Globalization Key Terms Created by Elizabeth Cushman (Spring 2007 IBUS student) Globalization 2 Foreign Market Entry 3 Foreign Market Entry Globalization of Markets 4 Foreign Market Entry Business Operations 5 Foreign Market Entry Business Operations Production Methodologies 6 Foreign Market Entry Business Operations Marketing 7 Foreign Market Entry Business Operations Human Resource Management 8 Foreign Market Entry Globalization of Production 9 Institutions 10 Political Systems 11 Economic Systems 12 Economic Systems Market Systems 13 Economic Systems Economic Integration 14 Economic Systems Foreign Exchange Market 15 Legal Systems 16 Legal Systems Systems 17 Legal Systems Property Rights 18 Legal Systems Trade Documents 19 Legal Systems Ethics 20 International Trade 21 International Trade Exports and Imports 22 International Trade Restrictions on Trade 23 International Trade Free Trade Theories 24 International Trade Counter Trade 25 Societal Environment 26 Outline – Foreign Market Entry Globalization of Markets • Foreign Direct Investment – Stock of FDI • Green Field Investment • Strategic Commitment • Licensing – Cross Licensing • Exporting – Importing • Wholly Owned Subsidiary • Turnkey Project • Joint Venture • Franchising Globalization of Production • Benefits – Value Creation – Core Competence – Experience Curve – Economies of Scale – Location Economies – Learning Effects • Strategies – Multi-Domestic Strategy – International Strategy – Global Strategy – Transnational Strategy • Ecletic Paradigm • First Mover Advantage/Disadvantage – Late Mover Disadvantage – Pioneering Costs 27 Outline – Foreign Market Entry Production Methodologies – Product Life Cycle – Distribution/Logistics – Total Quality Management (TQM) • Six Sigma • Total Process Management (TPM) • Toyota Production System (TPS) • ISO 9000 – Just-in-Time inventory (JIT) • Lean Manufacturing Marketing – Infant Industry – Marketing Mix • Push Strategy • Pull Strategy – Pricing • Strategic Pricing • Elastic/Inelastic • Multipoint Pricing • Predatory Pricing – Distribution Channels • Exclusive Distribution Channel • Channel length • Concentrated Retail System • Fragmented Retail System 28 Outline – Foreign Market Entry Human Resource Management Compensation/Benefits • Balance Sheet Approach • Behaviors/Staffing Policies • Ethnocentric • Polycentric • Geocentric • Management • Repatriate Management • Expatriate Management • Expatriate Failure • Inpatriate 29 Outline - Institutions Institutions • • • • • • • • Organization for Economic Cooperation and Development (OECD) Export-Import Bank International Accounting Standards Committee United Nations (UN) World Bank World Trade Organization (WTO) International Court of Justice (ICJ) International Monetary Fund (IMF) 30 Outline – Political Systems Political Systems – Democracy • Representative Democracy – Theories • Individualism • Collectivism – Totalitarianism • Theocratic Totalitarianism • Communist Totalitarianism • Right-Wing Totalitarianism • Tribal Totalitarianism 31 Outline – Economic Systems Market Systems • • • Market Economy Mixed Economy Command Economy Foreign Exchange Market • Economic Integration • • • • • • • Efficient/Inefficient Market Gross Domestic Product (GDP) Gross National Product (GNP) Degree of Integration – Free Trade Area – Customs Union – Common Market – Economic Union – Political Union Translation Exposure Law of One Price Purchasing Power Parity (PPP) – Lag Strategy • • Exchange Rates – Convertibility • Non-Convertible • Freely-Convertible • Capital Flight • Externally Convertible – Forward Exchange Rates – Currency Speculation – Foreign Exchange Risk – Spot Exchange Rates – Government Regulation • Floating Exchange Rate • Pegged Exchange Rate • Gold Standard • Dirty Floating System • Fixed Exchange Rate – Arbitrage – Currency Swap Hedge Fund – Short Selling Strategies – Lead Strategy – Lag Strategy 32 Outline – Legal System Systems • Common Law • Civil Law • Theocratic Law • Contract Law Property Rights • Conventions – Trade Related Aspects of Intellectual Property Rights (TRIPS) – Paris Convention for Protection of Industrial Property – Convention on Combating Bribery of Foreign Public Officials in International Business Transactions – United Nations Convention on Contracts for the International Sale of Goods Product Liability – Violation • Private Action • Public Action • Foreign Corrupt Practices Act – Copyrights/Trademarks – Royalties Trade Documents – Letter of Credit – Bill of Lading – Draft • Slight Draft • Time Draft 33 Outline – Legal System Ethics • Utilitarian Approach • Kantian Ethics • The Friedman Doctrine • Universal Declaration of Human Rights • Cultural Relativism • Vail of Ignorance • The Righteous Moralist • Ethical Dilemma • The Naïve Immoralist • Ethical Strategy • Sarbanes-Oxley (SOX) 34 Outline – International Trade Exports and Imports • Export Management Company • Balance-of-Payments Account • Current Account • Balance-of-trade Equilibrium Restrictions on Trade • Tariffs – Ad Valorem Tariffs – Specific Tariffs • Import Quota – Voluntary Export Restraint – Quota Rent • Administrative Trade Policies – Local Content Requirements – Dumping • Countervailing Duties • Antidumping Policies Free Trade Theories • Mercantilism • Learning Effects • Positive-Sum Game/Zero-Sum Game • Trade Creation/Trade Diversion • Comparative Advantage/Absolute Advantage Counter Trade • • • • • Buybacks Barter Offset Switch Trading Counter-Purchase 35 Outline – Societal Environment Societal Environment – Values – Social Strata • Social Mobility – Caste System – Class System – Norms • Mores • Folkways – Power Distance – Individualism vs. Collectivism – Uncertainty Avoidance – Masculinity vs. Femininity 36