WGU> D080 Managing in a Global Business Environment_ Latest Complete Study Guide
D080 Managing in a Global Business Environment Study Guide Unit 2 Globalization Module 1: Political, Economic, and Legal Systems 1. What is globalization? a. Globalization is when international integration arises from the interchange of world views, products, ideas, and other aspects of culture. 2. What opportunities to businesses are brought by globalization? Globalism is characterized by an increasing number of worldwide connections, rapid and discontinuous change, an increasing number of diverse participants, and growing complexity. Globalism has resulted in a widespread sharing of ideas. Internet/social media/. globalization has allowed corporations to outsource manufacturing and service jobs from high-cost locations to lower cost locations, where corporations can pay workers lower salaries and provide fewer (or no) benefits. 3. What are the economic, political, and cultural effects of globalization? Elaborate on each of the aspect. a. Economic. Economic globalization refers to the widespread, international movement of goods, capital, services, technology, and information. It is the increasing economic integration and interdependence of national, regional, and local economies across the world through an intensification of the cross-border movement of goods, services, technologies, and capital. Economic globalization primarily comprises the globalization of production, finance, markets, technology, organizational regimes, institutions, corporations, and labor. b. Political - globalization may ultimately reduce the importance of nation-states. Supranational institutions, such as the European Union, the World Trade Organization (WTO), the Group of Eight (G8), and the International Criminal Court, serve to replace or extend national functions to facilitate international agreement. Increasingly, nongovernmental organizations (NGOs) influence public policy across national boundaries, including humanitarian aid and developmental efforts. c. . Cultural globalization refers to the transmission of ideas, meanings, and values around the world in such a way that extends and intensifies social relations. The spread of culture has added to processes such as commodity exchange and colonization, which have a more extended history of carrying cultural meaning around the globe. The circulation of cultures enables individuals to partake in extended social relations that cross national and regional borders. 4. What are the arguments for and against globalization from country’s perspective? a. Globalism has resulted in a widespread sharing of ideas. Advocates for globalism feel that this sharing exposes people to more cultures and ideas, making them more tolerant. Opponents to globalism worry that cultures are becoming homogenized, especially in the spread of Western culture throughout the world. 15. What are the different forms of international business? Explain each form. International business relates to any situation where the production or distribution of goods or services crosses country borders. Intellectual property such as patents, copyrights, brand trademarks, and data; and contractual assets or liabilities. Such assets or liabilities include the right to use some foreign asset, provide some future service to overseas customers, or execute a complex financial instrument. The entities involved in international business range from large multinational firms with thousands of employees doing business in many countries to a small one-person company acting as an importer or exporter. Organizations-A business or person engaged in commerce to achieve profit Governmental Organizations - Embassies, NAFTA NGO – Nongovernmental Organizations - NGOs transcend borders to work on issues that affect people worldwide. - 6. What are the 5 stages of entering a global market? Explain each stage. a. Market Entry - companies enter new countries using business models similar to the ones deployed in their home markets. b. Product Specialization - companies transfer the full production process of a particular product to a single, low-cost location and export the goods to various consumer markets. In this scenario, different locations begin to specialize in different products or components and trade in finished goods. c. Value Chain Disaggregation - This represents the next step in the company's globalization of the supply chain infrastructure. In this stage, companies disaggregate the production process and focus on completing each activity in the most advantageous location. d. Value Chain Reengineering - companies seek to further increase their cost savings by reengineering their processes to suit local market conditions by substituting lower cost labor for capital. e. Creation of New Markets - the focus is on market expansion. This allows companies to substantially lower their sticker prices in both old and new markets and to expand demand. Significantly, the value of new revenues generated in this last stage is often greater than the value of cost savings in the other stages. 7. What are the 4 drivers of globalization? Explain. The four drivers of globalization are market, cost, government, and competition. 2Opportunities for scale arise through the marketing of somewhat standardized offerings. Convergence of needs “gradually consumer needs become the same.” Economies of scale refer to the phenomenon of diminishing marginal costs associated with output . Economies of scope refers to the concept that the unit cost to produce a product will decline as the variety of products increases. Competition - High levels of trade, competitive diversity, and interdependence increase the potential for industry globalization. Differences in policies and regulations affecting global competitiveness 8. What is the difference between the world is flat view and the CAGE analysis? Elaborate on each of them. Friedman (2005) identifies 10 significant events that helped reshape the modern world and make it flat: Fall of the berlin Wall 1989, Netscape went public in 1995, powerful and easier-to-use software with improved connectivity, free online software, worldwide internet, moving offshore and increasing US exports, Walmart, Insourcing, Google, technological advances. These 10 factors had influential roles in making the world smaller, but each worked in isolation until, Freidman writes, the convergence of three more powerful forces: new software and increased public familiarity with the internet, the incorporation of that knowledge into business and personal communication, and the market influx of billions of people from Asia and the former Soviet Union who want to become more prosperous quickly. Converging, these factors generated a critical mass. The benefits of each event became greater as it merged with another event. Increased global collaboration by talented people without regard to geographic boundaries, language, or time zones created opportunity for billions of people. Ghemawat's (2001) research suggests that to study "barriers to cross-border economic activity," you would use a CAGE analysis. The CAGE framework covers these four factors: Culture, Administration, Geography, Economics Cultural differences between two countries reduce their economic exchange. Administratively similar countries trade much more with each other than dissimilar countries. Geography - Generally, as distance goes up, trade goes down, since distance usually increases the cost of transportation. Geographic differences also include time zones, access to ocean ports, shared borders, topography, and climate. Economic distance refers to differences in demographic and socioeconomic conditions. 3Each of these CAGE dimensions shares the conventional notion of distance. CAGE differences are likely to matter the most when the CAGE distance is great. That is, when CAGE differences are small, there will likely be a greater opportunity to see business being conducted across borders. A CAGE analysis also requires examining an organization's specific industry and products in each of these areas. 9. What are the benefits and costs of global expansion from MNCs’ perspective? MNC - Multi National Corporation Critics of unrestricted fair trade say that it benefits the rich at the expense of the poor.2 They say that competition between countries has not driven prices down as expected, but instead, it has allowed countries to get a price advantage by manipulating their currency the development of global trade creates unfair exchanges between larger and smaller economies. They argue that MNCs and industrialized economies capture significantly more value because they have more financial leverage or wealth and because they can dictate advantageous terms of exchange, which end up victimizing developing nations. Larger market – lower cost – advanced technology Proponents of globalization point to the increased financial stability of many developing nations as a positive consequence of globalization. In addition, a collaborative global economy may also push the development of technology that could benefit everyone. 10.List different political systems and differentiate them. How does each political system impact business operation? ost people generally agree that anarchy, or the absence of organized government, does not cilitate a desirable living environment for society Type Definition Examples Monarchy A single person rules until he or she dies or abdicates the throne. Power can vary by type: absolute, constitutional, or a mix of both. Constitutional: Canada, Great Britain, Japan Absolute: Saudi Arabia, Qatar Oligarchy A small, elite group holds power Status not achieved through noble ancestry Russia Venezuela China Dictatorshi p A single person (or a very small group of people) holds power. Wields complete and absolute authority over a government and population. North Korea Cuba Democracy Citizens organize political parties and elect leaders Leaders power organized through constitution and term limits United States While any country can, in theory, pose a risk in all these factors, some countries offer a more stable usiness environment than others. Established democracies—such as those in the United States, Canada, Western Europe, Japan, and Australia—offer a high level of political stability. While many other countries also have functioning democracies, their stage of development impacts the stability of their economic and trade policy, which can fluctuate with government changes. 11.List different economic systems and differentiate. How does each economic system impact business operation and economic production? Traditional Economy - The traditional economy uses methods of trade and exchange that are passed through generations. Traditional economies have very little economic evolution or growth. Centers around family – carter – produce what is needed with n o surplus. There is little friction. Everyone knows their position and its sustainable. Disadvantage is at the mercy of climate and the low standard of living (Haiti) Command Economy - In a command economy, economic effort is devoted to goals passed down from a ruler or a ruling class. In a command economy, resources and businesses are owned by the government. The government decides which goods and services will be produced and what prices will be charged for them. The government chooses what methods of production will be used and how much workers will be paid. (Communist Society) Advantage is that can mobilize large amounts of resources without fear of lawsuits & economy can be transformed based on a leader's vision. Disadvantage is rapid change can neglect society, production not tied to demand, black market & economy less flexible (Cuba, N Korea) Market Economy - economic system, leaders make decisions based on consumer demands. Goods and services are produced and distributed according to the rules of supply and demand. Consumers influence how much is made. Consumer and business benefit from one another. A market economy uses prices to regulate the balance between supply and demand. Good and services are privately owned. People are free to choose, seller aims to make a high profit, competition keeps process low, Government interference is at the minimum that is necessary. Advantages of market economies are consumers pay for the things they want the most, and businesses produce the goods and services that will earn them a profit. Production methods are efficient in increasing both productivity and profitability. Innovation is encouraged and rewarded. Investments by individuals and organizations in other successful organizations drive both innovation and quality improvement. The disadvantages of a market economy include the following: Those who cannot compete as well, such as people with disabilities and their caretakers, may be at a competitive disadvantage. Not all can reach their full potential due to their inability to access education and obtain means to improve skills. There is a significant divide between the privileged and the underprivileged. Mixed Economy - Economies on either end of the spectrum are likely to fail due to either too much or too little regulation. For this reason, most economies are mixed.4 A mixed economy borrows the following characteristics from a market economy: It protects private property, the laws of supply and demand determine prices in a free market, and it is driven by self-interest. A mixed economy, like a command economy, uses the federal government to protect the people and the market as well as oversee the military and international trade the advantages of the mixed economy mirror those of the market economy in that goods and services are distributed where they are most needed. Prices are set by supply and demand, innovation is encouraged, and capital is allocated to the businesses that are the most innovative and efficient. A mixed economy minimizes the disadvantages of a market economy by having a more significant role for government intervention in the market. 5...................................Continues
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d080 managing in a global business environmentstudy guide
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d080 managing in a global business environment
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