(It's like a merger). A tax on something being imported making it more expensive to import the product. Diversification. The difference between money coming into a country (from exports) and money leaving the country (from imports) plus other money flows such as tourism and foreign aid. Which of the following are functions of export assistance centers (EACs)? What is contract manufacturing and how can it be used? Culture can include which of the following: The definition of a ____________ states: an unfavorable balance of trade, which occurs when the value of a country's exports is less than its imports. List of the Advantages of Globalization 1. increased communication and coordination across the business. Selling to multiple markets allows companies to diversify their business and spread their risk. Foreign buyers enjoy dealing with individuals rather than large corporations because (1) small companies provide a wider variety of suppliers and can chip products more quickly and (2) small companies give more personal service. Listed below are some advantages and disadvantages of buying a franchise. Large firms have more influence over market price. As a business grows it gains two major advantages over its smaller rivals. How do cultural differences impact product development and trade strategy? Advantages of doing business globally include: (1) Bringing ideas for businesses in other countries to new markets (2) Finding financing for a new business in other countries Going Global. Absolute advantage means your country is the best at producing worldwide. Franchising -- A contractual agreement when a business with a good idea that has proven to work/has been profitable sells the rights to use the name and sell a product/service in a given area in a specified manner. The international business has a natural advantage because the differences of each culture make it stronger while exposing their products or services to more overall people. In the hierarchical structures employees are well arranged in different levels of pre-defined responsibilities & authorities which enhance their performance and often motivate them with the lucrative promotion opportunities. A foreign country's production of private-label goods to which a domestic company then attaches its brand name or trade mark is called: When two or more companies, often from different countries, join together to take on a major project it is called a: A disadvantage of an international ____________ is one partner can learn the other's technology and practices, then use what it learned to its own advantage. Comparative advantage has to do with how a country does as far as producing a good or service compared to another. What are comparative and absolute advantage? What was the purpose of the General Agreement on Tariffs and Trade (GATT)? - The global market contains over 7 billion potential customer of goods and services. She knows the global market offers many opportunities. Joint ventures are normally just for one project while strategic alliances are more long term. For one, no nation is self-sufficient, and even if they were other nations need products prosperous nations produce. Since 1975 the United States has bought more goods from other nations than it has sold resulting in a : When the retail price of imported products is increased for the purpose of making domestic goods more competitively prices it is called a(n) ____________, The definition of ____________ states: the difference between money coming into a country (from exports) and money leaving the country (from imports) plus money flows coming into or leaving a country from other factors such as tourism, foreign aid, military expenditures, and foreign investment, A(n) ____________ is a limit on the number of products in certain categories that a nation can import and is considered a form of trade protectionism. What is the global strategy in which a firm allows a foreign company to produce its product in exchange for a fee? • Franchisors need to be careful to adapt their product to the countries they serve. Before you begin to set up entities and hire staff abroad, it’s vital to understand the new marketyou plan to expand into. When the value of a country's exports is less than that of its imports. Buying a franchise can be a viable alternative to starting your own business. improved global or regional projects. What are the key strategies or phases of world trade? Companies will not be tied to the changes of the business cycle of domestic market or of one specific country. 2. One of the advantages of having a business partner is sharing the labor. The advantage that exists when a country has a monopoly on producing a specific product is called: Darla's bicycle shop in the United States is experiencing a slowdown in its growth. Though international business is most important for a country’s economy there are some advantages and disadvantages of international business which are described in detail below:. Licensing < Exporting < Franchising < Contract manufacturing < Joint ventures and strategic alliances < Foreign direct investment. The benefits/disadvantages of joint ventures include: What does it mean to make an foreign direct investment (FDI)? Benefits of globalisation. As with any journey abroad, in order to successfully expand your business overseas, it is important to chart your course before setting sail. (1) Export bicycles to retailers in Australia, The definition of ____________ states: an attitude that your own culture is superior to other cultures, Trade ____________ is the use of government regulations to limit the import of goods and services such as import tariffs and quotas. In addition, natural resources and technology are not distributed evenly around the world. Whether you run a startup or a 50-year-old enterprise, finding skilled … Although the United States has a market of over 300 million people, there are over 7.7 billion potential customers in the ____________ market. What is trade protectionism? What are the advantages of and rationale for free trade? The most common form of FDI. The company can help you hire local management and workers who are familiar with the methods of doing business in the country, which can make the transition much smoother. Possibly the greatest competitive advantage of business growth is the ability to capitalise on the economies of scale. - Domestic workers (particularly manufacturing-based jobs) can lose their jobs due to increased imports or production shifts to low-wage global markets instead of things being produced domestically because companies are outsourcing. Unlike joint ventures, strategic alliances share: Common markets are also called ____________, ____________ and ____________ sized businesses are often better prepared for the global market because they are able to react more quickly to opportunities. It's the difference between your company doing business with customers in another town and the laws and regulations that govern that relationship. For global companies, often referred to as multinational corporations (MNCs), common benefits of expanding into developing markets include unsaturated demand for new products, lower labor costs, less expensive natural resources, and other inputs to products. Advantages of doing business globally include a larger customer base, increased talent pool and opportunities for higher profits. Rank the strategies for reaching global markets according to the level of risk and commitment (lowest to highest). The movement of goods and services among nations w/o political or economic barriers. Before expanding into other countries, businesses must consider how this action could hurt them. The goal is to have a favorable balance of trade (a trade surplus) rather than an unfavorable (a trade deficit). A company in another country that is owned by a U.S. company would be an example of a: For a firm to be considered a multinational corporation, it must have a(n), Physical presence in several different nations. reflects the needs of global or regional customers. What are the advantages and disadvantages of both strategic alliances and joint ventures? You give up control. When you go global, then the likelihood of increasing sales goes up as you open up your market to consumers all over the world. This allows businesses to reduce dependence on their local and national economies. What are the ramifications of the distribution of the world's population? A(n) ____________ is a long-term partnership between two or more companies established to help each company build competitive market advantages, although they do not share costs, profits, or management. It's a broad form of outsourcing. Export Assistance Centers work with small and medium-sized businesses who are hesitant to do: The definition of ____________ states: a contractual agreement whereby someone with a good idea for a business sells others the rights to use a business name and sell a product or service in a given territory in a specified manner, A(n) ____________ corporation is an organization that manufactures and markets its products in many different countries and has managers and stockholders from many countries. START YOUR BUSINESS BUSINESS IDEAS Another top benefit of going global is the opportunity to access to new talent pools. I would say it is similar to arbitrage but with goods instead of currencies). (E>I). Selling of products to another country is called: Selling products in a foreign country at a lower price than what is charged in the producing country is called ____________. What are the risks of this strategy for trade (foreign direct investment)? A company that manufactures and markets products in many different countries and has multinational stock ownerships (international stocks) and management (international management). The selling of products in a foreign country at lower price than those charged in the producing country. International business can exist without globalization… They're big enough to be price setters. The advantages to this are similar to licensing in that they pay for the rights and they have to come up with the capital. What is a trade deficit and its importance? While this can be the case in some situations, it can also lead to problems along the way. In a franchise business, the franchisor provides a developed way of doing business, ongoing guidance, systems and assistance in return for periodic payment of fees and/or purchases. How does dumping adversely affect trade and is it illegal? Strategic alliance (joint venture) Disadvantages. These include: (a) global buyers often enjoy dealing with individuals rather than with large corporate bureaucracies, (b) small companies can usually begin shipping much faster, (c) small companies can provide a wide variety of suppliers, and (d) mall companies can give global customers personal service and undivided attention because each overseas account … In addition, political, economic, and legal instability could result in the reduction in the value of those assets or total loss in the case of expropriation. Business Expansion If you already own an established franchise and are looking to expand, adding units in another country can provide a more profitable alternative to an already saturated market. The benefits/disadvantages of strategic alliances include: •They don't typically share costs, risks, management or profits. Globalization also aids in international access to low cost materials thus enabling companies to be cost competitive within their economies and abroad. A complete ban on the import or export of a certain product or the stopping of all trade with a particular a particular country. What's the difference between a joint venture and a strategic alliance? Importing cheap materials form around the globe is known as global sourcing. Advantages of growth. A(n) ____________ is a tax imposed on imports. What are the pros and cons of this philosophy? If you are considering global expansion as the next step, the first thing you need to do is research. Why should nations trade with other nations? You should carefully consider the pros and cons of expansion before pursuing business growth. What does it mean to form an international joint venture? It effects world trade because a country usually sells the products it produces most efficiently and buys from other countries the products it cannot produce as efficiently. Why is it important to take in to account cultural differences? In spite of high financial risk, running your own business gives you a chance to make more money than if you were employed by someone else. How do these concepts affect world trade? One of the best examples of globalization within our lifetime is the construction of the International Space Station. Which of the following are ways Darla's business could engage in the global market? 3. Capturing an additional foreign market will usually expand production to meet foreign demand. When trading internationally, it may be a general practice to ask for payment upfront, whereas at home you may have to be more creative in managing cash flow while waiting to be paid. Strategic alliance (joint venture) advantages. It would start a trade war. As we can see, most of these are about improving the way people work together and breaking down traditional barriers to cooperation. The difference between importing and exporting is: Importing is buying from another country whereas exporting is selling to another country, ____________ trade is the movement of goods and services among nations without political or economic barriers, The ____________ is the value of one nation's currency relative to the currencies of other countries. Those countries that produce more efficiently should sell and those who don't should buy. Expanding your business overseas could help you manage cash flow better. (Countries keep trading goods with other countries in order to get something they want. The buying of permanent property and businesses in foreign nations or building your own facility in a foreign market. Preparation for expanding globally can be the difference between success and failure. What agreement created a free-trade among the United States, Canada, and Mexico? This means countries can specialise in producing goods where they have a comparative advantage (this means they can produce goods at a lower opportunity cost). When a company’s market is able to … Which of the following are considered benefits of contract manufacturing? The only differences are that they pay their fee up front and the franchisees have to do whatever the franchiser says. What are the primary disadvantages of world trade? What is the of balance of trade and its importance? -share profits. As a business owner, you’ll be able to work in a field that you really enjoy, and you’ll gain personal satisfaction from … Because you can never assume what will work in one country will work in another. Which of the following are considered to be sociocultural forces that affect global trade: The definition of ____________ states: lowering the value of a nation's currency relative to other currencies. When the value of a country's exports is more than that of its imports. It is the total value of a nation's exports compared to its imports measured over a particular period. More Business Opportunities. But a truly multinational corporation is on who does not target on specific part of the world but everyone in the world itself. The advantages of adopting a hierarchical structure include: Defied levels of leadership and authority. Access to talent. A long-term partnership between two or more companies established to help each company build competitive market advantages. A global forum IOT reduce trade restrictions on goods, services, ideas and cultural problems. However, expanding your business isn't without risks. The objectives of a joint venture are not 100 percent clear and rarely communicated clearly to all people involved. A partnership in which two or more companies based in two different nations to join to undertake a major project. A process of doing business worldwide, so strategic decisions are made based on global profitability of the firm rather than just domestic considerations, is known as: the United States has substantial room for improvement in doing business globally 4. North American Free Trade Agreement (NAFTA). Doing business around the world can seem a long way from doing business in your hometown. A company owned in a foreign country by another company called the parent company. The visibility of the business brand will increase. Cloud computing has been around for approximately two decades and despite the data pointing to the business efficiencies, cost-benefits, and competitive advantages it holds, a large portion of the business community continues to operate without it. What do franchises need to be aware of when franchising around the world? A limit on the number of products in certain categories a nation can import. Creative freedom and personal satisfaction. (1) It enables a producer or business to experiment in a new market without incurring heavy start-up costs. This could result in more substantial savings than by going it alone. Because the cultural differences can impact how consumers perceive a product. It makes consumers buy globally rather than domestically and can impact jobs (manufacturing mostly). Learning opportunities. The advantages of Quizlet: It functions as a memorization tool to assist students' learning. What are the dangers? The main benefits and drawbacks of globalisation are outlined below. -help companies avoid tariff and non-tariff barriers. 1. Globalization allows us to pool all our resources together. -very beneficial to smaller local partners who link up with more experienced global firms. What is a trade surplus and its importance? ____________ is a contractual agreement whereby someone with a good idea for a business sells others the rights to use the business name to sell a product or service in a given territory in a specified manner. A complex form of bartering in which several countries each trade goods or services for other goods or services.
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