International Business Midterm (Chapters 1-4)

In late 2001, the WTO launched a new round of talks in Doha aimed at:

further liberalization of the global trade and investment framework

norms that are not central to the functioning of society and social life

mores

Containerization allows:

simplification of transshipment from one mode of transport to another

T or F: In a planned economy, the means of production are owned by private individuals. planned economy = government does everything for you

False

T or F: In a totalitarian country, there are safeguards to protect an individuals right to freedom of expression, opinion, and organization.

False

T or F: The objectives of the government in a command economy is to encourage free and fair competition between private producers. *command economy = communist society, not free example: Cuba, Venezuela

False

T or F: The social democrats believed that socialism could be achieved only through violent revolution and totalitarian dictatorship.

False

T or F: Totalitarian states promote human freedom and human development, which facilities economic progress.

False

In Western societies, there is a negative focus on the individual such as:

- a lack of company loyalty - failure to gain company specific knowledge - competition between individuals in a company instead of than team building - less ability to develop a strong network of contacts within a firm

In Western societies, there is a positive focus on the individual such as:

- individual achievement - dynamism of the U.S. economy - high level of entrepreneurship

What determines a culture?

- religion - political - economic philosophies - education - language - social structure

How are groups seen in many Asian societies?

- the group is the primary unit of social organization - discourages job switching between firms - encourages lifetime employment systems - leads to cooperation in solving business problems - suppresses individual creativity and initiative

Which of these statements pertaining to cross-border FDI flows is true? A) There was a growth of FDI between 2004 and 2007 B) A slump in FDI from 1998 to 2000 was followed by a surge from 2001 to 2003 C) Among developing nations the largest recipient of FDI has been Russia D) The dramatic increase in FDI reflects the decreasing internationalization of business corporations

A) There was a growth of FDI between 2004 and 2007

Which of the following is a consequence of globalization? A) Decreasing interdependence between national economies B) Increasing outsourcing of services C) Differentiation of material culture D) Increase in barriers to cross-border

B) Increasing outsourcing of services

Which of the following countries has been the largest recipient of foreign direct investment and received about $60 billion to $100 billion a year in inflows in 2004-2009? A) Brazil B) Russia C) India D) China

D) China

a set of moral principles, or values, that are used to guide and shape behavior - Religion and ethics are often closely intertwined Example: Christian or Islamic ethics

Ethical systems

T or F: Aristotle argued that individual diversity and private ownership are desirable. *Aristotle was for individualism, individualists should be the center

False

T or F: GNI allows a more direct comparison of living standards in different countries. *GNI = annual income

False

T or F: GNI and PPP (Purchasing Power Parities) data are useful because they provide a dynamic analysis of economic development dynamic analysis of economic = unemployment numbers, interest rates, consumer rates

False

T or F: Gross national income per capita data take into account differences in the cost of living *gross national income= annual income

False

T or F: In Sen's view, development is an economic process that should be assessed by material output measures such as GNI per capita. *development is about giving people a sense of individual freedoms

False

T or F: Since the late 1980s, there has been a strong move away from a more free market economic model and toward a more centrally planned and mixed economies.

False

T or F: The Two dimensions, according to which the political systems can be assessed, collectivism-individualism and democratic-totalitarian are independent of each other. Collectivism = totalitarian individualism = democracy

False

T or F: The central message of collectivism is that individual economic and political freedoms are the ground rules on which a society should be based.

False

Which of the following is a risk associated with globalization?

Global financial contagion

T or F: Democracy is one of the consequences of economic growth and progress

True

T or F: GNI per capita can be adjusted by purchasing power to account for differences in the cost of living.

True

T or F: If a country's economy is to sustain long-run economic growth, the business environment must be conductive to innovations and entrepreneurial activity

True

T or F: In a command economy, enterprises have little incentive to control costs and be efficient, because they cannot go out of business. * command economy = controls everything, there's no incentive to do things better

True

T or F: In a market economy, if demand for a product exceeds supply, prices will rise, signaling to producers to produce more.

True

T or F: Life's expectancy at birth is one of the measures used by the Human Development Index (HDI) to measure the quality of human life in different nations.

True

T or F: Most modern democratic states practice representative democracy.

True

T or F: Plato, to whom the advocacy of collectivism is traced back, did not equate collectivism with equality.

True

T or F: Political Freedom is one of the measure used by the Human Development Index (HDI) to measure the quality of human life in different nations

True

T or F: Some totalitarian regimes have fostered a market economy and strong property rights protection and have experienced rapid economic growth.

True

T or F: The Cold War was a war between collectivism and individualism collectivism = soviet Union individualism = U.S

True

T or F: The Peruvian development economist Hernando de Soto has argued that the chronic inability of property owners to establish legal title to the property they own is a key problem for innovation, and entrepreneurial activity in developing nations.

True

T or F: The base for the purchasing power parity adjustment of the GNI is the cost of living in the U.S.

True

T or F: The economic freedom associated with a market economy creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy

True

T or F: The state can expropriate the profits from innovation through legal means. **such as taxes, rules.

True

T or F: When collectivism is emphasized, an individuals right to do something may be restricted on the grounds that is runs counter to "the good of society" example: China, 1 child policy

True

the relationship between the individual and his or her fellows

Uncertainty avoidance

The ___ was established on October 24th, 1945, by 51 countries committed to preserving peace through international cooperation and collective security.

United Nations

The _____ is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by member states.

World Trade Organization

norms include:

folkways and mores

The G20tx was originally established to ______

formulate a coordinated policy response to financial crises in developing nations

an association of two or more people who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other's behavior

group

A multinational enterprise (MNE) is a firm that ______

has production units in more than 2 countries

are involved in families, work groups, social groups, recreational groups, etc.

individuals

Supporters of globalization maintain that the apparent decline in real wage rates of unskilled workers:

is due to technological changes that create greater demand for skilled workers

Globalization of markets results in markets becoming _____. **we buy stuff regardless of where it was produced

less diverse

Early outsourcing efforts were primarily confined to _____.

manufacturing activities

the social rules and guidelines that prescribe appropriate behavior in particular situations

norms

A U.S. investment firm set up a customer call center in India to take adv of lower labor costs. This is called _______.

outsourcing

Since the collapse of communism at the end of the 1980s, the erstwhile communist nations have transformed their economies by globalizing their markets. This involves ____. **Communist: production is controlled by government

privatizing state-owned enterprises

The World Trade Organization has estimated that the developed nations of the world can raise global economic welfare by $128 billion by:

removing subsidies given to their agricultural producers

All societies are born and placed on a hierarchical basis into social categories known as a:

social strata

a group of people who share a common set of values and norms

society

Globalization is criticized because it increases the power of ______

supranational organizations over nation-states

A study published in 2011 by the OECD noted that:

the gap between the poorest and richest segments of society in some OECD countries had widened

The relative decline of the U.S in the share of world output and world exports reflects ____.

the growth in the economic development of the world economy

Throughout the 1990s, the amount of foreign direct investment directed at both developed and developing nations increased dramatically. This trend reflects:

the increasing internationalization of business corporations

The financial crisis in the U.S in 2009 was triggered by ____.

the problems in the U.S subprime mortgage lending market

In the last 2 decades, Latin American countries like Brazil, Mexico, and Chile have _____.

welcomed foreign investment

Which of the following had enabled globalization of markets? A) Differentiation amongst national markets B) Failing barriers to cross border trade C) Reduced homogeneity of material culture across the world D) Increase in barriers to cross-border trade

B) Failing barriers to cross border trade

captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors

Confucian dynamism/long-term orientation

- practiced mainly in China - teaches the importance of attaining personal salvation through right action - high morals, ethical conduct, and loyalty to others are stressed - three key teachings: loyalty, reciprocal obligations, and honesty - may all lead to a lowering of the cost of doing business

Confucianism

T or F: Democracy is a form of government that prohibits opposing political parties

Fales

T or F: Most property in poor countries is owned legally by investors.

False

T or F: Privatization refers to the process of hiring private management consultancy firms to manage state-owned enterprises.

False

T or F: The communists believed that socialism could be achieved by democratic means, and turned their backs on violent revolution and dictatorship.

False

the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society - important in determining a nation's competitive advantage - Japan's postwar success can be linked to its excellent education system - general education levels can be a good index for the kinds of products that might sell in a country Example: impact of literacy rates

Formal education

- practiced primarily on the Indian subcontinent - focuses on the importance of achieving spiritual growth and development, which may require material and physical self-denial - valued by their spiritual rather than material achievements

Hinduism

the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguity

Individualism versus collectivism

____ occurs when a firm exports goods or services to consumers in another country.

International Trade

the relationship between gender and work roles

Masculinity versus femininity

NAFTA was passed only after:

Mexico committed to tougher enforcement of environmental protection regulations.

____ predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months.

Moore's Law

An international business, unlike a multinational enterprise, ______.

Need not invest directly in operations in other countries

The General Agreement on Tariffs and Trade (GATT) *before WTO* was responsible for _____.

Policing the global marketplace

T or F: Anecdotal comparisons suggest that the assertion that nations that invest more in education will have higher growth rates is true.

True

T or F: In an individualist society, the welfare of society is best served by letting people pursue their own economic self-interest.

True

T or F: In mixed economies, governments also tend to take into state ownership troubled firms whose continued operation is thought to be vital to national interests.

True

T or F: It is possible to have a democratic political system that emphasizes a mix of collectivism and individualism

True

T or F: It is possible to have a totalitarian state that is hostile to collectivism and where some degree of individualism is encouraged.

True

T or F: Modern socialists trace their intellectual roots to Karl Marx (1818-83), although socialist thought clearly predates Marx.

True

T or F: The number of command economies has fallen dramatically since the demise of communism in the late 1980s.

True

In the 1970s, many Japanese firms invested in North America and Europe:

as a hedge against unfavorable currency movement

routine conventions of everyday life

folkways

The World Trade Organization promotes _____

lowering of barriers to cross-border trade and investment

abstract ideas about what a group believes to be good, right, and desirable provides the context within which a society's norms are established

values

a society's basic social organization

Social structure

Four religions that dominate society

1. Christianity 2. Islam 3. Hinduism 4. Buddhism 5. Confucianism is also important in influencing behavior and culture in many parts of Asia

Hofstede's dimensions of culture are:

1. Power distance 2. Uncertainty avoidance- the relationship between the individual and his or her fellows 3.Individualism versus collectivism- the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguity 4.Masculinity versus femininity - the relationship between gender and work roles 5. Confucian dynamism or long-term orientation - captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors

Which of the following factors hinders globalization of consumer goods markets? A) National differences in tastes and preferences B) Higher production costs in developed nations C) Homogenization of material culture D) Increasing outsourcing of goods and services

A) National differences in tastes and preferences

Which of the following is not an impediment that makes it difficult for forms to achieve for firms to achieve the optimal dispersion of their productive activities to locations around the globe? A) Reduced tariffs on imports of manufactured goods B) Government regulations C) Issues associated with economic and political risk D) Barriers to foreign direct investment

A) Reduced tariffs on imports of manufactured goods

Which of the following statements is true about an international business?

An international business must find ways to work within the limits imposed by government intervention.

Which of the following is true about the International Monetary Fund? A) It is primarily responsible for policing the world trading system B) It is seen as the lender of last resort to nation states whose economies are in turmoil. C) It is responsible for establishing multinational treaties to govern the global business systems D) It was established to formulate a coordinated policy response to financial crises in developing nations

B) It is seen as the lender of last resort to nation-states whose economies are in turmoil.

- has about 350 millions followers - stresses spiritual growth and the afterlife, rather than achievement while in this world - does not emphasize wealth creation - does not support the caste system, individuals do have some mobility and can work with individuals from different classes

Buddhism

Which of the following is not a consequence of the reduction in trade barriers and restrictions on FDI since 1950? A) Firms are dispersing parts of their production process to global locations to dive down production costs and increase product quality. B) The economies of the worlds nation states are becoming more intertwined. C) Nations are becoming more independent of each other for important goods and services. D) The world has become significantly wealthier since 1950

C) Nations are becoming more independent of each other for important goods and services.

- the world's largest religion - found throughout Europe, the Americas, and other countries settled by Europeans - the Protestant work ethic (Max Weber, 1804) - hard work, wealth creation, and frugality is the driving force of capitalism

Christianity

Since the 1960s which of the following has been a notable trend in the demographics of the multinational enterprise? A) The decline of multinational companies in the manufacturing sector B) The growth of government-owned multinational enterprises C) The decline of non-U.S multinationals D) The growth of mini-multinationals

D) The growth of mini-multinationals

the world's second largest religion dating to AD 610 - there is only one true God - associated in the Western media with militants, terrorists, and violent upheavals - teaches peace, justice, and tolerance - people do not own property, but only act as stewards for God - supportive of business, but the way business is practiced is prescribed

Islam

the spoken and unspoken (nonverbal communication such as facial expressions, personal space, and hand gestures) means of communication - countries with more than one language often have more than one culture Example: Canada, Belgium, Spain

Language

how a society deals with the fact that people are unequal in physical and intellectual capabilities

Power distance

a system of shared beliefs and rituals that are concerned with the realm of the sacred

Religion

Which of the following is not included in world merchandise trade?

Services

the extent to which individuals can move out of the strata into which they are born

Social mobility

What is the total cumulative value of foreign investments best referred to as?

Stock of foreign direct investments

____ have/has the most to gain from reductions in agricultural tariffs and subsidies that are part of the Doha agenda

The world's poorer nations

A number of econometric studies have found consistent evidence of a hump-shaped relationship between income levels and pollution levels remain low....

after a while the pollution levels decrease

closed system of stratification in which social position is determined by the family into which a person is born - change is usually not possible during an individual's lifetime

caste system

a condition where people tend to perceive themselves in terms of their class background, and this shapes their relationships with others

class consciousness

form of open social stratification, position a person has by birth can be changed through achievement or luck

class system

________ is an understanding of how cultural differences across and within nations can affect the way in which business is practiced, it is also important for business success

cross-cultural literacy

It is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living where

culture