chapter 8 - CHAPTER8 GLOBAL MANAGEMENT What is Global...

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CHAPTER8 GLOBAL MANAGEMENT What is Global Business? Global business—the buying and selling of goods and services by people from different countries. 1. Global Business, Trade Rules, and Trade Agreements 1. The Impact of Global Business Multinational corporation—a corporation that owns businesses in two or more countries. Direct foreign investment—a method of investment in which a company builds a new business or buys an existing business in a foreign country. Direct foreign investment is an increasingly important and common method of conducting global business. 2. Trade Barriers Trade barriers —government-imposed regulations that increase the cost and restrict the number of imported goods. Protectionism —a government’s use of trade barriers to shield domestic companies and their workers from foreign competition. Tariff —a direct tax on imported goods. Nontariff barriers—nontax methods of increasing the cost or reducing the volume of imported products. Quota —a limit on the number or volume of imported products. Voluntary export restraints —voluntarily imposed limits on the number or volume of products exported to a particular country. The “voluntary” offer limit exports occurs because the importing country has implicitly threatened to impose quotas. According to WTO, voluntary export restraints are illegal and should not The difference between quota and voluntary export restraints is that in voluntary export restraints, the exporting country rather than importing country imposes restraint. Government import standard —a standard ostensibly established to protect the health and safety of citizens but, in reality, often used to restrict imports. Subsidies —government loans, grants, and tax deferments given to domestic companies to protect them from foreign competition. Customs classification —a classification assigned to imported products by government officials that affects the size of the tariff and imposition of import quotas. 3. Trade Agreements General Agreement on Tariffs and Trade (GATT) —a worldwide trade agreement that reduced and eliminated tariffs, limited government subsidies, and established protections for intellectual property. It was a most significant change that 124 countries agreed to adopt GATT. Functions of GATT-- First, tariffs were cut 40 percent on average worldwide. Second, tariffs were eliminated in 10 specific industries. Third, stricter limits
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were put on government subsidies. Fourth, GATT established protections for intellectual properties such as trademarks, patents, and copyrights. Protection of intellectual property has become an increasingly important issue in global trade because of widespread product privacy. World Trade Organization (WTO)
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This note was uploaded on 06/16/2011 for the course BUSI 010 taught by Professor Na during the Fall '11 term at University of North Carolina School of the Arts.

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chapter 8 - CHAPTER8 GLOBAL MANAGEMENT What is Global...

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