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Chapter 7: Global Management (Regional Trading Zones (Maastricht Trading,…
Chapter 7: Global Management
Impact of Global Business
Direct foreign investments
Company builds a new business or buys an existing business in a foreign country
Multinational corporations
own businesses in two or more countries
Trade Barriers
Historically, government have actively used trade barriers to make much more difficult or expensive to buy imported goods.
Tariff
Tax on imported goods
Nontariff barriers
Quotas
government import standards
voluntary export restraints
Subsidies
custom classification
GATT
an agreement to regulate trade among more than 120 countries. Active 1947-1995
Now we have World Trade Organization
Regional Trading Zones
Maastricht Trading
NAFTA
CAFTA-DR
ASEAN
UNASUR
APEC
Consumers, Trade Barriers, and Trade Agreement
For consumers, trade agreements increase choices, competitions, and purchasing power and decrease power
The U.S marketplace is the most competitive in the world and has been one of the easiest for foreign companies to enter
Exporting
Selling domestically made products to foreign markets
Cooperative Contacts
Licensing
Domestic company, the licensor, receives royalty payments for allowing another company, the licensee, to produce product, sell its service, or use its brand name in a particular foreign market.
Franchise
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.
Strategic Alliances
When companies combine key resources, costs, risks, technology, and people. Most common form is joint ventures
Wholly Owned Affiliates
Foreign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company.
Growing Markets
Growth potential
Purchasing Power
Choosing a Location
Qualitative Factors
Company strategy
Workforce quality
Quantitative factors
Kind of facility being build
Trade Barriers
Exchange rates
Transportation and labor cost