Test Prep Essay

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Chapter 5: Global dimensions of Management Reasons for engaging in international business 1. Profit: Global operations offer profit potential 2. Customers: Global operations offer new markets to sell products 3. Suppliers: Global operations offer access to needed raw materials 4. Capital: Global operations offer access to financial resources 5. Labor: Global operations offer access to lower labor costs e.g. Mexico-GM pay for one week job. Forms of International Business 1. Global Sourcing – materials and service are purchased around the world for local use. 2. Exporting – local products abroad for sale 3. Importing – foreign products for sale in domestic marketing 4. Licensing agreement – paying a fee for the right to make or sell other company’s products. 5. Franchising – licensee buys complete package of support needed to open a particular business 6. Joint Venture – form joint ownership of business operation with local partners of foreign countries Checklist for joint ventures • Choose a partner with your firms major business • Choose a partner with a strong local workforce • Choose a partner with future expansion possibility • Choose a partner with a strong local market for its own products • Choose a partner with shared interests in meeting customer needs • Choose a partner with good profit potential • Choose a partner in sound financial standing 7. Wholly owned subsidiary – Form a local operation that is completely owned and controlled by a foreign film Ethical Issues for Multinational Operations 1. Corruption – illegal practices to further ones business interest e.g. Bribes excessive commission to foreign officials 2. Sweatshops – employ workers at very low wages long hours, poor working conditions 3. Child labor – fulltime employment of children for work of adults 4. Respect for natural environment – wherever the business operates-

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