MGMT1001 Chapter Notes - Chapter 11: World Trade Organization, Multinational Corporation, Protective Tariff
Chapter 11 Textbook Notes MGMT1001
Kinicki, et al. 2017, Management, A Practical Introduction, 2nd edn, McGraw-Hill Australia,
Sydney.
Global Management
• Globalisation is trend for world economy to become more interdependent system
o 3 important developments of: rise of global village and e-commerce, one market
instead of many national markets, rise of megamergers and internet-enabled
minifirms worldwide
• E-commerce is buying and selling products and services through networks
• Global economy: increasing tendency of economics of world to interact with one another
as one market instead of many national markets
• International management oversees conduct of operations in or with organisations in
foreign countries, whether it's through a multinational corporation or a multinational
organisation
• Multinational corporation (enterprise) is business firm with operations in several countries
• Ethnocentric managers tend to believe export managers and practices of their home
countries anywhere in the world and that they will be more capable and reliable than the
native managers
• Parochialism is narrow view only seeing from their own perspective
• Low labour costs is decline in manufacturing jobs in older industrial economies
o Maquiladoras is manufacturing plants allowed to operate in Mexico with special
privileges in return for employing Mexican citizens
• Global outsourcing is using suppliers outside company to provide goods and services
• Importing is buying goods outside country and reselling domestically
• Exporting is a company producing goods and selling outside
• Five ways to expand internationally
o Global outsourcing
o Important, exporting and countertrading
o Licensing and franchising
o Joint ventures
o Wholly owned subsidiaries
• Foreign subsidiary that is totally owned and controlled by an organisation.
Greenfield venture is a foreign subsidiary that the owning organisation has
built from scratch
• Free trade is movement of goods and services among nations without political or
economic obstruction
• Tariffs are trade barriers in form of customs duty, or tax, levied mainly on imports
o Protective tariff is raising price of imported goods
o Revenue tariff
• World Trade Organisation is designed to monitor and enforce trade agreements
• World bank founded after WWII to help European countries rebuild
• World's 5 major trading blocs are NAFTA nations, the EU, APEC countries, ASEAN, and
Mercosur
• NAFTA is three countries to eliminate 99% of tariffs and quotas among countries
• APEC is 21 pacific countries to improve economic and political ties as first step towards
removal of trade barriers
• Aus NQ Closer Economic Relations Trade Agreement (CER) to increase trans-Tasman
economic relations, including removal of tariff and licensing restrictions affecting trade
• National culture is shared set of beliefs, values, knowledge and patterns of behaviour
common to a group of people
• GLOBE 9 cultural dimensions evolving network of 150 scholars
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