Chapter 8 Flashcards

Question

Why Free-Trade Agreements Matter

Answer 1

* Free-trade agreements increase choices, competition, and purchasing power -Lead to the decrease in the expenditure for food, clothing, necessities, and luxuries * Free-trade agreements create new business opportunities and intensify competition - Managers are responsible to address the competition

Answer 2

when a multinational company has offices, manufacturing plants, and distribution facilities in different countries and runs them all using the same rules, guidelines, policies, and procedures * Valued because it simplifies decisions * Involves risk of using management procedures poorly suited to particular countries’ markets, cultures, and employees

Answer 3

modifying rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies * Involves the risk of losing cost effectiveness and productivity that result from using standardized rules and procedures * Locally sourcing inputs is desired

Answer 4

Selling domestically produced products to customers in foreign countries

Answer 5

foreign business owner pays a company a fee for the right to conduct that business in his or her country

Answer 6

an agreement in which a domestic company, the licensor, receives royalty payments for allowing another company, the licensee, to produce the licensor’s product, sell its service, or use its brand name in a specified foreign market

Answer 7

a collection of networked firms in which the manufacturer or marketer of a product or service, the franchisor, licenses the entire business to another person or organization, the franchisee

Answer 8

an agreement in which companies combine key resources, costs, risks, technology, and people

Answer 9

a strategic alliance in which two existing companies collaborate to form a third, independent company or engage in a clearly defined business activity * Can help companies avoid tariff and nontariff barriers to entry * Companies participating in a joint venture bear only part of the costs and the risks of that business * Must share profits as well as costs/risks * Often are challenging because multiple cultures are involved

Answer 10

foreign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company * Advantage: the parent company receives all of the profits and has complete control over the foreign facilities * Disadvantage: expense of building new operations or buying existing businesses

Answer 11

new companies that are founded with an active global strategy and have sales, employees, and financing in different countries * Result of easy transportation, low-cost communication technologies, and experienced business people

Answer 12

- Growing markets are the most important factor to assess - Purchasing power - Degree of global competition - Determined by the number and quality of companies that already compete in a foreign market

Answer 13

the relative cost of a standard set of goods and services in different countries

Answer 14

*Qualitative factors – Work force quality – Company strategy * Quantitative factors – Kind of facility being built – Tariff and nontariff barriers – Exchange rates – Transportation and labor costs

Answer 15

the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events

Answer 16

the risk associated with changes in laws and government policies that directly affect the way foreign companies conduct business

Answer 17

* Avoidance - Divesting or selling the business - Postponing investment until the risk shrinks * Control - Lobbying foreign governments or international trade agencies to change laws, regulations, or trade barriers * Cooperation - Using joint ventures and collaborative contracts

Answer 18

the set of shared values and beliefs that affects the perceptions, decisions, and behavior of the people from a particular country

Answer 19

* power distance: individuals’ perceptions of power distribution * individualism: degree of belief in self-sufficiency * masculinity/femininity: assertive vs. nurturing cultures * uncertainty avoidance: comfort level with the unpredictable/unstructured * short-term/long-term orientation: preference for deferred or immediate gratification * indulgence versus restraint: strictness of social norm

Answer 20

* Cultural differences affect perceptions, understanding, and behavior * In order to succeed in global business, companies should: - Recognize cultural differences - Decide how to adapt the company to differences - Ensure that adaptations are not based on outdated and incorrect assumptions about a country’s culture

Answer 21

someone who lives and works outside his or her native country

Answer 22

Language and cross-cultural training: * Help expatriates make faster adjustments to foreign cultures and perform better on their international assignments * documentary training – focuses on identifying specific critical differences between cultures * cultural simulations – trainees practice adapting to cultural differences * field simulation – trainees are placed in an ethnic neighborhood for three to four hours to talk to residents about cultural differences Family adjustment is also a significant factor in international assignment success * Adaptability screening assesses how well managers and their families are likely to adjust to foreign cultures * Intercultural training helps families prepare for the cultural differences they will encounter

Chapter 8 Flashcards

(47 cards)