Managing Public Issues and Stakeholder Relationships.docx

Nike gap foreign direct investment fdi another

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sellers in other countries; work may also be subcontracted. (Nike, Gap) Foreign Direct Investment (FDI) Another important aspect of globalization is the worldwide flow of capital. FDI occurs when a company, individual, or fund invests money in another country, buying shares of stock in or loaning money to a foreign firm. In 2013, FDI was $1.45 trillion. Sovereign funds = e.g. Norway, UAE, China, Kuwait, Singapore Pension/superannuation funds Inversion Companies avoid taxes in their home countries. By merging with companies located in other countries and shifting their headquarters there. A strategy of acquiring or merging with a foreign firm in order to reduce corporate tax obligations at home. (Burger King) International Financial & Trade Institutions Three institutions that set the rules by which international commerce is transacted: World Bank (WB)International Monetary Fund (IMF) World Trade Organization (WTO)
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No business can operate across national boundaries without complying with rules set by the WTO. Many businesses in developing countries are dependent on WB and IMF loans to survive. The World Bank Established in 1944. Provides economic development loans to its member nations. Funds used mainly for roads, dams, power plants, and other infrastructure projects, as well as for education, health and social services. Funding provided by member countries and international capital markets. International Monetary Fund “Sister” organization to World Bank, created at same time. Purpose : to stabilize the system of currency exchange rates and international payments to enable member countries to participate in global trade. Lends foreign exchange to member countries. Imposes conditions on governments that receive its loans. These conditions often lead to hardship: ▪Demands that governments cut spending ▪Devalue their currencies ▪Increase exports ▪Liberalize financial markets and reduce wages World Trade Organization (WTO) Founded in 1995, successor to General Agreement on Tariffs and Trade (GATT). International body that establishes the ground rules for trade among nations. Its major objective is to promote free trade; attempts to eliminate barriers to trade (e.g. quotas, duties and tariffs). Conducts “rounds” of negotiations on various topics. “Most favored nation” rule means members countries cannot discriminate against foreign products for any reason
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(status granted by one nation to another) Comparative Political and Economic Systems 1. Nations differ greatly in their political, social and economic systems. 2. First important dimension to consider is how power is exercised and degree of democratic rights. 3. Past century has been marked by spread of democratic rights to many nations for the first time.
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