question

globalization

answer

the widening set of interdependent relationships among people from diff. parts of the world (nations)

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goal of private business is...

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to make profits

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Over time, import restrictions have ____ and foreign owned investments as a percent of world production has ____

answer

decreased, increased

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World trade grows ______ rapidly than world production

answer

more

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Smaller countries are ____ globalized than larger ones

answer

more

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countries with higher income populations are _____ globalized

answer

more

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factors in increasing globalization

answer

-increase in technology application -liberalization of cross-border trade & resource movements -services that support international business (Ex. currency in foreign sales easily transferrable) -growth in consumer pressures (companies target markets with higher incomes and consumption) -increase in global competition (more born global companies, many competitors) -Changes in political situations & government policies -expansion of cross-national cooperation (gain reciprocal advantages, attack problems jointly, deal with areas of concern lying outside territory of any nation)

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costs of globalization

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-sovereignty in countries has diminished -environmental stress (carbon footprint has gone up) -growing income inequality & personal stress (winners vs. loser)

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Is offshoring a good strategy? (reasons for yes)

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-good if reduces costs

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reshoring

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bringing back operations tom abroad because poor quality, consumer pressure, concerns about competitive security

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Is offshoring a good strategy? (reasons for no)

answer

-loss of domestic jobs -poor working conditions and job quality abroad

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Why companies engage in international business

answer

1. expanding sales (expanding markets and potential profits 2. acquiring resources (can give lower costs to companies, better or new products and additional operating knowledge) 3. reducing costs (smoothing sales/profits and preventing competitors from gaining advantages

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international business merchandise exports and imports

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tangible, major source of international revenues and expenditures, usually a country's most common international economic transactions

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international business service exports and imports

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provider/receiver of payment makes a service sport and the recipient/payer makes a service import

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Types of international service exports and imports

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1. tourism and transportation 2. service performance (banking, insurance, retail, engineering) 3. asset use (done under licensing agreements to earn royalties (Ex. Adidas, Real Madrid)

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turnkey operations

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construction projects performed under contract & transferred to owners when they're operational

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management contract

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arrangements in which one company provides personnel to perform general/specialized management functions for another

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international investment

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ownership of foreign property in exchange for a financial return, such as interest & dividends

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direct investment

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investor takes controlling interest in a foreign company

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joint venture

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when 2+ companies share ownership of an FDI (foreign direct investment)

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portfolio investment

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non controlling financial interest in another entity (2 forms of stock in a company or loans to a company/country in the form of bonds, bills or notes)

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collaborative arrangements/strategic alliance

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agreement of critical importance to its partners or an agreement that doesn't involve joint ownership

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MNE (MNC or TNC)

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any company w/ foreign direct investments

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why international and domestic business differ

answer

1. geographic influences 2. political policies 3. legal policies 4. behavioral factors (influence how companies run around the world) 5. economic forces

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3 ways to look at globalization going into the future

answer

1. further globalization is inevitable (must spread benefits equally while min. hardships) 2. international business will grow primarily along regional rather than global lines 3. forces working against further globalization & international business will slow down the growth of both (uncertainties include oil prices, economic recession, unemployment, safety concern, efficient institutions)

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learn cultural norms based on ____, ______ and ______ of groups of peopl

answer

values, attitudes, beliefs

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cultural collision

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when divergent cultures come in contact 1. when a company implements practices that are less effective than intended 2. when a company's employees encounter distress b/c of difficulty in accepting or adjusting to foreign behaviors

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problems that can hinder managers' cultural awareness

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1. subconscious reactions to circumstances 2. assumption that all societal subgroups are similar

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deal-focused culture

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people primarily task-oriented

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relationship-focused culture

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put dealings w/ friends ahead of business dealings

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research is important, but

answer

1. comparing countries by what people say can be risky 2. researchers who focus on national differences in terms of averages may overlook variations within countries & believe in unrealistic stereotypes 3. since cultures evolve, some research outdated

question

the idea of a nation:

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delineating cultures good definition because: 1. similarity among people is cause & effect of national boundaries 2. many laws affecting businesses are along national lines

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managers find country by country analysis difficult because

answer

1. subcultures exist within nations 2. similarities link groups from different countries

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cultural value systems set early in life, but can change through:

answer

1. choice or imposition 2. contact w/ other cultures

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cultural imperialism

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imposing certain elements from an alien culture

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cultural diffusion

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change caused by contact among countries

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creolization

answer

when change results in mixing cultural elements

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How many languages? what percent will be extinct by end of 21st century?

answer

6000, 50-90%

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What is the most common language?

answer

English

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social stratification determined by:

answer

1. individuals' achievements & qualifications 2. affiliation w/ or membership of certain groups (creates hierarchies)

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group affiliations can be:

answer

1. ascribed (gender, family, age, ethnicity, race, national origin vs. acquired (religion, political affiliation, educational place & achievement, & profession) 2. reflection of class & status (equalitarian societies place more importance on acquired group memberships)

question

unfreedom

answer

exclusion of people from work place (negatively affects economic advancement)

question

country by country attitudes vary toward

answer

1. race & ethnicity 2. male and female roles 3. rules and expectations based on age 4. family ties

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desire for mental wealth is...

answer

1. a prime motivation to work 2. positive for economic development

question

people are more eager to work if...

answer

1. rewards for success are high 2. some uncertainty of success

question

masculinity-femininity index

answer

compares preference for performance & growth vs. quality of lie ^ environment. Belief that gender roles should be different vs. similar.

question

hierarchy of needs:

answer

1. may differ among countries 2. is useful in deciding how to motivate differently among countries (1-5 with 5 being at top of pyramid and 1 being on bottom) 1. physiological (food, water, sex) 2.security (safe physical & emotional environments) 3. affiliation (social needs) 4. esteem (bolstering our self-image through recognition, attention and appreciation) 5. self-actualization (self-fulfillment)

question

power distance

answer

superior-subordinate interaction preferences high: autocratic or paternalistic (regulating conduct by supplying needs) management style low: consultative management style

question

individualism

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employee's preference to fulfill leisure time & improve skills outside the organization, receive direct compensation instead of fringe benefits & engage in personal decision-making & on the job challenges Champions primacy of rights & role of individual. Risk of opportunistic behavior

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collectivism

answer

employee's dependance on the organization through training, satisfactory workplace conditions & good benefits, security is prime motivation. stresses needs of society take precedence over needs of the individual. Can lead to severe limits and regulations in extreme cases

question

nationalities differ in

answer

1. ease of handling uncertainties 2. degree of trust among people 3. future orientation 4. attitudes of self-determination & fatalism

question

cultural differences (differences in perceptions of cues) helps managers know whether cultures favor:

answer

1. focusing on broad info 2. sequential (monochromic) or simultaneous (polychronic) handling of situations 3. handlign principles or small-issues first

question

silent language

answer

includes color association, sense of appropriate distance, time & status cues, body language (kinesics), prestige

question

cultural distance

answer

degree of cultural differences

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when doing business in similar culture, companies:

answer

1. usually have to make fewer adjustments 2. may overlook subtle differences

question

polycentrism

answer

business units abroad should act like local companies, management may be so overwhelmed by national differences that it won't introduce workable changes

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ethnocentrism

answer

idea that one's own culture is superior to others, management overlooks national differences by: 1. ignoring importnat factors 2. believing home-country objectives should prevail 3. thinking acceptance by other cultures is easy

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geocentrism

answer

integrates company & host country practices as well as some entirely new ones

question

strategies for instituting change

answer

1. value systems 2. cost-benefit analysis of change 3. resistance to too much change 4. participation w/ all stakeholders (employees, customers, suppliers, etc.) 5. reward sharing 6. opinion leadership 7. cultural bridges 8. timing 9. learning abroad

question

Does international business lead to cultural imperialism? (reasons for yes)

answer

-west tends to impose tech, political, military and economy supremacy on developing countries

question

Does international business lead to cultural imperialism? (reasons for no)

answer

many countries pick and choose, cultural diffusion is inevitable, cultural hybridization, foreign words in english language, globalization gives people more opportunities, tourism has economic & cultural benefits

question

looking to future of what will happen with national cultures

answer

1. new hybrid cultures will develop & personal horizons will broaden 2. although outward expressions of national culture will continue to become more homogeneous, distinct value will lend to remain stable 3. nationalism will continue to reinforce cultural identification 4. existing national borders will shift to accommodate ethnic differences

question

political system

answer

structural dimensions & power dynamics of government that: 1. specify institutions, organizations and interest groups 2. define norms/rules that govern political activities

question

mission of political system

answer

integrate different groups with different viewpoints into a functioning, self-governing society

question

political ideology

answer

encapsulates doctrine of political behavior & change, outlines procedures for converting ideas into actions

question

pluralism

answer

multiple opinions about an issue, each of which contains part of the truth, but none that contain entire truth (progress depends on negotiation and compromise)

question

political freedom

answer

measures degree to which fair & competitive elections occur, the extent to which individual & group freedoms are guaranteed, the legitimacy ascribed to the rule of law, & the existence of freedom of the press

question

democracy

answer

calls for participation by citizens in a fair & just decision-making process

question

characteristics of democracy

answer

1. representative (originates in constituion, all citizens treated equal, elected representatives hold ultimate sovereignty but must act in people's interest, officials rep voters but can act as they see fit 2. multiparty (3+ parties govern (separate or as port of a coalition of leadership o fa single party can't legislate policy w/o negotiating w/ opposing parties 3. parliamentary (citizens exercise political power by electing reps to parliament, legislature is source of legitimacy for various ministers that run exec. branch 4. social (applies democratic meansto guide transition from capitalism to socialism, government promotes egalitarianism while regular capitalism's tendency toward opportunism

question

totalitarianism

answer

consolidates power in a single agent who then controls political, economic and social activities Downfalls: often shadow politics, skewed elections and nefarious security agencies

question

authoritarianism

answer

tolerates no deviation from state authority, resistance = punishment, officials regulate politics & pay little attention to econ/society, often locks an ideology to politicize public and private life

question

fascism

answer

organizes a nation based on corporatist perspectives, values, systems, advocates a single party slate that controls through indoctrination, calls for merger of state and corporate power

question

secular

answer

single party government controls elections, tolerates dissent as long as it doesn't challenge the state & suppresses other ideologies, state doesn't prescribe an all-encompassing ideology, limited indiv. freedoms if one doesn't contest state authority or disrupt social harmony

question

theocratic

answer

government is an expression of the preferred diety, applies ancient dogma in place of modern principles, strict social regulation & tgender rregimentation

question

free country

answer

open political competition, respect for civil liberties, independent civic life and independent media, inalienable religion

question

partly free country

answer

limited political rights and civil liberties, corruption, weak rule of law, ethnic and religious strife, unfair elections, censorship, democracy is often convenient slogan for the single party that dominates within a facade of regulated pluralism

question

not free country

answer

no political rights & civil liberties, government allows minimal to no personal freedom, rule of man as basis of law, constrain = religious/social freedoms, controls large share of bus. activity

question

number of democracies increased by ____ percent from 1950-2009

answer

47

question

Third Wave of Democratization

answer

1970s and 80s. as this wave crested, the number of countries led by a democratic government went up.

question

The engines of democracy

answer

1. failure of totalitarian regimes to deliver prosperity 2. improving communication technology 3. economic dividends of political freedom

question

There has been a _____ in political freedom in past 7 years

answer

slowing

question

economist intelligence unit types of political systems

answer

1. full democracy - 11% of pop 2. flawed democracy - 37% of pop 3. hybrid regime - 14% of pop 4. authoritarian - 38% pop

question

reasons behind authoritarians' surge

answer

1. strong states supporting strong performance 2. gaps in principles & practices of democracy 3. economic insecurity following slow growth .4 escalating debate of the meaning of democracy

question

Washington Concensus

answer

advocates democracy, political freedom rule of law and human rights, US as a rule model, requires a powerful military

question

Beijing Consensus

answer

single party system where eleccted reps, preapproved by ruling party, oversee a nominal democrati system whose citizens, though granted right to vote, can't participate in decision making

question

Decisions/events in a country will negatively affect profitability and sustainability in investment because:

answer

1. many fast growing emerging markets have many flashpoints 2. aftermath of financial crisis aggravates political risk in developed and developing markets

question

types of political risk:

answer

1. systematic (influence micro bus. environment and affect operations of all firms 2. preocedural - institutes impediments that constrain the flexibility of local operations 3. distributive - gradual elmiination of local prop. rights of foreign companies 4. catastrophic - devastates companies and countries

question

proactivie political risk management is best approach (reasons for yes)

answer

1. managers apply statistical modeling to quantify politlical risks 2. stress-test models and consult experts on the political maneuverings in a country

question

proactivie political risk management is best approach (reasons for no)

answer

no model can cconsistently predict political risk, MNEs buy political risk insurance, better to manage risk

question

Multilateral development banks (MDBs)

answer

international financial institutions funded and owned by governments that promote growth in member countries by providing finance incentives to attract investors.

question

overseas private investment corp. (OPIC)

answer

encourage US investment projects overseas by protecting against various forms of risk, promotes investments in emerging markets that support US foreign policy priorities

question

private insurance companies

answer

underwrite political risk protection, cover "routine" distributive and procedural risks but reluctant to cover catastrophic risks

question

legal system:

answer

mechanism for conceiving, stipulating, interpreting and enforcing the low in a formal jurisdiction

question

constitutional law

answer

translates country's constitution into an open/just legal system, setting the government framework & defining the authority/procedure of political buddies

question

criminal law:

answer

safeguards society by specifying criminal conduct and prescribing punishment to those who breach standards

question

civil and commercial laws

answer

ensure fairness and efficiency in business transactions by stipulating private rights and specific remedies to regular conduct

question

common law

answer

developed by judges through the decisions of courts, stare decisis

question

civil law

answer

based on inspirations and instructions of religious teachings

question

customary law

answer

based on behavior norms that gain legitimacy through long-term practice, offenses treated as torts

question

The Rule of Man

answer

the ruler commands authority that is above the law, anchors legal system in totalitarian states

question

rule of law

answer

no individual is above laws that are clearly specified, commonly understood and fairly enforced

question

400 midsize emerging market cities will generate ____ percent of global growth over the next 15 years

answer

40

question

legal issues in international business

answer

1. operational concerns -Starting a business 2. entering and enforcing contracts 3. hiring and firing workers 4. closing a business 2. richer countries regulate bus. activities less/pooer countries regulate more

question

strategic international business concerns

answer

1. product origin and local consent 2. marketpalace behavior 3. legal jurisdiction 4. product safety

question

intellectual prosperity protection

answer

creative, ideas, expertise or intangible assets that grant owner a competitive advantage

question

intellectual property rights

answer

right to control and derive benefits from writing (copyright), inventions (patents), processes (trade secrets), identifiers trademarks

question

T/F msot shares of counterfeit products made in countries where rule of man prevails

answer

true

question

Basis of political and legal differences

answer

1. historical legacies - countries that observe the rule of law more aggressively protect IPRs 2. economic circumstances - usually poorer countries protect IP less than wealthier countries (critics of IP protection argue that granting monopoly rights imposes hardships, creates inefficiencies and slows innovation 3. cultural orientation - cultural attitudes influence the protection of IPRs, individualist societies are more vigilant than collectivist -countries that advocate intellectual property are strong advocates of ownership rights

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