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32 Cards in this Set

  • Front
  • Back
Formulation of strategies and management systems to take advantage of international opportunities and respond to international threats
Multinational Management
The Nature of The Multinational Company
• Any company that engages in business functions beyond its domestic borders
• Includes both large and small companies
The worldwide trend of the economies of the world becoming borderless and interlinked.
Negatives of Globalization?
• Not all economies of the world are benefiting equally or participating equally in the process.
• Terrorism, wars, and a worldwide economic stagnation have limited or reversed some aspects of globalization.
• Producing negative effects such as scarcity of natural resources, environmental pollution, negative social impacts, and increased interdependence of the world’s economies.
• Widening the gap between rich and poor countries
The Benefits of Globalization?
• Resulting in lower prices in many countries as multinationals are becoming more efficient.
• Benefiting many emerging markets such as India and China as these countries enjoy greater availability of jobs and better access to technology.
• Major reason why many new companies from Mexico, Brazil, China, India, and South Korea are the new dominant global competitors.
7 Key Trends of the Globalizing Economy?
• Disintegrating borders
• Growing cross-border trade and investment
• The rise of global products and global customers
• The internet and information technology
• Privatizations
• New competitors in the world market
• The rise of global standards of quality and production
Mature economies with substantial per capita Gross Domestic Product, international trade and investments.
Developed countries
Economies that have grown extensively over past two decades
Developing countries
Countries that have changed from mostly communist systems to market/capitalistic systems
Transition economies
Those countries that are currently between developed and developing countries and are rapidly growing
Emerging markets
•1947 Nations met to reduce tariffs from 45% to less than 7% - resulted in the ______________
General Agreement on Tariffs and Trade (GATT)
• 1997 – Trade ministers from countries representing 92 % of world trade agreed to eliminate tariffs on software, computer chips, telecommunication equipment and computers.
World Trade Organization
Agreements among nations to reduce tariffs and develop similar technical and economic standards
Regional Trade Agreements
Includes a large number of European countries.

Allows free movement of goods and services and a common currency.
European Union (EU)
Links United States, Canada, and Mexico in an economic bloc.
The North American Free Trade Agreement (NAFTA)
Looser confederation of 19 Asian nations with less specific agreements on trade facilitation.
The Asia-Pacific-Economic Cooperation (APEC):
World trade growth: average of _____% per year between 1990 and 2000.
Occurs when a multinational company from one country has an ownership position located in another country.
Foreign Direct Investment (FDI)
FDI increased by more that ___% between 1996 and 2000.
Developed countries get the bulk of FDI (___%) while developing countries get around 30%.
T or F: •Least developed countries get minimal FDI.
Considers all factors of a nation’s economic climate that may affect a foreign investor.
Economic Risk
Anything a government might do or not do that might adversely affect a company.
Political Risk
Factors Outside of The Control of The Multinational
•The recent increases in oil prices have the potential to slow down global trade
•Natural disasters
•International terrorism
Sale of government-owned businesses to private investors, usually through stock or direct sale to other companies.
Two types of privatization contribute to the global economy -
the developed world and the developing world.
Use privatization to make formerly government-controlled enterprises more competitive in the global economy.
The Developed Countries
Use privatization to jump-start their economies or to speed the transition from a communist to a capitalist system.
The Developing Countries
Global trade has two important effects in developing new competitors:
1) When developing countries are used as low-wage platforms for high-tech assembly, multinationals facilitate the transfer of technology.

2) Aggressive multinationals are also expanding beyond their own borders.
Consistency in quality also an important requirement of doing business in many countries.
Global standards
Next Generation of Multinational Managers: Characteristics are what?
•Global mindset

•Ability to work with people from diverse backgrounds

•Talent to motivate all employees to achieve excellence

•Accomplished negotiation skills

•Willingness to seek overseas assignments

•Understanding of national cultures

•Long-range perspective

•Ability to manage change and transition

•Ability to create systems for learning and changing organizations
Trends Shaping Future Business Environment
•Blurring of industry boundaries

•Flexibility matters more than size

•Focusing on niche


•Emphasis on innovation and the learning organization