mkt310 exam 1

Which best characterizes the political system in China?

China is a one-party state.

Recognizing that Russians typically only smile in response to something funny reflects an understanding of which part of Russia's culture?

folkways

Which best describes Detroit Bike's sourcing of components from other countries for assembly in the United States?

globalization of production

Argentina's economic development has been hampered because since 1950, Argentina

has consistently run a budget deficit.

China's economic growth from the late 1970s to the present can largely be attributed to

its shift toward more private enterprises.

A major factor leading to Argentina's current economic problems is its

lack of strong governance

Venezuela's economic system can best be described as a

mixed economy

A major factor contributing to the fraying of globalization since 2008 is

more regulations limiting credit.

Which is not a factor contributing to economic growth in China since the 1970s?

nationalization of most vital industrial sectors

Many Russians feel that smiling when nothing funny has happened is odd. Smiling is an example of

unspoken language

Smiling is an example of

unspoken language

China's state-owned enterprises

Are less productive than its private sector businesses.

What is a key factor contributing to the feeling that some people have been left behind by globalization?

advances in technology

Which was not a factor contributing to Argentina's prosperous economy in the early 1900s?

high barriers to foreign investment

From 2003 to 2015, ___________ in Argentina.

state intervention increased

What is one impact of globalization?

Greater uniformity replaces diversity.

Russians tend to rank ________ on individualism and _______ on uncertainty avoidance.

Low ; high

Which is not an accurate depiction of globalization?

The number of people living on farms has increased.

The political system in Venezuela reflects the ideals of

communist totalitarianism.

One reason why a global market does not fully exist is _____.

differences in legal regulations among national markets

For companies, Venezuela

would likely be considered a highly risky destination for doing business.

Culture is a system of values and norms shared among a group of people and that when taken together constitute a design for living. Any culture is based on values that provide the context within which a society's norms are established and justified. Norms of a culture can be further subdivided into folkways and mores, which govern the social rules of people's actions toward one another.

1. The use of alcohol is not permitted in Saudi Arabia. Mores 2. The way a society views the role of women. Values 3. The importance of ritualistic and symbolic behavior of bowing when meeting Japanese business executives. Folkways 4. How time is viewed when conducting business meetings in Western countries as opposed to Latin American and Middle Eastern countries. Folkways 5. Freedom to have democratically free market capitalism. Values 6. Most countries have laws against theft. Mores

Dominant religions in certain parts of the world have an effect on entrepreneurship as well as religious ethics pertaining to the cost of doing business. Religion is a system of shared belief and rituals that are concerned with the realm of the sacred. The major religions of the world—Christianity, Islam, Hinduism, and Buddhism—have an effect on economic growth and entrepreneurship through their emphasis on ethics and values espoused in their particular belief systems.

A monotheistic religion—the belief in one God. Christianity In order to escape growing opposition, the prophet Muhammad left Mecca. Islam A moral force requires the acceptance of certain responsibilities. Hinduism Suffering originates in a person's desire for pleasure. Buddhism

Political systems, the systems of government in nations, differ from country to country. It is important to understand the nature of different political systems and develop an awareness of and appreciation for the significance of national differences. Political systems are assessed according to two dimensions. The first is the degree to which they emphasize collectivism as opposed to individualism. The second is the degree to which they are democratic or totalitarian. These dimensions are interrelated and may share certain characteristics.

China: Xi Jinping, the new party chief, has said officials need to guard against corruption as its spread would doom the party and the state. -- Communist Totalitarianism France: State-owned enterprises allow for the "public good rather than the private profit." -- Social Democracy Saudi Arabia: Ruled by an Islamic absolute monarchy. -- Theocratic Totalitarianism United States: Two major political parties field candidates for federal, state, and local elections. -- Representative Democracy Zimbabwe: Defeated in 2008 parliamentary elections, President Mugabe remains in power today. -- Tribal Totalitarianism Italy in the 1930s: Benito Mussolini's dictatorship. -- Right-Wing Totalitarianism

What is a challenge faced by companies entering the global market?

Differences in consumer tastes and preferences

Some fairly dramatic changes have taken place in the demographics of the global economy over the past three decades. Several factors have played a significant part in shaping this change. Since the 1960s, four major factors have contributed to the changing world economy and the world trade picture. These factors are U.S. dominance in the world economy, U.S. dominance in world foreign direct investment, dominance of large multinational U.S. firms, and lack of trade with centrally planned economies. All of these have either changed or are rapidly changing the global economy of today.

It's estimated that today's developing nations may account for more than 60% of world economic activity by 2030, while rich nations' economic activity, currently at 55%, may decline to 38%. -- The Changing World Output and World Trade Picture Toyota rapidly increased its investment in auto production facilities in the United States and Europe during the late 1980s and early 1990s. -- The Changing FDI Picture In 1970, China's Hisense started with 10 employees. Today, it has sales of $7 billion, with overseas anufacturing subsidiaries in Algeria, Hungary, Iran, Pakistan, and South Africa. -- The Changing Nature of the Multinational Enterprise China continues to move toward greater free market reforms. If this continues for two more decades, China may move from third-world to industrial superpower status more rapidly than Japan did. -- The Changing World Order

What is an accurate description of the globalization of production?

Locating each stage of production where it can be done most economically

An American businessperson in Russia who recognizes that a lack of a smile by their Russian counterpart does not indicate that the American has done anything wrong might have

a high degree of cross-cultural literacy.

When looking at a country as a market or investment, the international business must consider the country's legal system. In that assessment, the firm needs to understand the differences between private actions, which refer to theft, piracy, blackmail, and the like from individuals or groups, and public actions, which are those actions taken by politicians and government bureaucrats. Either kind of action would pose a serious threat to the firm's investment or operations. Before the firm can seek legal remedies, it must clearly understand the options open to it. In a legal sense, property refers to a resource over which an individual or a business holds a legal title. It is a resource that it owns. Countries differ in the extent to which their legal systems define and protect property rights, even those countries that are still nominally communist states. Property rights can be violated, sometimes by governments and sometimes by individuals or groups.

Public Action 1. You face demands from government officials that will be required before you are allowed to do business. Payments are to be made to individuals, not the government. 2. A government official is demanding trips, education payments for his children, and a new car before he will allow your firm to be considered for a procurement bid. 3. You've learned your firm will face very expensive new licensing fees in addition to a new tax regulation that targets foreign firms (you) in a specific industry. Private Action 1. Your business is told to pay a group of individuals or face violent retribution. You have learned other similar businesses have faced similar demands. 2. A group of hackers based in the country where your firm wishes to conduct business has broken into your database and is demanding payment or they will destroy your firm's records. 3. You thought your contract would protect your rights, but your customer is now refusing to pay for merchandise already received, and the courts don't seem willing to help you.

The geopolitics of the world have—in general—been good for international businesses since the late 1980s. The world, however, is dynamic. Despite the general trends, terrorism and other changes make it imperative that international business managers understand the risks and realities in any market, nation, or region he or she is considering as an investment or market. The international business manager must understand what is driving unrest, change, transition, and risk. Why change is taking place is as important as where it is taking place. The political economy of many of the world's nation-states has changed dramatically over the past quarter century. Two major trends have been the wave of democratically elected governments and the strong move away from centrally planned and mixed economies to a more free market economic model.

Spread of Democracy 1. Totalitarianism failure: Brutal regimes have found citizens protesting, rebelling, and at times removing leaders of the country. 2. Emergence of middle and working classes: Once citizens experience new freedoms that come with increasing prosperity and dispassionate enforcement of contracts, they push for democratic reform. 3. New information and communication technologies: These technologies have created new conduits for the spread of democratic ideals and information from free societies. Spread of Market-Based Systems 1. Deregulation: Price controls are replaced by supply and demand. Restrictions on private enterprise are removed, and restrictions on foreign investment and trade are eased. 2. Legal system protecting property rights: Private property rights must be protected, and an enforcement mechanism put into place. Commercial codes must be improved, and courts must be made effective. 3. Privatization: The economy and former state monopolies must be opened to competition. Governance must also change from state to private owners and managers. New World Order and Terrorism 1. Fukuyama: A noted author suggests the war of ideas may be at an end, and liberal democracy will be the way of the future. It is a vision of a harmonious world. 2. Huntington: A noted author envisioned a world split into different civilizations with different value systems and ideologies. This vision suggests a world hazardous to business with global terrorism.

Since the middle of the 20th century, the international global business system has been shaped by global institutions. Countries have established these institutions to address the global issues that span their borders. The functions of these organizations have been established in international treaties. International businesses need to be aware of the functions of these organizations as they can have a profound impact on trade and commerce. It is critical for businesses to understand the responsibilities of each organization as well as the rationale for its creation.

The IMF and World Bank were created in 1944 by 44 nations that met to maintain order in the international monetary system and promote economic growth. -- Bretton Woods Institutions As much as 70 percent of its work is devoted to establishing higher standards of living, full employment, and conditions of economic and social progress and development. -- UN A series of treaties that reduced barriers to trade. -- GATT Primarily responsible for policing world trade system. -- WTO Finance ministers and central bank governors of major economies coordinate policy on global financial crises. -- GTO

Detroit Bike is located in the United States, assembles its product in the United States, but imports components from China and other countries. Which best describes Detroit Bikes?

an international business

Globalization naturally leads to firms following each other around the world, which then _____

creates some uniformity across markets

Why are consumer products less likely than industrial products to be a source for the global marketplace?

differences in consumer taste

It is common practice for people today to use products that are produced or assembled in various nations around the world. This is a reflection of _____.

globalization

Renata is traveling across Europe and is surprised to find Starbucks, McDonald's, and Coca-Cola in nearly every city she visits. This shows a convergence of consumer tastes, which creates a _____.

globalization of markets

When Jerry started his small appliance manufacturing company in the 1950s, every component part was made in the United States and the product was assembled in the United States. Today, he sources the components from China. The change at this company is an example of the _____.

globalization of production

Global markets for industrial goods such as oil and wheat are more typical than those for consumer products because _____.

industrial goods serve universal needs

Which best describes what takes place when a Chinese supplier of bicycle parts exports bike seats to Detroit Bikes?

international trade

After many months of communicating via email and telephone, Jade is eager to meet her Russian colleague, Irina, at a trade show in St. Petersburg, Russia. Jade is upset and offended, however, when Irina fails to return her warm smile when they finally meet in person. Jade

is demonstrating a lack of cross-cultural literacy.

Since World War II, globalization has been driven by two major factors: the decline in barriers to the free flow of goods, services, and capital, and technological change. Business has fueled these trends as well as has been the beneficiary of these trends. Understanding these trends helps businesses develop strategies and tactics to accelerate these trends. Understanding globalization trends helps businesses identify opportunities and threats in their environment. Understanding these trends will also make the changes much more manageable. International businesses have greater flexibility, more options, and a broader scope to consider globalization of production and globalization of markets.

lower tariffs and increased international trade in goods and services - declining trade barriers rapid FDI growth and new production opportunities and new markets - declining investment barriers explosive growth of high-power, low-cost computing and growth in services - technology: computing and communication faster and cheaper shipping and optimal production - technology: transportation

Globalization has

negatively impacted both blue-collar and white-collar jobs.

A common complaint among those pushing back against globalization is that

the benefits of globalization are not evenly distributed among socioeconomic classes

Detroit Bike's strategy has been impacted by tariffs imposed by Donald Trump on parts imported from China. Which institution is responsible for ensuring countries adhere to their trade treaties?

the world trade org

The general acceptance by Russians of hierarchy and power differentials arising from social status reflects their

values.

Many influential economists, politicians, and business leaders think that a shift toward a more integrated and interdependent global economy is a good thing. There is evidence to support the theory that falling barriers to international trade and investment drive the global economy toward greater prosperity. There are, however, critics who argue against globalization. Anecdotes, evidence, and arguments can be collected to support each side of the debate. International businesses need to understand the nature of the globalization debate and observe how their own practices may act in support of, or against globalization. Understanding how each side sees the issues can lead toward better solutions to the problems caused by globalization.

Argument against globalization 1. Manufacturing jobs move to low-wage countries 2. Lack of adequate regulations to protect the environment 3. Economic power shifts from nations to international institutions 4.The gap between the rich and the poor nations of the world has gotten wider Argument for globalization 1. Increased efficiency of the whole economy 2. Tougher environmental regulations follow economic progress. 3. Real power resides with nation-states. 4. Living standards improve.

The modern business environment has been shaped by political and economic events. Rapid growth and change in many areas have been typical in the past two or three decades. In the midst of growth and change, some trends have emerged as the drivers of change. Political and economic trends have different dynamics. The international business manager needs a clear vision and understanding of world events and the markets and countries in which he or she operates. Putting current events into the historical context provides the manager with the ability to distinguish anomalies from trend events. The same vision and understanding offer the manager insights into timing and opportunity. The transformation of the political economy of the world's nations has been driven by a wave of democratic revolutions and a move toward a more free market economic model. International business managers must assess the attractiveness of specific locations. Countries with democratic regimes, market-based economic policies, and strong protection of property rights are more likely to attain a high and sustained growth rate. These countries are attractive locations for international business.

Economic trend 1. Markets move more freely, and private enterprise grows in a supportive environment. 2. Privatization is a way to stimulate growth and efficiency by offering private investors the incentive of profits. Privatization can mean increases in productivity, entering new markets, and leaving losing ones. 3. States choose their levels of participation in the economic system. The number of centrally planned economies—centrally planned by the state—is declining. Political trend 1. The Internet is allowing democratic ideals to penetrate closed societies as never before. 2. The end of the Cold War ushered in a "new world order."

Managers in international businesses will need to evaluate the attractiveness of a country as a market or location for a facility or investment. Knowing how to think about events and situations will help the manager make that evaluation. Countries with democratic regimes, market-based economic policies, and strong protection of property rights are more likely to attain high and sustained economic growth rates and are thus a more attractive location for international business. The benefits, costs, and risks are associated with the political, economic, and legal systems of the country. The overall attractiveness of a country depends on balancing the benefits, costs, and risks.

Evaluate benefits 1. You see an opportunity to establish a strong market presence before your competitors, and you will be able to set product standards. 2. Property rights seem to be well protected as part of a total system that shows few signs of state control of key sectors. 3. You are looking at a country's population growth. You are concerned not only about the total population, but also about the growth of the middle class and its consumers. Evaluate costs 1. Distribution systems are not well developed, and you may have to create your own. While this could create a competitive advantage, it is expensive to set up. 2. Political entities in the government expect to receive what may be considered bribes in order to be able to get the necessary business licenses and permits. 3. The laws on business practices are evolving, but you see potential problems in ensuring contract disputes are resolved fairly. Evaluate Risks 1. The current leader of the country has been in power for decades, but his health is failing. Social unrest may affect the leadership transition, and there are several opposition groups. 2. Social unrest has been triggered by rising prices for food and essentials. The government, which already has a large debt burden, may need to borrow more.

Early outsourcing efforts were mostly limited to _____ activities while today numerous business activities can be outsourced.

Manufacturing

Geert Hofstede undertook what is probably the most famous study of how culture relates to values in the workplace. Through his research in the late 1960s and early 70s, he was able to isolate four dimensions that he claimed summarized different cultures: power distance, individualism vs. collectivism, uncertainty avoidance, masculinity vs. femininity, and, later, Confucian dynamism. How a society's culture affects the values found in the workplace is considerably important to an international business with operations in different countries. Management processes and practices may need to vary according to culturally determined work-related values.

Ming is from a powerful family, and because of this, she will be in an authoritative position in the workplace. -- Power Distance Ben has very loose ties with his family and enjoys wearing provocative T-shirts to express a sense of freedom and uniqueness. He shows no interest in joining the family business. -- Individualism/Collectivism Elena has worked at the same company for more than 15 years. She parks in the same parking spot every day and values routine and predictability. -- Uncertainty avoidance Jiro is extremely driven and assertive. His goal is to become the most powerful man in the company. -- Masculinity/Femininity Bill works very hard in his job and expects to see the reward of his labor quickly. -- Time orientation

In just a few years, thanks to the policies and actions of its undemocratic and authoritarian economy, Venezuela has gone from being a prosperous country to a nation with widespread poverty. We use the term ________ to indicate that a country's political, economic, and legal system are interdependent, and influence the country's level of economic well-being.

Political economy