the buying and selling of goods and services of people from different countries
corporations that own businesses in two of more countries.
direct foreign investment
a company builds a new business or buys an existing business in a foreign country
impedes trade, direct tax on imported goods.
impedes trade, quotas, voluntary export restraints, government important standards, subsidies, customs classification.
General Agreement on Tariffs and Trade
1947-1995, agreement to regulate trade among more than 120 countries, it led to substantial reduction in tariffs and other trade barriers.
World Trade Organizations
administers trade agreements, forum for trade negotiations, handles trade disputes, monitor national trade policies, technical assistance and training for developing countries.
when a multinational company has offices, manufacturing plants, and distribution facilities in different countries and runs them all using THE SAME rules, guidelines, policies, and procedures.
when a multinational company modifies its rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies.
makes company less dependent on domestic sales, gives company more control
oods subject to trade barriers, transportation costs
a domestic company, the licensor, receives royalty payments for allowing another company, the licensee, to produce its products and service or use its brand name in a particular foreign market.
+ companies earn money without investing more, avoid trade barriers
- licensor gives up control over quality, licensees can become competitors
collection of networked firms in which the manufacturer or marketer of a product or service, the franchisor, licenses the entire business to another person or organization, the franchisee. fees associated, training/assistance in marketing from franchisor.
+ fast way to enter foreign markets, gives franchisor additional cash flow
- loss of control, culture bound.
when companies combine key resources, costs, risks, technology, and people. most common form is joint venture.
+ avoid trade barriers, only bear part of costs, can learn from each other
- profits shared, merging of cultures
Wholly Owned Affiliates/Subsidiaries
foreign offices, facilities, and manufacturing plants that are percent owned by the parent company.
+parent company receives all of the profits and has complete control
- losses for parent company can be enormous.
Global New Ventures
companies founded with an active global strategy
fast air travel, low telecommunications, experienced global business people.