines and radio stations
Term
resource and product markets
Definition
company managers must evaluate the market demand for their ___; ___ for providing needed raw materials and labor must also be available
Term
exchange rates
Definition
the rate at which one country's currency is exchanged for another country's; changes in the ___ can have major implications for the profitability of international operations; inflation and interest rates impact profitability as well
Term
political risk
Definition
a company's risk of loss of assets, earning power, or managerial control due to politically based events or actions by host governments; includes gov't. takeovers of property and acts of violence directed against a firm's properties or employees; companies must formulate plans and programs to guard against unexpected losses
Term
political instability
Definition
includes riots, revolutions, civil disorders, and frequent changes in government; increases uncertainty; although most companies prefer to do business in stable countries, some of the greatest growth opportunities lie in these areas
Term
laws and regulations
Definition
host governemnts have many laws concerning libel statutes, consumer protection, information and labeling, employment and safety, and wages; the most visible changes in ___ grow out of international trade agreements and the emerging international trade alliance system (ex. GATT, EU, NAFTA)
Term
5 dimensions of of national value systems that influence organizational and employee working relationships
Definition
1) individualism (and collectivism)
2) power distance
3) uncertainty avoidance
4) masculinity/femininity (nurturing)
5) short-term orientation (vs. Long-term)
Term
individualism (and collectivism)
Definition
degree that individuals should be self-sufficient
Term
power distance
Definition
extent to which people in a country accept that power is distinguished unequally
Term
uncertainty avoidance
Definition
degree to which people are uncomfortable w/ambiguous or unpredictable situations
Term
masculinity/femininity (nurturing)
Definition
whether you have a highly assertive or highly nurturing culture
Term
short-term orientation (vs. long-term)
Definition
are we oriented towards the present or oriented towards the future
Term
FALSE.
Definition
true or false.

Management styles are the same in all countries.
Term
World Bank
Definition
purpose is to provide low-interest loans to developing nations for improving transportation, education, health, and telecommunications
Term
designed to assist in smoothing the flow of money b/t nations
Definition
International Money Fund (IMF)
Term
culture
Definition
shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people
Term
ethnocentric managers
Definition
believe that their native country, culture, language, and behavior are superior to all others
Term
Parochialism
Definition
narrow view in which people see things solely through their own eyes
Term
Poly-centric managers
Definition
take the view that native managers in the foreign offices best understand native personnel practice, and so the home office should leave them alone
Term
geocentric managers
Definition
accept that there are differences and similarities b/t home and foreign personnel and practices and that they should use whatever techniques are most effective
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