WGU Global Business D080

WGU Global Business D080 Cost Economies of scale and scope. Exploiting cost of factors of production Competition New Markets and increased levels of trade Government Favorable policies and support for industry Subsidies A sum of money granted by the government to assist an industry or business Patents Protects inventions and improvements to existing inventions for a limited period of time in exchange for detailed public disclosure of those inventions Copyrights A government authority or license giving the owner of an invention the right to exclude others from making or selling the invention for a set period of time Trademarks Protection for any word, name, symbol, device, or any combination used in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others Ethical business practices Arguably the most substantial of the challenges faced by MNCs-ethical business practices in areas such as labor, product safety, environmental stewardship, corruption, and regulatory compliance-has historically played a dramatic role in the success or failure of global players Organizational structure Another significant hurdle is the ability to efficiently and effectively incorporate new regions into the value chain and corporate structure Public relations Public image and branding are critical components of most businesses Leadership It can be difficult for businesses to find an effective organizational leadership having the appropriate knowledge and skills to approach a given geographic market successfully Legal and regulatory structure Every nation has unique laws and regulations that govern business. MNCs need access to legal expertise that will help them understand in country laws and comply with applicable regulations Infrastructure Infrastructure includes the basic physical and organizational structures needed for a society to operate and for an economy to function Technology The level of technological development of a nation affects the attractiveness of doing business there and the type of operations that are possible Cultural distance refers to people's differences based on language, norms, national or ethnic identity, levels of trust, tolerance, respect for entrepreneurship and social networks, or other country specific qualities Administration Bilateral trade flows show that administratively similar countries trade much more with each other than dissimilar countries In Globalization 1.0 nations dominated global expansion Globalization 2.0 was driven by the ascension of multinational companies, which pushed global development In Globalization 3.0 significant software advances have allowed an unprecedented number of people worldwide to work together with unlimited potential Authoritarian governments Centralize all control in the hands of one strong leader or a strong small group of leaders who have full authority Totalitarianism Contends that every aspect of an individual's life should be controlled and dictated by a strong central government. Tend to use more fear and corruption to maintain control Anarchism Contends that individuals should control political activities, and public government is both unnecessary and unwanted Democratic governments Derive their power from the people of the country, either by direct referendum (called a direct democracy) or through elected representatives of the people (a representative democracy) Free trade zones These areas have reduced tariffs, taxes, customs, procedures, or restrictions to promote trade with other countries Command Economy Economic effort is devoted to goals passed down from a ruler or a ruling class. Resources and businesses are owned by the government Mixed economy Supply and demand are generally determined by individuals or companies, but the government will intervene as necessary Traditional economies Are focused around families or tribes where everyone consumes and produces the same goods, there is no surplus, and members barter. Little to no global trade is practiced Market economy, goods and services are owned by individuals or companies that can buy, sell, or lease them to make a profit with minimum interference by the government Communism A system in which all property is publicly owned and the government controls global trade Capitalism A system in which the means of production is controlled by private owners who can choose to participate in global trade Socialism A system in which the government controls the means of production and regulates global trade Industrialized Prevalent formation of new markets with possibility of saturation Less developed Focus on agriculture and raw materials with limited imports Developing Growing population which leads to long term growth potential Civil Law An inquisitorial system where the investigating judge investigates the facts of the case Common Law Judges interpret the law, and judicial rulings can set precedent Religious Law Is based on religious guidelines Customary Law Can vary from community to community and is found in countries without strong formal justice systems Canon Law This system is the body of laws and regulations made by a religious authority governing communities Special Drawing Rights The international type of monetary reserve currency created by the IMF TRIPS Trade Related Aspects of Intellectual Property Rights Privatization Selling government holdings to private companies The International Monetary Fund (IMF) Promote international economic cooperation, international trade, employment, and exchange rate stability by making financial resources available to member countries to meet their balance of payments needs World Bank Helps build sustainable economic growth, invests in people, end extreme poverty, improve the income of the lowest 40% of citizens in each country, and build resilience to shocks and threats The European Central bank Regulates the supply of euros Debt Instruments A tool used by a company or any other entity to raise money or capital Federal Reserve Bank U.S. central bank Criticisms of The World Bank Power imbalance in leadership, not help to developing countries, privatization in general and specifically in the health sector, not considering how funding projects will adversely affect the environment, and emerging markets have been frustrated with their lack of influence in the World Bank Criticisms of IMF Conditions of its loans, lack of accountability, and willingness to lend to countries with poor human rights records, requiring poor countries to reduce their government borrowing, an administrative underrepresentation of the global south, environmentalists criticize the IMF by blaming IMF loans for the exploitation of natural resources Criticisms of The WTO Free trade is not equal across all industries, reserves the right to review each nation's trade policies, protects developed countries more than developing countries, has refused to address the impacts of free trade on labor rights, and ignoring environmental concerns One of the results of the Uruguay Round of the World Trade Organization negotiations, Decrease in tariffs Specialization is A method of production whereby an entity focuses on the production of a limited scope of goods to gain a greater degree of efficiency Tariffs A tax or duty to be paid on a particular class of imports or exports Trade Surplus When the value of a country's exports is greater than the value of goods being imported Mercantilism One of the earliest economic theories, which stated that a country's wealth was determined by the amount of gold and silver they had in their possession Imports Bringing goods or services into the country from abroad for the purpose of selling Exports A commodity, good, or service sold abroad Protectionism The theory or practice of protecting a country's domestic industries from foreign competition by taxing imports Government Subsidies Money paid by the government to help an organization or industry reduce its costs Free trade International trade left to its natural course without tariffs, quotas, or other restrictions Absolute Advantage The ability of an individual or group to produce a good or service more efficiently than another Economies of Scale A proportionate savings in costs gained by an increased level of production Convertible A currency that can be used to buy or sell without government restrictions Foreign Direct Investment An investment strategy of investing in a foreign market through direct involvement in the operations of a company, either by acquisition or partnership or by creating a new business. A company engages in this due to it wants to control organizational assets in another country Value Chain Describes how a good is produced in stages. Industry privatization When a country converts a state owned enterprise into a private company Skill specialization When one country can gain a particular advantage in manufacturing one type of equipment by the nature of the labor skills and resources Quotas A limited quantity of a particular product that can be produced, exported, or imported under official controls Comparative advantage What a country as a whole can produce cheaper Intra industry trade Occurs between two countries that decide to use specialization to reduce costs of products in various industries Consumer Surplus The difference in price between the highest price a consumer is willing to pay for a good or service and what they actually paid. When tariffs and quotas are discontinued they increase Import Tariffs Taxes on goods that are imported into a country Export Tariffs Taxes on goods leaving a country Protective Tariffs Tariffs that protect a domestic industry by making imported goods more expensive than equivalent goods produced domestically