Management ch4

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Refers to the extent to which trade and investments, information, social and cultural ideas, and political cooperation flow between countries
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Globalization
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Stage in globalization where market potential is limited to the company’s home country and all production and marketing facilities are located in this home country
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Domestic stage
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Stage in globalization where exports increase and the company adapts a multi-domestic approach of focusing on delivering a similar product to multiple countries
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International stage
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Stage in globalization where the company has marketing and production facilities located in many countries with more than one third of sales outside the home country; focus on delivering a similar product to multiple countries
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Multinational stage
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Stage in globalization where international development transcends any single home country; make sales and acquire assets in whatever country offers the best opportunities
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Global (stateless) stage
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One way companies become international whereby they seek cheaper resources offshore
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Global outsourcing/ Offshoring
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Companies that maintain production facilities within the home nation and transfer products for sale in foreign countries
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Exporting companies
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Refers to the barter of products for products instead of for currency
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Countertrade
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Refers to engaging in the international division of labor so that work activities can be done in countries with cheaper labor
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Outsourcing
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Refers to the process by which a corporation in one country makes certain resources available to companies in another country
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Licensing
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Special form of licensing whereby a person buys a complete packaging of materials and services from a company to expand that business
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Franchise
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Refers to a company involved in managing the productive assets in expansion, allowing for complete managerial control
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Direct investing
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Form of direct investing whereby companies share costs and risks with other firms to develop new products
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Joint venture
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Form of direct investing whereby the company maintains complete control of the firm in another country
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Wholly owned foreign affiliate
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Form of direct investing (most risky) whereby a company builds a subsidiary from scratch oversees
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Greenfield venture
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Management of business operations conducted in more than one country
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International management
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Determined by per capita income; countries may be classified as developed or developing
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Economic development
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Risk of a loss of assets, earning power, or managerial control due to politically based events or actions
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Political risk
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Includes riots, revolutions, civil disorders, and frequent changes in government
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Political instability
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Developed five dimensions of national value systems that influence organizational and employee working relationships
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Geert Hofstede
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Refers to people accepting inequality in power among institutions, organizations, and people
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Power distance
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Indicates the degree to which members of society avoid ambiguity and support beliefs that promise conformity
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Uncertainty avoidance
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Reflects a society where people are independent
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Individualism
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Society type that prefers achievement and heroism
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Masculine
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Society type that includes greater concern for the future
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Long-term orientation
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Type of culture where people are sensitive to circumstances surrounding social exchanges; communication is used primarily to build social relationships
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High context culture
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Type of culture that uses communication primarily as a means of exchanging facts and information
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Low context culture
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The tendency of people to regard their own cultures as superior and to downgrade other values
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Ethnocentrism
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Refers to a person’s ability to use reasoning and observation skills to interpret unfamiliar gestures and situations
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Cultural intelligence (CQ)
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Trade agreement designed to foster free trade
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General Agreement on Tariffs and Trade (now WTO)
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A corporation that typically receives more than 25% of its total sales revenue from outside the home country
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Multinational corporation
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Type of multinational corporation that places emphasis on the home country
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Ethnocentric
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Type of multinational corporation that orient toward the markets of individual hosts
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Polycentric
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Type of multinational corporation that favors no specific country
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Geocentric
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Concept that proposes corporations can alleviate the world’s ills by selling to the world’s poorest people
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Bottom of the pyramid (BOP)

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