Chapter 3 Learning Goal 1 Free trade movement of goods and services among nations without barriers o Comparative advantage sell what you produce efficiently buy what you cant o Absolute advantage theory sell what you monopolize or are most efficient at Balance of trade total value of a nations exports compared to its imports over period Balance of payments difference between money coming into and leaving the country plus money flows from other factors such as tourism military aid and expenditures Dumping selling products in a foreign country for lower price than in that country Learning Goal 3 Licensing firm allows a foreign company to produce in exchange for royalty o Firm can gain revenues it would not have generate otherwise o Licensees much purchase start up supplies and consulting services from licensor o Licensors spend little to no money on producing and marketing products o Indirect exporting export trading companies assist in negotiation and relations Exporting selling goods from your domestic country to a foreign country Franchising contractual agreement where someone sells business rights to someone to use Contract manufacturing foreign company produces domestic company attaches brand Joint venture partnership where two or more companies undertake a major project Strategic alliance long term partnership between companies to establish market advantages o Shared technology risk marketing and management expertise o Entry into markets where foreign companies aren t always allowed o Provide broad access to markets capital and technical expertise o Companies don t share costs risks management or profits o Foreign subsidiary company owned by foreign country by another company o Home country is where parent firm is host country is where subsidiary is o Expropriation firms assets are taken over by the foreign government Foreign direct investment buying of permanent property and businesses in foreign nation Multinational corporation firm that manufactures and markets in many countries Sovereign wealth funds funds controlled by governments with stakes in foreign companies Learning Goal 4 Sociocultural forces values beliefs rules and institutions held by people o Ethnocentricity an attitude that your country is superior to other countries o Plant manager assumed power failure at plant but workers were just praying o Never assume what works in one country will work in another o Exchange rate value of one nations currency relative to other countries Economic forces financial differences between countries High value of the dollar foreign products become cheaper Floating exchange rates currencies float according to supply demand o Devaluation lowering the value of a nations currency relative to others o Countertrading form of bartering where several countries may be involved Legal forces conduct of the business in accordance to law varies amongst countries o FCP Act of 1978 prohibits payments to foreign officials to secure contracts Physical and environmental forces transportation and storage facilities in countries Learning Goal 5 Trade protectionism regulations to limit imports to improve domestic economy o Tariffs taxes imposed on imports from other countries to discourage it Protective raise retail price of imported products to be competitive Revenue designed simply to raise money for the government o Import quota limit on the number of products in certain categories imported o Embargo complete ban on import or export of a certain product General Agreement on Tariffs and Trade global forum reducing trade restrictions World Trade Organization organization that mediates trade disputes among nations Common market regional group of countries that have a common external tariff o Also called a trading bloc examples EU ASEAN COMESA o NAFTA created a free trade area among US Canada and Mexico Chapter 4 Learning Goal 1 When facing an ethical dilemma ask yourself these questions Ethics standards of moral behavior accepted by society as right versus wrong o Goes beyond obeying laws reflects proper relationships with one another o Is my proposed action legal Am I violating any law or policy o Is it balanced Am I acting fairly Would I want to be treated this way o How will it make me feel about myself Would I be proud of my decision o Tolerance or intolerance of misconduct influences employees more than anything Managers set formal ethical standards and informal standards through actions Integrity based ethics standards that define organizations values set environment Compliance based ethics standards to prevent unlawful behavior with control punishment Whistleblowers insiders who report illegal or unethical behavior Learning Goal 5 Corporate social responsibility a businesses concern for the welfare of society o Corporate philanthropy charitable donations to nonprofit groups of all kinds o Corporate social initiatives philanthropy of company related to competencies o Corporate responsibility hiring minority workers to making safe products o Corporate policy position a firm takes on social and political issues JFK proposed four consumer rights right to safety be informed choose heard Business is responsible for four types of stakeholders o Must satisfy customers with goods and services of real value o Must make money for investors o Must create jobs for employees maintain job security and reward hard work o Must create new wealth for society promote social justice and contribute Social audit systematic evaluation of an organizations socially beneficial progress Chapter 7 Modern managers emphasize teamwork cooperation rather than discipline give order Leaders of fortune 500 companies are younger more female less elite educations Learning Goal 1 Learning Goal 2 Management process used to accomplish goals through o Planning anticipating trends and creating strategies o Leading giving assignments providing feedback o Organizing structuring authority and motivating employees o Controlling monitoring performance and taking necessary action Learning Goal 3 Mission statement should address o Organizations self concept o Philosophy o Long term survival needs o Customer needs o Social responsibility Vision encompassing explanation of why the organization exists Goals broad long term accomplishments the organization wants to attain Objectives specific short term statements on how to achieve goals What is the situation now How can we get to our goal from here o SWOT analysis looks at strengths
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