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MGMT 450 Exam 1-TAMU Vanita MahajanGlobalization - answer the shift towards a more integrated and interdependent world
economy
International business - answer business transactions between parties from more than
one country
2 facets of globalization - answer1. globalization of markets
2. globalization of production
Globalization of Markets Advantages - answer-you can *sell* outside of your country
-you have access to new sources of revenue
Globalization of Production Advantages - answer-you can *produce* outside of your
country
-cheaper labor, less stringent laws, closer to raw materials, access to technology or
skills
BUT quality and intellectual property are at risk
International Business vs. Domestic Business - answer-boundaries: tariffs at borders
-currencies: fluctuation of exchange rates
-cultures: adapt your co to the culture (McDonalds are different across the world)
-legal systems- copyright laws and accounting principles might be different in a foreign
country
-availability of resources
-skills and knowledge
History of International Trade - answerstarted during the roman empire:
-engineers, great military
-perfected the arch>could make aqueducts, bridges, and roads
-converted old buildings into marketplaces
-military guarded trade routes
-common coinage and standardized measurements
^^^trade thrived>Pax Romana-period of peace in Rome
-Pax americana- alludes to America being an empire that will have to fall eventually.
Contemporary causes of globalization - answer-strategic imperatives (motivating
factors)
-the environmental causes of globalization (facilitating factors)
, Manifestations of globalization - answer-intensification of the role of international trade
-growing importance of FDI
Strategic Imperatives - answer-Leveraging a firm's core competencies
-Acquiring resources at a low cost
-Expanding into new markets (when domestic market becomes mature. Benefits?
economies of scale, diversifies revenue stream)
-Competing with industry rivals (prevent rivals from getting a stranglehold in any
country)
Two Recent Eras of Globalization & timeline - answerFirst period-British pound 1870-
1914
Second period-USD 1990-
1914- WWI began, import tariffs that favor local trade
1917-communist ideology hindered trade
!945- WWII ends, tariffs and barriers to FDI eliminated
1990-collapse of the SU means a lot more countries are now open to trade
post 1990-intro of the internet
International business activities (5) - answer1) exporting and importing
2) international investments
3) international licensing
4) international franchising
5) international management contract
GDP - answer-Gross Domestic Product
-total monetary value of goods produced and services provided by a country in a year
-USA: 19.36 trillion
-Rank:
1) USA
2) China
3) Japan
Purchasing Power Parity - answer-the buying power of a currency
Exports of goods and services as a percentage of GDP - answer1) Luxembourg-230%
2) Hong Kong-188%
3) Singapore-173%
4) USA-12%
-US consumes a lot of what we make which is a sign of a stable economy
-How are some greater than 100%-re-exporting (ex. of reexporting is Floraholland in the
Netherlands)
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