Global Business Environment PDF

Global Mindset Attributes: Psychological You display this attribute if you want to gain additional knowledge regarding new cultures. This can involve learning new norms. Hofstede's Cultural Dimensions Theory: Power Distance We look at this dimension of Hofstede's theory when assessing the accepta...

Global Mindset Attributes: Psychological You display this attribute if you want to gain additional knowledge regarding new cultures. This can involve learning new norms. Hofstede's Cultural Dimensions Theory: Power Distance We look at this dimension of Hofstede's theory when assessing the acceptance of how power is distributed in a society. This can control how accessible employees consider managers to be. Cultural Intelligence (CQ) This refers to an individual's skill with recognizing and becoming comfortable with differences in culture. Those who can attune to cultural norms display this. Political Capital Countries use this kind of capital if they use force or diplomatic skills to entice others to take actions that are favorable economically. Human Capital This capital is dependent on a country's inhabitants and the skills or intelligence they possess. Countries with educated citizens can increase this. Hofstede's Cultural Dimensions Theory: Individualism vs. Collectivism The dimension of Hofstede's theory that considers whether a culture encourages people to work alone or together. Global Company This kind of company sells services or products in a large number of countries, keeping its brand and products the same in different markets. International Monetary Fund (IMF) This organization offers countries aid with loans and currency exchange. 188 countries are part of this group. Global Business Environment: Cultural Challenges Challenges that relate to the way the citizens of different countries behave or believe. Social Norm Behaviors that a specific society expects you to perform in a given situation. An example would be waiting patiently in line to order your drink at a coffee shop. Hofstede's Cultural Dimensions Theory This theory focuses on aspects that are unique to different cultures and then compares them based on a ranking system. It includes six categories. Hofstede's Cultural Dimensions Theory: Masculinity vs. Femininity This dimension of Hofstede's theory focuses on what societies prefer. Societies can favor material rewards and assertiveness, or cooperation and concern for weaker individuals. Global Business Environment: Social Challenges The challenges faced by global businesses that are connected to the norms that dictate standard behavior in different countries. Liability of Foreignness (LOF) This reflects what it will cost a company to enter a new market and effectively compete with a country's established businesses. Globalization: Disadvantages This process can cause high competitiveness that lowers labor costs and may cause job insecurity. It may also negatively impact diversity and the unique cultures of different nations. Going Global: Advantages Companies may choose to expand in this way to gain a competitive advantage, to access raw materials, to extend the life cycle of products and to get into fresh markets. Hofstede's Cultural Dimensions Theory: Uncertainty Avoidance We consider this dimension of Hofstede's theory when determining how comfortable cultures are when forced to handle ambiguity. Product Life Cycle This covers the amount of time it takes to develop a product, bring it to market, and then finally remove it from the market. Joint Venture You use this method to enter a foreign market when you share business ownership. Some countries expect you to do this to get into their markets. Linear View of Time This view of time is seen in cultures that see deadlines as important because they feel that time may be spent and then never gotten back. International Company A company that mostly focuses on its local market, but makes a certain number of sales in foreign markets. Cultural Intelligence (CQ): Workplace Benefits Fostering this in employees can raise profits, creativity and production, while lowering barriers to communication and issues that cause interpersonal conflict. Direct Investment A method of entering a foreign market that involves purchasing your way into the market. This is a good idea if you are entering a market that has a lot of corruption. Cyclical View of Time Countries that view time in this way believe it will always continue and, therefore, they should use as much time as they need to bring a project to completion successfully. Global Business Environment: Ethical Challenges These challenges focus on deciding what is right or wrong. Cultures have differing views on many of these issues, including bribery, which makes global business difficult. Global Mindset Attributes: Social This attribute is apparent in employees who can show empathy on an intercultural level. Individuals who travel to different countries could develop this. Franchising Businesses enter foreign markets in this way when they sell another company the right to use their brand and receive royalties in return. Globalization The process that broadens perspectives beyond nationalism to allow businesses to see the world as interconnected and capable of moving goods, services and capital freely over national borders. Resource Capital The type of capital associated with natural assets found in a country, including things like oil or timber. Global Mindset Attributes: Intellectual This represents the skill necessary to understand new information as it relates to cultures different from your own. Costs of Doing Business Abroad (CDBA) Companies incur these when they enter international markets. If these outweigh potential revenue, the company should not expand in this way. Hofstede's Cultural Dimensions Theory: Long-term vs. Short-term Orientation You can focus on whether a culture is interested in searching for virtue or absolute truth with this dimension of Hofstede's theory. Financial Capital A country has this kind of capital if it has a lot of monetary tools or cash. Economic Inequality Differences in the way income, wealth and assets are distributed among countries. We see this when comparing countries that have a lot of infrastructure with those that do not. Capital Flight This occurs when wealthy people living in a LDC decide to choose other, more developed countries to deposit their money. Long-Run Aggregate Supply Curve A graph that can be used to show the growth of an economy. When the economy flourishes, the curve will shift to the right. World-Systems Theory A theory that divides countries into three groups: core, periphery and semi-periphery. It looks at different forms of capitalism and the effect of external factors on a country. Economic Globalization This occurs as economies around the world mix and grow interdependent, fostering open trade. It can lead to goods from one country being sold in many other locations and lower prices. Developed Nations Countries in this economic category are industrialized and have levels of per capita income that are fairly high. Canada, Taiwan and the U.S. are examples of this kind of country. Dependency Theory This theory looks at LDCs through the lens of Marxism. It focuses on how development in these countries is impacted by external factors. Economic Growth The process that occurs when the potential economic output of a country increases for the long-run. Lesser-Developed Countries (LDC) / Developing Countries: Effects of Globalization This process can make it easier for these countries to acquire capital. It also helps them integrate into networks for global production. Modernization Theory The developmental theory that advocates LDCs growing in a way that will make them similar to Western cultures and that supports industrialization. Transitional Countries These are nations that are changing their economies to a market-based model from their previous economic models. Globalization: Effects This process can cause domestic workers to lose jobs, because foreign labor is sometimes cheaper. It may increase profit for businesses by offering lower costs and more revenue. Lesser-Developed Countries (LDC) / Developing Countries Nations that are not as economically mature as developed countries. We usually find these in Africa, Asia or Latin America. Tariffs A tax placed on goods that are imported into a country. North American Free Trade Agreement (NAFTA) A trade agreement set up between the United States, Mexico and Canada. This resulted in new jobs, but it also caused wage stagnation. The Neo-Classical Growth Model (Solow-Swan Growth Model) A theory about economic growth that asserts that capital, labor and technological advances all have an effect on a country's economic development. Open Trade Trade that does not face restrictions from the government. This is also called free trade. This kind of market could result in poor conditions for workers and damage to the environment. Absolute Advantage Countries have this kind of advantage if they are able to produce a specific good for less money and with greater efficiency than anyone else. Free Trade Area A type of economic integration that focuses on taking away trade barriers like quotas and tariffs between member nations. Market System In this type of economic system, most resources are owned by private citizens. Command System The state is in control of the majority of resources in this kind of economic system. These systems have a lot of barriers to entry. Physical / Environmental Forces Factors that are related to the ecosystem of a country. Countries that are particularly difficult to navigate may experience a large impact from these forces on trade. Trade Deficit The balance of funds a country has if their total imports have greater value than their total exports. Classical Theory of Economic Growth This theory on economic growth argues that GDP is steady and that any fluctuations will eventually pass. Customs Union We see this kind of economic integration between countries that share a trade policy. These countries also remove barriers to trade. Trade Surplus Countries with total exports that have a higher value than total imports have this. Saudi Arabia maintains a high level of this. Common Market This kind of economic integration occurs when restrictions on foreign investment, immigration and emigration are taken away. Theory of Economic Integration This theory asserts that as countries with labor and capital disparities trade with one another, the disparity will equalize, resulting in fair trade. Economic Forces The forces that relate to resource allocation and distribution in a culture. Legal Forces These forces are related to the way a country's laws impact its ability to trade. Comparative Advantage Countries have this when their opportunity cost for producing a good is lower than anyone else's. This can be increased by free trade. New Growth Theory An economic growth theory that focuses on money invested into research, human capital and knowledge. It argues that countries investing in these things grow more economically. Theory of Comparative Advantage This theory argues that countries would be best served by specializing in the products that they can create with the lowest opportunity cost. Opportunity Cost The money you would get if you completed a task, but that you do not receive because you instead chose to work on a different task. International Centre for Settlement of Investment Disputes (ICSID) This group offers aid in settling disputes that arise between investors and the countries that accepted their investments. Mercantilism Countries participate in this practice when they try to stop others from becoming wealthy through the use of a trade barriers. Non-Tariff Barrier These non-tax related barriers to trade could include large amounts of paperwork, regulations, quotas, embargoes, and more. International Monetary Fund (IMF) This was set up in 1944 to help countries cooperate regarding monetary policy on an international level. Greenfield Operations the process of building facilities for manufacturing in a new country in order to avoid a tariff Tariff Barrier This kind of barrier exists in the form of taxes on imported goods. Trade Barriers: Effects on Consumers Setting up these regulations generally results in rising prices for domestic consumers; governments must consider this before the regulations are set. North American Free Trade Agreement (NAFTA) The agreement set up to bring down the barriers that disrupted trade between the U.S., Mexico, and Canada. International Development Association (IDA) This part of the World Bank focuses on assisting economies that are severely struggling. World Trade Organization (WTO) This organization works on lowering barriers to trade and mediating on trade disputes. It absorbed the General Agreement on Tariffs and Trade (GATT). World Bank This was designed to foster economic development. It has two components: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Multinational Investment Guarantee Agency (MIGA) Lenders and investors can gain ''political'' insurance through this organization to reduce their risk of investing in potentially unstable countries. Trade Barriers These regulations make it difficult for one country to sell goods in a different country and may rise prices or restrict the number of possible imports into a country. Webb-Pomerene Association This group is made up of manufacturers who are interested in joining forces against barriers to trade in order to improve exporting. Trade Barriers: Effects on Domestic Manufacturers These regulations support domestic manufacturers, especially those who are just getting started in the market. They can also save domestic jobs. Import Quota This regulation that controls how many goods can be brought into a country during a set length of time may help prevent businesses from engaging in dumping. Dumping Businesses practice this if they sell a lot of their goods in a different country for less money than they charge in their domestic market. International Bank for Reconstruction and Development (IBRD) Developing countries can approach this organization to get loans that have little to no interest. It is part of the World Bank. Trade Agreement Countries may set these up in order to alleviate the effects of quotas, tariffs, and other trade barriers. Joint Venture a business arrangement that occurs when two companies share ownership of a business Tariff This kind of tax is placed on goods that are imported into a country. It limits a domestic consumer's purchasing power. Most Favored Nation (MFN) A designation given to countries so they can export goods without facing high tariffs. International Finance Corporation (IFC) This organization works to connect investors from the private sector with business sectors that have a lot of risk. Front Back Relative Purchase Price Parity The price level that focuses on interest rates along with the way currencies appreciate due to exchange rate differences. This is dynamic compared to other levels. Long-Run Exchange Exposure You face this kind of risk over a lengthy period of time. It deals with the way exchange rates can become unfavorable as time passes. Currency Appreciation The process that occurs when one country's currency grows more valuable relative to the currency of another country. This lowers inflation and may create a trade deficit. Currency Depreciation This happens when a country's currency weakens and loses value in relation to other countries' currencies. This increases inflation and may lead to a trade surplus. Translation Exposure Companies face this risk when they invest in currency from another country and have to report stock prices with an unfavorable exchange rate. Forward Exchange Rate Your company can lock into this exchange rate to be used at a future date, regardless of what the actual exchange rate is at that time. Short-Run Exchange Exposure This risk occurs when companies may need to deal with exchange rates that are unfavorable around the current time. Absolute Purchase Price Parity The kind of purchase price parity that balances the prices different countries change for goods or services. It is not as dynamic as other types of this kind of parity. Purchasing-Power Parity (PPP): Formula Price of a good in country 1 / price of a good in country 2 Monetary Policy The kind of policy focused on credit and money supply. The Federal Reserve is in charge of this. Purchasing-Power Parity (PPP) This occurs when the currencies of two countries have the same purchasing power. If this is lower than the exchange rate, the currency is overvalued. Fixed Exchange Rate The government controls this exchange rate. It is sometimes called a pegged rate. Conversion Rate Determine this by dividing the amount of currency you want to convert by the amount of currency you would like to convert into. Fiscal Policy Policies used by the government to influence the economy. These usually include changes to taxes or government spending. For example, increasing tax returns can stimulate the economy. Flexible Exchange Rate Supply and demand guide this exchange rate. It is affected by inflation, interest rates, political stability and other factors. Partially Flexible Exchange Rate This exchange rate is largely regulated by supply and demand, but the government also influences it to a certain extent. Find the cost of a milkshake in country B if it costs $2 in country A and the purchasing-parity index is 0.90. Divide the cost of country A's milkshake by the purchasing-parity index. 2 /.90 = $2.22. Currency Appreciation: Effect on Trade This process can increase the number of imports brought into a country because they will be cheaper. However, exports decrease because they will be more expensive. Big Mac Index This looks at whether or not you can purchase a specific kind of hamburger for the same cost using two different currencies. It assesses purchasing power parity in this way. Anti-Trust Laws These regulations stop a company from absorbing all competition in order to control a market. Joint ventures may be subject to these regulations. Outsourcing A process wherein a business hires someone outside of the company to complete a task. The person hired may live in the same country. This can lower company costs and increase flexibility. Foreign Licensing Agreement You enter into this kind of agreement if you agree to let a company sell your products in another country in exchange for royalties. You may lose control of your information in this process. Foreign Direct Investment: Advantages Businesses may consider using this method of investment to access markets that otherwise limit foreign sales, often with quotas or tariffs. It also lowers production costs and provides resources. Free Trade This practice works to eliminate quotas, tariffs and other taxes on exported products. This is limited between some countries, such as the U.S. and North Korea, Iran and Cuba. Licensing Businesses enter a foreign market using this strategy when they agree to pay another company a fee in order to produce a service or product that is already established. Balance of Trade You can look at this to determine the difference between the total value of goods exported from a country and the total value of goods imported into a country. Offshoring Businesses participate in this when they buy things from different countries or when they move production facilities to foreign markets, which can result in a loss of control. Franchising: Advantages Opening a business with this strategy provides you will a business model that is already known to be a success. Developmental work is already completed and you have a clear path to follow. Contract Manufacturing The process of hiring an outside company to complete a portion of your manufacturing process. This many lower the cost for your company, which is considered its most important advantage. Exporting This strategy for entering a foreign market has the lowest amount of risk. It involves selling a product to people in a different country and may require high transportation costs. Fiduciary Duties These require one individual to always act in ways that serve another person's best interest. In a joint venture, all partners share these duties with one another. Franchising You can spread into a foreign market with this strategy by entering into an agreement to use the name and processes of another company. Foreign Direct Investment A method to break into a foreign market that is very risky and that costs a lot, since you buy into another company. However, it does allow you to have control of your business. Joint Venture A strategy to enter a foreign market that requires you to partner up with a company local to this new market. You may need to deal with disputes with this partner. International Managers Managers who work with individuals outside of their home country. These individuals must be capable of adapting to the culture around them in order to be successful. International Environment: Economic Aspect The aspect of the international environment that deals with a country's economy and monetary stability. Human Resource Management This focuses on handling interactions between employees and their employer as well as a business and the employee union. Third-Party National Employees who work for a company that has its headquarters in a different country and who are, themselves, from a country distinct from where they currently work. Regiocentric Staffing The staffing method used when you divide your business up into segments made of multiple countries and allow each segment to autonomously decide on policies for HR. International Environment: Sociocultural Aspect We focus on this aspect of the international environment when considering a country's culture and society. Foreign Direct Investment Laws Regulations set up by a country to dictate how companies operating foreign subsidiaries handle profits. These may control the amount of money sent back to a home country. Global Mindset A way of using a globally aware perspective to view business, instead of just seeing it through the lens of your own culture. Cultural Awareness: Function Teaching employees to develop this helps alleviate issues with communicating across cultures, since cultural exchanges cannot be stopped and every possibility can't be trained for. International Environment: Technical Aspect You focus on this area when looking at how foreign countries use technology. Some countries, like China, are very restrictive, particularly of the internet, which can make business harder. Expatriate An employee who shares the same home country as his or her company. This individual works overseas in one of the company's subsidiaries in another country. International Environment: Legal Aspect This area of the international environment focuses on the laws dictated by the court system. Any lawsuits are part of this area. Geocentric Staffing You use this staffing method when you hire the best person for the job without considering his or her nation of origin. This is the best choice for global organizations. Polycentric Staffing This staffing method involves hiring individuals living in the host-country where a business's subsidiary is located. Ethnocentric Staffing Companies staff their businesses in this way when they hire individuals from their home country to work in subsidiaries established in other countries. International Environment: Political Aspect The segment of the international environment controlled by the actions undertaken by a country's government. Labor Relations These are the interactions that take place between the union used by a company's employees and the company. Offshoring Companies complete this process when they send jobs, or outsource them, to other countries. Employee Relations This refers to the way managers and employees interact in business dealings. It is considered official. Cultural Awareness Managers demonstrate this ability when they grasp a culture's intricacies, including how the culture treats communication and the work environment. Domestic Environment The home country of a business or where they have their headquarters. This is also referred to as the company's base country. Logistics: Documentation / Communication Channel You work in this logistical channel when managing information such as commercial shipping documents, business contracts, and inventory control. Foreign Markets: Paperwork Barriers This challenge involves filling out a large number of forms to operate in a foreign market. This may be the largest problem when trading with countries that have the same language. Foreign Markets: Regulatory Barriers Business face these barriers when they have to obey different laws or guidelines to sell products or services in a foreign market. This may include paying different fees. Globalization: Impact on Distribution Facilities These facilities must be placed carefully to serve customers and to receive shipments from international locations. Using network tools to do this can lower costs for transportation. Centralized Distribution Model This distribution model features one major location that handles inbound and outbound messages. This location offers services to a lot of markets. Decentralized Distribution Model A distribution model that works with multiple centers for distribution, making it easier function in the global market. This model can lower your transportation costs. Logistics: Transaction Channel This logistical channel is concerned with how goods are bought and sold. It also deals with collecting payments from customers. International Logistics This process of applying logistical skills across different countries requires additional work and you may need help from locals to manage new laws and unfamiliar customs. Logistics: Distribution Channel The channel of logistics that focuses on physically delivering goods or resources from one place to another. Foreign Markets: Cultural Barriers These challenges are related to customs that differ from one area of the world to another. Differences in religious practices would be an example of this. International Environment This environment is made up of factors that impact both the foreign and domestic market of a business. This is especially important to consider when selling goods in another country. Foreign Markets: Language Barriers This problem is the result of conducting business with people who do not share a common way to communication, which makes the business process much harder. Global Supply Chain Management: Disadvantages Adopting this process can cause a company's quality to drop. It can also lead to less reliability and issues with security for intellectual property. Intermediary A company that provides specific services for other companies, such as storing products, fulfilling orders, or distributing goods. Logistics You plan, implement, and control how things get from their point of origin to your customers with this process. It involves controlling inventory, packaging, forecasting demand, and procuring supplies. Front Back PESTLE Analysis This kind of analysis assesses how businesses are impacted by a wide range of external elements. This can be applied on the international level. Population Growth Rate This is how quickly the population of a country is expanding. Global Research and Development (R&D): Product Demands Completing this process can help businesses determine what adjustments to make to products to ensure that they meet local needs around the world. Tariff This kind of tax is placed on imported products to raise their costs in relation to domestic goods. Gross Domestic Product (GDP) This is the best known economic indicator. It assesses market potential and size by measuring the value of everything produced, both services and goods, in one year by a single country. Global Research and Development (R&D) The process of researching and developing products for a world-wide market. This helps companies compete and may assist with dispersed customer networks. Profit Margin The money a company makes after it covers all of its costs. This can be increased by companies that market their products effectively over social media. Marketing Mix: 4 P's Product Place Price Promotion Research Process: Pure (Basic) Research This is the first part of the research process. It deals with grasping what a thing is or the way in which it functions with no focus on gaining a short-term payoff. Promotional Adaptation Businesses accomplish this by entering a new market and selling the same product while changing the strategy they use to advertise their product. SWOT Analysis: Threats These outside factors can damage companies. The economy, customer feelings, and technological changes may all be examples of these factors. Dumping Companies take this action when they sell exported goods much more cheaply than they sell the good in their home market. SWOT Analysis: Strengths a company's internal advantages, including the methods that they use to retain customers and the processes that make them competitive Global Marketing: Disadvantages Many people fear the increase in outsourcing that can accompany this process, as domestic jobs are moved overseas. Research Process: Development Activities These are actions that we take to improve upon processes or goods that have already been developed. PESTLE Analysis: Components This analysis focuses on political, economic, social, technological, legal, and environmental factors. Global Standardization: Adjustments Companies typically have to make these to succeed in the global market. It can involve selling different goods in different places and is usually driven by the sensibilities of customers. Global Marketing This process of selling services or goods internationally with a plan can allow businesses to reach new markets. Real Income Evaluation The economic indicator that focuses on how much disposable income people in a given market have. Product Invention You perform this process when you completely change a product in order to better sell it in a new market. E-Commerce Businesses use this to buy or sell services and products electronically. It has had a tremendous impact on global business and sales. International E-Commerce: Risks This type of commerce can be negatively impacted by local practices. For example, countries like Japan that avoid credit cards would limit the market for these sales. Human Development Index (HDI) Marketers look at this economic indicator to assess the target market of a country. It looks at average income levels and life expectancy for a population as well as educational levels. SWOT Analysis: Opportunities This portion of SWOT analysis focuses on external forces that can help a company improve. This includes new markets, new demands, and new technologies. Target Market Identification The process of locating the consumers who are most likely to buy a business's services or goods. This may also be called niche marketing. Product Adaptation The process of slightly changing a given product to better fit the preferences of different cultures. Research Process: Applied Research You might see this as the research process's second step. It involves solving practical problems and offers some kind of payoff. Global Standardization: Disadvantages The downside of this process relates to the sensibilities of different countries. Cultures do not all share the same perspective, which can force companies to adjust their marketing. SWOT Analysis: Weaknesses These are any internal processes that a company performs poorly. It could reflect on spending or actions that just aren't effective. International Chamber of Commerce (ICC) This organization sets rules, advocates for policies for businesses and helps businesses resolve disputes through arbitration. Cultural Differences in Business: Work Ethic This refers to how different countries treat a dedication to work. Some areas, like Japan, are very dedicated and expect everyone to remain until all work is completed. Cultural Differences in Business: View of Outsiders The way people from different cultures see newcomers. Countries like Russia are very suspicious of strangers, making it hard for people from other areas to set up teams. Mediation Companies use this method to resolve disputes when they work with a neutral third party to reach a settlement. The third party makes suggestions, but they are not binding. Global Business Communication This type of communication involves connecting with people around the world. It requires the utilization of technology to be effective. Arbitration A method for resolving disputes that involves a third party making a decision that is final and binding. It is the method with the most efficiency. Global Business Communication: Challenges Language barriers, differing holidays and world events can all increase the difficulty of successfully using this kind of communication. Cultural Differences in Business: Respect for Superiors This difference reflects the way employees relate to their managers. Some countries, such as India, value obedience to the degree that they will not say anything if a supervisor makes a mistake. Cultural Differences in Business: Partnership Length This difference relates to the fact that some countries only want short-term business deals, while others, such as India, want a deal that extends over a longer period. Reactive Decision-Making Businesses use this type of decision-making to respond to events that have already occurred. If you don't make plans to handle emergencies, and one occurs, you will make this kind of decision. Proactive Decision-Making You make decisions before something happens with this kind of decision-making. It allows you to react quickly when new opportunities for success present themselves. Task Environment This environment influences the way a company finishes tasks when they buy, sell or transport services and products. Companies operate in this. Labor Unions: Downsides These organizations have been negatively connected to politics and sometimes to criminal activities. They may also foster corruption. Wealth Fluctuation A shift between wealth and poverty in a country. This can be caused by global influences on supply and demand. Environmental Policies These regulations are designed to control how humans treat the world around them. Because this goes beyond national lines, it requires people from around the globe to cooperate. The Montreal Protocol This guideline was put in place in 1987 in an attempt to lower how many chlorofluorocarbons were released into the atmosphere. Globalization: Benefits As this process grows, it brings with it lower prices and higher amounts of trade, along with more advanced understanding between different cultures. Migrant Workers Individuals who move from place to place, working at different agricultural jobs depending on the season. These individuals are at high risk for exploitation. Globalization: Effect on Economic Inequality This process can lead to increased exploitation of workers, including children. It may also lower the amount of money people earn for their labor. Pollution Contaminants that can be found in land, air or water. Because we all live together, these pollutants can spread across the globe, impacting people who live far from the original source. General Environment This is the wide-reaching environment where a company works. It encompasses the politics, culture, location and technology that surround the company. Global Diversity Differences in people that are brought to the forefront by the process of globalization. These differences create difficulties for employees in global companies. Organizational Structure This refers to the way a company's departments are connected in order to reach goals. Embracing globalization will change this. National Culture: Uncertainty Avoidance We look at this when determining how well cultures handle ambiguity. International Managers: Unique Challenges These managers have to adjust to differing holiday schedules, employees from feuding nations, communication variations and a challenge related to gender issues. Global Environment Interactions accomplished on an international scale that affect a business's operation make up this environment. Companies cannot directly control this environment. Free Trade Agreements These allow countries to agree to trade with one another without restrictions. Globalization: Small Business This kind of business is typically flexible and able to adapt quickly to the global market. Utilizing the internet makes these businesses even more competitive. National Culture: Long-Term vs Short-Term Orientation You consider this aspect of a country when assessing if its people value immediate solutions or those that take place after a lengthy period of time. Globalization: Large Businesses These businesses have lots of resources that support them in the global market. They usually have better market research and are able to take greater risks than other businesses. National Culture: Individualism vs Collectivism This determines if a culture values team work or personal accomplishment. The U.S. values individual work, making it difficult for countries that don't to work with them. National Culture: Power Distance This refers to how a culture distributes power and what this distribution must be like to be seen as unequal. This can be impacted by the size of the middle class. Globalization: Effect on the Environment This process may negatively affect areas of the environment that are not developed. These areas may suffer deforestation, pollution and the aftereffects of mining. Planning Strategy Businesses use this when deciding how to market goods. Companies that go global and change this may find their supply chain management process is impacted. Uniform Quality Standards These require that the quality of goods and services should be comparable regardless of where they were manufactured. Global Responsibility: Incentives for Businesses Businesses may be influenced to act in this manner on a global scale due to the free marketing they will receive and the fact that it makes customers more likely to buy their products. Economic Integration Countries can set up these agreements if they want to remove barriers that hold back commerce and trade. Unethical Behavior: Causes This type of behavior might occur when people are pressured to achieve a business goal, if they are confused about business standards, or due to misplaced loyalty to one's organization. Green Trade Practices These are actions that are designed to lessen the impact a business has on the environment. This may involve restricting the use of certain chemicals or even plastic bags. Rule of Law This principle says that everyone, including the government, is subject to the law. Globalization The idea that the world is one huge market, not a bunch of small markets. In this environment, skill sets, not jobs, provide people with a safety net. Outsourcing This occurs when companies hire a third party, typically one that is overseas, to perform some of their work, primarily because it will be cheaper and more efficient. Technology Tools and developments that make work, production and transportation easier and faster. The more this develops, the more the middle class grows around the globe. Tariff These taxes are placed on goods that are imported into a country. Social Pressure This influence on businesses comes from customers or investors, instead of laws. It is usually used to force businesses into supporting the environment. International Business: Ethical Issues These issues can be related to corruption; labor practices and conditions; and different environmental regulations around the world. Globalization: Effect on Businesses Businesses dealing with this process may suffer if their goods are not cheap or extremely well made. Businesses can succeed in this kind of market if they have a lot of capital. Strategic Alliance This type of relationship forms when at least two businesses agree to work together in order to reach a mutually-shared objective. Caux Round Table A group developed by leaders in the business and political arena, as well as internationally-based special interest groups, who created a set of ethical codes/principles to be used globally. Business Culture The norms and values that guide a company. Depending on the beliefs of a company's founder, these values may be good or bad. Emerging Market These are markets that are growing rapidly and are generally stable. They form in countries that are changing from economically developing to economically developed. Import Quota Rules set up to control how many imports can be brought into a market over a period of time. Cultural Imperialism The practice of one culture moving in and supplanting another culture. This could happen if one culture forces another to use its language or subscribe to its work habits. Globalization: Effect on Workers This process can cost many people their jobs. The people who stay employed usually work in cheaper areas and make more than they did, but not as much as those in better areas. Embargo This restricts all trade with another country. This may be put into place by countries preparing to go to war with one another. Middle Class This group drives the growth of economies. As it grows, it generates greater amounts of revenue for businesses in the global environment. Demographic Trends These are changes related to the groups in a population. Recently, the global market has seen more young people entering the workforce and the middle class.