Bus 340 Midterm 2

What are some other important financial scandals?

- 1920s. Teapot Dome was an oil field owned by the U.S. government and located in Wyoming. - Albert Fall, while serving as Secretary of the Interior under President Warren G. Harding, secretly leased Tea- pot Dome oil reserves to a businessman who paid Fall hundreds of thousands of dollars in zero-interest loans. Eventually Fall was indicted and convicted. He became the first U.S. cabinet member to be sent to prison. - 1930s, Samuel Insull, who had once served as president of the Edison power company, became the head of a massive utility holding company. - stock market de- clined and Insull's holding company collapsed in 1932. Total losses to investors amounted to approximately $700 million, a record at the time. - Insull was charged with mail fraud and embezzlement but fled the country.

What are the cultural dimensions of doing business in Latin America?

- Brazil, Mexico, Argentina, and Colombia are populous countries (Brazil, 203 million; Mexico, 121 million; Argentina, 43 million; and Colombia, 46 million); they have reached viable per capita GDPs: Brazil $12,000; Mexico, $16,000; Argentina, $19,000; and Colombia, $11,000. Chile is small (17 million people) but has per capita GDP of $19,000. - important to understand that potential customers want to develop a personal relationship before doing business with foreign ex- ecutives. D - Dinner meetings and lunch meetings provide a good time for executives to get to know one another better. - conversations about buying and selling and contracts and terms will be relegated below discussions about the particular Latin American country's - culture, history, architecture, current economic conditions, and similar topics. - Dinners of- ten occur late in the evening, at 9:00 p.m. or 10:00 p.m. Formal manners and appropriate business attire are appreciated. - not as conscious about time as are North Americans. - not as rushed as workers from the United States. - Companies that want to do business in Latin America will need to be flexible about meeting times, dates, and deadlines. - Their motto is: "We work to live," not "We live to work."

What did fons trompenaars add to hofstedes dimensions?

- Building on the work of Hofstede, Fons Trompenaars added a number of cultural variables to the theory. o Universalism vs. particularism refers to the importance of rules versus relationships in a society. o neutral vs. emotional variable involves the extent to which persons within a soci- ety emotionally express themselves. o specific vs. diffuse variable refers to the compartmentalization of roles. o achievement vs. ascription how rewards in a society are handed out: performance vs. place in society

What is terrorism? What is the terrorism risk insurance act?

- terrorism involves unlawful acts or vio- lence threatening the physical safety of others - Terrorism Risk Insurance Act of 2002 a U.S. law that after a certain deductible provides U.S. businesses government insur- ance coverage for the risk of terrorism - President George W. Bush signed into law on November 26 of that year.

What is a theoretic law legal system?

- theocratic law legal system a legal system based on a reli- gious document and religious teachings

What is a totalitarian government?

- totalitarian government system of government in which individuals govern with- out the support or consent of the citizenry; for example, a military dictatorship - totali- tarian in nature, meaning that nonelected religious leaders have political control of the country. - Another totalitarian variant is the absolute monarchy, where the king or queen holds political power; these are rare but still exist today. - In between the extremes of democracy and totalitarianism are governments in countries like today's China where, as discussed below, party rulers share some rights with citizens. - openness of democratic countries, like Finland, and the protections such countries tend to generally provide for property rights and freedom of expression usually make them more hospitable places to conduct global business than countries with totalitarian or semi-totalitarian political regimes. - political systems in such countries may actually be more "stable" than in democratic countries because a dicta- tor in such a country may be in power for many decades

backward translation

translating a message from English into a foreign lan- guage, then translating it back into English to check for accuracy

verbal communication

a message's actual contents (i.e., what the message says)

Material culture

in a society is often a direct result of technology. It is perhaps best demonstrated by a country's infrastructures; that is, the basic economic, social, financial, and marketing frameworks that enable the society to function.

culture

learned behavior; a way of life for one group of people living in a single, related, and independent community

acculturation

the ability of a firm to adjust to a culture different from its own

social stratification

the extent to which groups at the top of the social pyramid exert control over others at lower levels of the pyramid

nonverbal communication

tone of voice, gestures, eye contact, body positions, facial grimaces, and other body lan- guage that accompanies verbal communication

How can computer information be threatened?

- Business managers must beware of potential problems associated with e-business. A business must take precautions to avoid becoming a victim of computer crime. - computer crime involves the use of computers to perpetrate or facilitate illegal activ- ity. - average computer crime has been estimated to cost almost $200,000, - Increased use of computers to maintain financial records has led to more opportunities for computer crime. - The five basic threats to security are: o • natural disasters; o • dishonest employees; o • disgruntled employees; o • persons external to the organization; and o • accidental errors and omissions. - Accidental errors and omissions cause the great majority of the problems concern- ing computer security. - Errors and omissions are especially prevalent in systems of sloppy design, implementation, and operation. - effective internal control structure that includes computer security is an integral part of any reliable information system.

Who was charles ponzi? What is the ponzi scheme?

- Charles Ponzi, tricked thousands of New England residents into investing in a postage stamp speculation scheme during the 1920s. Ponzi was swamped with money from investors, as he guaranteed a 40 percent return in three months. - Ponzi achieved this remarkable rate of return by using money received from later inves- tors to provide early investors with returns on their investment, thus giving them an ap- pearance of a profitable investment. - Ponzi was unable to keep up the appearance of profitability and his fraud was discovered. - Ponzi scheme a type of fraud, also called a pyramid scheme, in which money received from later investors is used to provide returns to earlier investors, thus giving an appearance of a profitable investment - money manager Bernard Madoff perpetrated a Ponzi scheme amounting to an estimated $65 billion. In March 2009, a U.S. Department of Jus- tice press release stated that Madoff was charged with federal offenses including securi- ties fraud, wire fraud, mail fraud, money laundering, making false statements, perjury, theft from an employee benefit plan, and making false filings with the SEC.1 - sentenced to a statutory maximum of 150 years in prison and began serving in June, 2009, at the age of 70.

What is the better business bureau code of business practices?

- Code is based upon the BBB Standards for Trust, which includes eight values that summarize the essential ele- ments of creating and maintaining trust in business. C o 1. Build Trust: Establish and maintain a positive track record in the marketplace. o 2. Advertise Honestly: Adhere to established standards of advertising and selling. o 3. Tell the Truth: Honestly represent products and services, including clear and adequate disclosures of all material terms. o 4. Be Transparent: Openly identify the nature, location, and ownership of the business, and clearly disclose all policies, guarantees, and procedures that influence a customer's decision to buy. o 5. Honor Promises: Abide by all written agreements and verbal representations. o 6. Be Responsive: Address marketplace disputes quickly, professionally, and in good faith. o 7. Safeguard Privacy: Protect any data collected against mishandling and fraud, collect personal information only as needed, and respect the preferences of customers regarding the use of their information. o 8. Embody Integrity: Approach all business dealings, marketplace transactions, and commitments with integrity.

How do Aesthetics affect culture?

- Color, form, and music are the major components of aesthetics (i.e., taste and beauty as perceived by a society). - must carefully choose colors, as colors often represent different things in different countries

How does communication vary across different cultures?

- Communication is a key function in business, and culture has an impact on communica- tion styles whether a firm is small or large, multinational or domestic. - Companies with foreign personnel running their overseas operations must be especially careful to clearly communicate. - use of jargon is usually inappropriate, as it greatly increases the risk of misunder- standing. - Abbreviations like CAD, CAM, COO, CEO, and CFO may not be understood by personnel in foreign countries, nor will Latin and French phrases.

Who was geert hofstede?

- Dutch researcher Geert Hofstede pioneered research into cultures with a study focusing upon IBM employees in 64 countries; this research was later extended to many more coun- tries and other groups of subjects

What is the foreign corrupt practices act FCPA?

- Congress passed the Foreign Corrupt Practices Act (FCPA) in 1977 in response to corrup- tion and bribery of foreign government of- ficials by managers of U.S. companies. - Foreign Corrupt Practices Act (FCPA) a U.S. federal law that consists of two parts: an anti-bribery provision and a requirement to maintain an adequate internal control system over financial books and records - regard to bribery, the FCPA prohibits any U.S. firm, including any officer, director, or employee, from using "the mails or any means or instrumentality of interstate commerce cor- ruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to": o a foreign official; o a foreign political party; o an official of a foreign political party; o a candidate for foreign political office; or o any person who will in turn give the money or any item of value to one of the afore- said individuals or entities for purposes of influencing a decision or act in order to as- sist in obtaining or retaining business or directing business to a person. - regard to internal controls, the FCPA amended the Securities Exchange Act of 1934 by requiring public companies to devise and maintain a system of internal account- ing control. - - few people complain that the FCPA puts American firms at a disadvantage against non-U.S. competitors. - argument to do whatever it takes to win is a premise that leads corporate managers to use questionable accounting practices and sometimes to commit fraud to maintain im- pressive financial statements. - FCPA is a U.S.-based law, it is en- forced on U.S.-based companies and therefore does not apply to foreign companies that fall outside the statute definition

What is the corruptions perceptions index?

- Corruption Perceptions Index (CPI) a report published each year by Transparency International, providing metrics to the potential corruption risk for most of the world's countries - first released in 1995, - determined by expert assessments and opinion surveys. - The index, ranging from "0 to 10," assigns a lower CPI to those countries with a perceived high corruption risk. - When planning to begin business operations in a country, examining that country's CPI is a good starting point for risk assessment. - Corruption is not limited to countries with low CPI scores (i.e., high risk of corrup- tion). - limitations of CPI risk assessment must be kept in mind; that is, a low-risk country does not guarantee that there will be no corruption. - Risk assessment should be thorough and focused upon operations in high-risk countries, without ignoring low-risk countries.

Is Culture important for business?

- Cultural understanding plays a major role in global business success. - must contend with various aspects of the external environment in addition to culture. - include the business market, com- petition, technology, economy, and the legal and political climate.

What was the financial scandal of enron?

- Enron Corporation is considered by many to be the most infamous financial scandal in U.S. history. - caused people to question the reliability of the financial reporting practices of publicly traded corporations. - company's bankruptcy, which was the largest in U.S. history at the time, resulted in 20,000 individual job losses. - Enron was a major global provider of electricity, natural gas, pulp and paper, and communications services. - great number of the company's assets and profits were overstated—or in some cases completely fraudulent and nonexis- tent. - Many of the company's financial obligations and losses were created "offshore" and were not disclosed in the company's financial statements - Using technically complex accounting transac- tions between Enron and related companies, En- ron was able to remove unprofitable operations from the company's financial records. - Enron's former CEO, Kenneth Lay, sold mas- sive amounts of his Enron stock in late 2001 as the company stock price fell, while at the same time urging company employees to purchase the stock, assuring everyone that the stock price would surge again. - Mark to market accounting generally refers to accounting practices that update the value of an asset to its current market levels. o ideally should give investors, lenders, and others more useful information for decision making. o subject to abuse and manipulation by unscrupulous business managers. - Enron recorded expected future profits immediately as if those profits were already earned. A - Enron booked gains that, in some cases, would eventu- ally show up as losses. T - company leadership decided to disguise the company's actual financial situation, which was declining, and to deceive Wall Street analysts and investors. As a result, the company's stock price continued to rise. - truth about Enron was finally revealed in 2001. - number of Enron employees were charged with crimes, including the company's top two former managers. - 2004, former CEO Kenneth Lay was indicted by a grand jury on 11 counts of securities fraud and related charges. - former president Jeff Skill- ing was indicted on 35 counts of fraud, insider trading, and other crimes

What are ethics?

- Ethics - the branch of philosophy that addresses the values pertaining to human behavior, with regard to the "rightness" and "wrongness" of actions and to the "goodness" and "badness" of the intent and results of such actions - ethical problem, or dilemma, occurs when one must make a choice among alternative actions and the right choice is not absolutely clear. Often that choice affects the well-being of others.

What two principles can help make ethical decisions?

- Following legal rules is a starting point for making an ethical choice. - second way to resolve an ethical question is to apply the formal policies of your com- pany or of an appropriate professional organization. - third way to make an ethical choice is to follow an informal guideline such as moral intuition. - Two principles that can help when making an ethical decision are the principle of con- sistency and the principle of respect. - To apply the principle of consistency, which is derived from the generalization argument presented earlier, ask: "What if everyone did it?" and ex- amine what the consequences would be if everyone who faced a similar decision made the same choice - To apply the principle of respect, one would make the choice that treats people with the greatest respect. This implies that one would act toward others in the same way it would be hoped they would act in return. - referred to as the "Golden Rule": Do unto others as you would have them do unto you.

What is the foreign corrupt practices act?

- Foreign Corrupt Practices Act a U.S. law that prohibits U.S. companies from bribing or otherwise corrupting foreign government officials in order to win foreign government contracts or obtain other for- eign government assistance for their businesses - specialized unit within the U.S. Securities and Exchange Commission (SEC) to further its enforcement. - not every country has stringent laws in this regard like the United States, and, even if they do, such laws may not be aggressively enforced—or enforced at all. - many countries and cultures throughout the world, bribes are simply an expected part of compensation. - particularly true in totalitarian regimes when the individuals in command can accumulate considerable personal wealth in this manner.

Explain the Vivendi financial scandal?

- French-based multinational corporation, has op- erations in music, television and film, publishing, telecommunications, the Internet, and video games. - headquartered in Paris. - Between October 2000 and April 2002, the company cooked its books to make its financial performance appear better than it was, for the purpose of making a number of acquisitions. W - company's board of directors discovered CEO Jean-Marie Messier's actions, Messier was forced to resign. - Vivendi agreed to pay a fine of $50 million, and Messier was required to pay a fine of $1 million and to forfeit his $25 million severance package. M - SEC demonstrated that a series of repeated actions had been used to hide Vivendi's cash flow and liquidity problems: improp- erly adjusted accounting reserves were used to meet earnings before interest, taxes, depreci- ation, and amortization targets; and material financial obligations were not disclosed. - Messier had clandestinely used money from company accounts to repurchase shares of the company's stock. The stock repurchases led to a cash shortage that almost caused Vivendi to become insolvent

What is the GLOBE project?

- Global Leadership and Organizational Behavior Effectiveness (GLOBE) project has involved surveying thousands of business executives from 61 different countries about nine cultural dimensions.

What are intellectual property protections?

- Intellectual property protections are essentially limited monopoly rights legally granted by a nation to the creator of intellectual property. - Patents, trademarks, and copyrights are all examples of intellectual property protections

What two categories do internal controls fit into?

- Internal control procedures fit into two categories o first: preventing accidental er- rors and intentional misrepresentations—also called irregularities—from occurring. o Sec- ond: identifying errors and irregularities after they occur so that corrective action may be taken. - internal controls can be categorized as either preventive controls or feed- back controls. - Both categories of accounting controls are essential to a company's control structure. - Preventive controls include hiring competent and ethical employees, having (and following) written policies and procedures, providing for the physical security of firm assets, and keeping adequate documents and records.

Explain the parmalat financial scandal?

- Italian-based multinational corporation, specializes in dairy and food prod- ucts. T - late 1990s, Parmalat entered into world financial markets in a significant way, fi- nancing several international acquisitions, especially in the Western Hemisphere, with debt. - 2001, a number of the new operations were losing money. - com- pany began extensively using derivatives for financing. - efforts to disguise the extent of the company's financial liabilities and losses. Parmalat cooked its books by purchasing its own credit-lined notes, thereby creating an asset that did not really exist. - 2003, the company was no longer able to pay off debts and make bond payments: a 14 billion euro shortfall led to the company's collapse, which became Europe's biggest bankruptcy. - former CEO, Calisto Tanzi, had be- come a symbol of great economic success and a business hero of sorts. - Tanzi was charged with financial fraud and money laundering. He was sentenced to ten years in prison for fraud.

Do ethics codes work in companies?

- Many companies have established a corporate ethics code. - Businesspeople need formal standards upon which to base decisions regarding ethical issues, such as information security, personal privacy, use of company resources, care for the environment, and professional behavior. - Components of Halliburton's Code of Business Conduct, al- though not limited to, include expectations that all directors and employees: o observe the highest form of personal ethics in all business transactions; o aspire to fairness in dealings with shareholders and stakeholders alike; o and never allow company loyalty or drive for profit to result in illegal behavior. - Well-designed corporate ethics codes, which are monitored and enforced by top man- agement personnel, will help employees to do the right thing in difficult circumstances. - Ethics codes cannot guarantee that people will always make the correct choice - ethics codes and ethics training will help minimize unethical behavior.

What is mark to market accounting?

- Mark to market accounting generally refers to accounting practices that update the value of an asset to its current market levels. o ideally should give investors, lenders, and others more useful information for decision making. o subject to abuse and manipulation by unscrupulous business managers.

Who was Martin Gannon? What were his cultural metaphors?

- Martin Gannon believes that it is extremely difficult for executives of companies conduct- ing business overseas to learn much about the cultures of a number of countries through "do's" and don'ts." - suggests that it would be more productive for international execu- tives to gauge a specific culture by using an image ("metaphor") that depicts how people in a specific culture think and behave. - Examples: o French wine—Purity; classification; composition; compatibility; maturation o German symphony—Orchestra; conductors; performance; society; education and politics o British house—Laying the foundation; building the brick house; living in the brick house

What are the material elements of culture?

- Material culture in a society is often a direct result of technology. It is perhaps best demonstrated by a country's infrastructures; that is, the basic economic, social, financial, and marketing frameworks that enable the society to function. - Economic infrastructure involves transportation, energy, and communications. - Social infrastructure refers to housing, medical services, and educational institutions. - Financial infrastructure consists primarily of banks, and marketing infrastructure refers to marketing research and adver- tising firms. - Without the availability of these forms of infrastructure, international businesses will not be able to obtain funds to finance their operations, transport their products to market, or draw upon the expertise of local marketing research and advertising firms. - "leapfrog" tech- nology—technological advances that bypass intermediate stages industrialized nations ex- perience.

What are the cultural dimensions of doing business in korea?

- Older generations are respected for their knowledge and wisdom. Gray hair is viewed positively. - • The number 1 is good, whereas the number 4 signifies death or failure. - • Children are not supposed to say their parents' names, even when used with a title. - • Younger brothers and sisters are not allowed to use the names of their older siblings. - • "Yangban" refers to the noble class. Its culture is honor, reputation, and dignity. It is illus- trated by never begging, even when one is hungry, and never running, even when it rains. - • "We" is more important than "I." - • At the dinner table, older generations, superiors, or parents will start to eat earlier than subordinates, younger generations, or children. - • It is important not to show your backside when meeting with a colleague. Thus, you will back out of his office instead of turning around to leave. - • Teachers are so revered that walking in their shadows is viewed as impolite. - • Rocks, trees, clouds, and skies are important elements of Korean culture. - • Adults who are married with their own children will often live with their parents. - • "Inwa" involves harmony among unequals: loyalty is owed to parents and authority figures, yet superiors are responsible for the well-being of their subordinates. - • A personal relationship needs to occur before business matters can be discussed with foreigners. - inwa Korean philosophy stressing harmony among unequals, loyalty to parents and author- ity figures, and superiors being responsible for the well-being of subordinates

What is the Overseas Private Investment Corporation?

- Overseas Private Invest- ment Corporation (OPIC) a U.S. government agency that sells political risk insurance to U.S. businesses operating in countries with which the United States has a bilateral investment treaty - insurance protects them against politi- cal risks, such as insurrections, revolutions, political violence, and nationalization. - OPIC has very specific premium rates for its insurance. - companies may be able to purchase political risk insurance from private insurance firms or insurance sold through the World Bank

What does corporate social responsibility mandate a company to strive to?

- Religion is arguably the broadest basis that society has for ethics and provides the internal justification for many ethical acts, such as providing safe working conditions, treating employees fairly, and protecting the environment. - Corporate social responsibility mandates that a company strive to: o • provide a quality product or service to its customers; o • provide an appropriate return on investment to the company's stockholders; o • treat its employees with dignity and respect; o • take care of the environment; o • meet its legal obligations; and o • fairly deal with suppliers, lenders, and other business parties.

What are social institutions and reference groups?

- Social institutions refer to the way people relate to one another within group settings in a society. - Families, churches, workplaces, and friends a - Sociologists refer to groups that are important to individuals as reference groups. o Reference groups can be those of which people are already a member or those to which people aspire to belong.

What are the three philosophical principles regarding ethics?

- Three philosophical principles regarding ethics include the imperative principle, the utilitarian principle, and the generalization argument. - Imperative Principle: Do what is right. Act according to absolute moral rules, such as "lying is wrong." Under the imperative principle, ethics is a function of moral rules and principles and does not involve a situation-specific calculation of consequences. - Utilitarian Principle: Do what produces the greatest good. - Generalization Argument: This is a combination of the imperative principle and the utilitarian principle: do what is right, but filter the action by consideration of the consequences. Following the generalization argument, one would make a decision by considering the consequences if everyone made the same choice under similar cir- cumstances.

Why are management styles important?

- U.S. companies have management styles that frequently conflict with the management styles preferred in other cultures. - Tata is an Indian conglomerate that specializes in automobile manufacturing and recog- nizes the importance of using several management styles. - Lenovo is a Chinese manufacturer of PCs. In an effort to become a truly global company, the firm decided to eliminate headquarters; instead it holds rotating meetings for senior managers at its various locations around the world. o Philosophy - "In all situations, assume good intentions; be in- tentional about understanding others and being understood; respect cultural differences."

What are US management styles in US operations?

- U.S. management styles in its U.S. operations: o Headquarters sends out "coordinators," who are responsible for keeping an eye on American managers. Coordinators closely monitor American managers' decision mak- ing and the results of those decisions. o Sales goals are established with little input from U.S. executives. Instead of basing goals upon projected demand, they are driven by production quotas. o There is an over-management of details; headquarters rarely listens to advice from its American managers, and little, if any, dissent is permitted.

What is common law legal system?

- United States follows a com- mon law legal system. - common law legal system a legal system where legisla- tive bodies generally enact less specific legal rules giving judges/courts considerable authority in interpreting these rules based on precedent and other factors - judges to interpret the term "free speech" based on precedent and other evidence and considerations - originated in England in 1066 when William the Conqueror assumed the English throne. King William believed in a strong centralized judicial and court system. - One key advantage of a common law legal approach is that judges have a decent amount of leeway to change their interpretations of the law based on changing societal develop- ments, without waiting for the legislative branch to pass new rules or amend a constitution. - One possible downside of a common law approach, however, is that it gives a good deal of power to the courts and judges. - Rather than just enforcing specific codified rules, judges in common law countries often have considerable opportunities to interpret the law as they see fit. - leads some to criticize that in common law countries it is often appointed judges who are, in effect, "making the law" rather than elected legislators.

What are the two primary types of language?

- Verbal and nonverbal communication are the two primary types of language. - verbal communication a message's actual contents (i.e., what the message says) - nonverbal communication tone of voice, gestures, eye contact, body positions, facial grimaces, and other body lan- guage that accompanies verbal communication - important to managers when evaluating employees, communicating on an in- tra-company basis with overseas divisions, and helping to interpret the circumstances (con- text) in which language occurs. - crucial when providing access to local markets through advertising - numerous examples of how language mistakes have cost marketers in international markets.

What is corporate social responsibility?

- When a business firm loses its reputation, word spreads quickly due to electronic communications. - Inevitably there is a loss of trust, which is fundamental to business activities involving the firm's customers, suppliers, lenders, investors, and others. - positive corporate reputation connotes management's commitment to ethical accounting and principled business practices. - key factor in corporate reputation is acting responsibly, such as fairly treating employees and taking care of the environment. - Other fac- tors related to corporate social responsibility include wise use of assets, financial soundness, and investment value, all of which depend upon honest financial reporting. - corporate social responsibility (CSR) a company's obligations to society, including the welfare of people and places affected by company activities o People include customers, employees, suppliers, creditors, lenders, investors, and anyone who interacts with the company and its products or services. o Places include the communities and countries in which the company does business. o includes the responsibility to take care of the environment (land, air, and water) so as to minimize or eliminate pollution.

How do management styles affect product development?

- When developing new products, management styles must be considered along with many other aspects of marketing expertise. - Products that are wildly successful in home-country markets may need to be modified for an international market. - can be different cultural groups within countries of which organizations need to be aware. - many examples of American brands that have been unsuccessful in foreign mar- kets because their names were not culturally acceptable.

What are ethics with regard to business?

- While making a profit is an appropriate and worthy goal, companies must simultaneously fulfill their ethical responsibilities: making quality products and services, treating people within and outside the company with respect and dig- nity, taking care of the environment, and being good corporate citizens in the communities and nations where the company operates. R - Ethics refer to the guidelines by which people relate to the world, including how they con- duct business, how they treat other people, and how they care for the environment. P - develop their ethical perspectives from a study of history and literature, from religious prin- ciples, and from personal experiences and observations. - Ethics define how people view the world.

Explain the worldcom financial scandal?

- WorldCom began in 1983 as Long Distance Discount Services, Inc. (LDDS), located in the United States in a middle-sized town, Hattiesburg, Mississippi. - From 1999 to 2002, the company had manipulated earnings by using fraudulent accounting methods, thereby presenting a false image of eco- nomic growth and prosperity. As a result, the company's stock price continued to climb, when it should have been falling. - underreporting "line costs" by recording them as assets on the balance sheet instead of correctly expensing each one on the income statement. - overstating revenues through recording fraudu- lent transactions regarding "corporate unallocated revenue accounts." - During 2002, a small group of internal auditors at WorldCom worked together, frequently in the evening and in secret, to explore and reveal $3.8 billion in fraud. - WorldCom emerged from Chapter 11 bankruptcy in 2004 with about $5.7 billion in debt and $6 billion in cash. - 2005, Bernie Ebbers was found guilty of fraud and conspiracy and for filing false documents with regulators. He was sentenced to 25 years in prison.

What are anti-trust laws?

- antitrust laws laws to promote "fair competi- tion" among businesses - antitrust laws typically prohibit companies from engaging in collusion (i.e., acting in a manner that secretly thwarts competition among themselves)

What is the sarbanes oxley act?

- ap- ply, however, to any entity that is an issuer un- der the U.S. securities laws, any foreign entity with subsidiaries in the United States and any act in furtherance of a bribe occurring in the United States. - new regulatory measures, including the especially signifi- cant Sarbanes-Oxley Act, often referred to as "SOX," which was enacted in 2002. - SOX established new and more rigorous standards for corporate boards of directors, corporate management, and public account- ing firms. - SOX increased the potential prison sentence for fraud to 25 years. - SOX established new crimes with potential 20-year sen- tences for destroying, altering, or fabricating records in federal investigations, or any scheme or attempt to defraud shareholders. - requires that the chief executive officer and chief financial officer of a publicly traded corporation must certify in each periodic report containing financial statements that the report fully complies with the Securities Exchange Act of 1934 and that the information fairly presents the company's financial condition and results of operations.

What is arbitration?

- arbitration an alternative dispute resolu- tion process whereby the par- ties designate a neutral private person or group of persons to hear and decide the case - Arbitration cases tend to be heard and decided rather quickly, a clear advantage given the time sensitivity of international business con- tracts. - arbitration decisions are almost always deemed final and binding on the parties—meaning they can't be appealed to the courts. - very important for parties to make sure they have full confidence in the arbitrator they agree upon to hear their dispute(s).

What are the attitudes and beliefs that drive various management styles?

- attitudes and beliefs that drive various management styles: o "Master of destiny" philosophy: the idea that workers and companies can influence the future. Hard work, a commitment to company goals, and effective time manage- ment are important aspects of this managerial orientation. o • A company is an independent enterprise. It is a vital social institution. Workers will do what is best for the company instead of what is best for their government or their families. o • Rewards are based on merit. This management style may be problematic in other cultures, where friendships and family ties may be more important. o • Decisions are based upon objective analysis. Accurate information and its timeliness are important aspects of decision making. In some cultures, judgment and intuition may be viewed as being more vital. o • Wide-sharing in decision making. Effective decisions are often viewed as the primary way to evaluate subordinates. Decision making, thus, is decentralized and delegated to lower levels of management. In other cultures, such as the Middle East, only top executives will make the most important decisions. o • An internal quest for improvement. This often involves a company's need to adjust to change in its environment in order to achieve higher sales, profits, and market shares. This style may be problematic in other cultures that are more interested in maintain- ing the status quo. o • Competition is necessary. This is reflected in competition among workers and com- petition among companies. In China and Japan, however, cooperation is emphasized over competition.

What is a copyright?

- copyright the exclusive legal right of authors, playwrights, publish- ers, artists, and composers have to publish and dissemi- nate their work as they see fit - Copyright law in the United States generally gives the originator of a creative work the exclusive right to sell, exhibit, and publish it for her or his lifetime plus 70 years. T - One hundred and sixty-two of the 190 countries throughout the world have signed a document called the Berne Convention that provides for international copyright protections. - copyright infringement is a major problem in the world today o extreme with respect to computer software technology. o majority of soft- ware installed on computers was "pirated" or illegally acquired.

What is a civic law legal system?

- basically three kinds of legal systems in countries throughout the world: civil law legal systems, common law legal systems, and theocratic law legal systems - civil law legal system a legal system based on a com- prehensive listing of legal rules in sets of written codes of law - In a civil law country, the real power lies with the legislative branch of government, which enacts specific laws or rules that are then set forth in given legal codes. - Judges in civil law countries have relatively little power, as the codes set forth specific rules and the job of the judges is simply to enforce these specific rules. - little room in civil law countries for judicial "interpretation" or changing of legal regulations—the rules are specifically and comprehensively set forth in given codes, and only the legislative branch of government can change these rules by passing new laws that alter the given codes. - cultural perspective, civil law systems provide considerable uncertainty avoid- ance. - Citizens clearly know the given rules and judges straightforwardly enforce these codified rules. - Companies and individuals planning on doing business in civil law legal system countries need to carefully review existing rules and codes that apply to the nature of business they are going to be conducting.

What is the better business bureau?

- business and accounting organizations, such as the Bet- ter Business Bureau (BBB), American Institute of Certified Public Accountants (AICPA), and Financial Executives International (FEI), recognize their professional responsibilities by providing ethical guidelines to their members. - BBB Code of Business Practices signifies good advertising, selling, and customer service practices that build customer trust and confidence in business.

What is capitalism?

- capitalism an economic ideology where businesses are privately owned, strong individual incentives exist, and the gov- ernment plays very little role in the economy - Individual gains and losses of wealth can be very large, as the government, pursuant to this ideology, essentially stays out of the way of the economic system and the individual successes and failures that occur. - United States of America, with its strong individualistic/entrepreneurial/free mar- ket spirit, has historically been viewed as the leading economically capitalistic economy in the world.

What is a caveat emptor and caveat venditor?

- caveat emptor "Buyer beware"; involves plac- ing the burden of determining product safety on consumers - caveat venditor "Seller beware"; involves plac- ing on manufacturers/sellers of products the burden of making sure products are safe or at least clearly and explicitly warning consumers about the potential safety risks of said product - Manufacturers and sellers of products clearly need to be specifi- cally aware of the different product safety law standards that exist in the countries where they operate.

Where do people look to when ethics have failed?

- civilized society is built upon a foundation of commonly accepted ethical values. - greed is unacceptable, and unethical behavior will ultimately destroy a company's ability to make money. - goal of any company should be to increase its owners' wealth, to do so requires the public's trust. - long term, trust depends upon ethical business practices. - free societies, such as the United States, people usually have the freedom to make their own decisions about the "right" thing to do. - The American society was founded upon ethical values regarding respect for individuals, their lives, their property, and their freedoms. - A culture or society will be on the edge of disaster when its people lack integrity. - No nation can survive very long without citizens who share common values, such as courage, devotion to duty, respect for other people's lives and property, and a willingness to sacrifice personal interests for a greater cause. - When a society's ethical values begin to deteriorate, people often look to government for help. - that government cannot save a free society from its own citi- zens. - If the people do not personally hold and live by positive ethical values, then laws and regulations will be unable to maintain the society.

Who was adam smith?

- classical economists, such as Adam Smith, considered economics a branch of eth- ics. - business activity would grind to a halt without trust, fair dealings, and honest communication.

What is collusion?

- collusion practice of companies act- ing in a manner that secretly thwarts competition among themselves o example of collusion would be an agreement among companies to divide up certain markets so as not to compete with one another in certain geographic markets or locations. - antitrust laws are known as "antimonopoly laws."

What is communism?

- communism an economic ideology where the government/state basically owns and controls all major factors of production and is philosophically an economi- cally classless society - individual rights give way in the extreme to collectivistic rights—indeed, under Karl Marx's classic view, a communist country is at heart an economically classless one. - China is currently the largest nation in the world with a communist economic ideology, and it is emerging as one of the most economically powerful countries in the world. o finding it needs to move very slowly away from a 100 percent communist economic ideological approach. o formerly prevailing complete absence of individual remuneration/incentive differences has also been relaxed.

What is contract law?

- contract law the body of law governing legally enforceable agree- ments between parties to engage in economic exchange - civil law countries, contracts tend to be relatively short and unspecific because many of the relevant issues are already covered in the given civil code. - common law countries, however, judges have considerably more leeway to interpret contracts in different ways than in civil law countries, which means that contracting parties need to have long and very specific contractual language if they want to avoid judicial construction of their contractual document. - Contracts are essentially meaningless unless they can be successfully enforced. - increasing numbers of contracts today have provisions allowing them to be enforced outside the judicial process by way of alterna- tive dispute resolution methods such as arbitration, - Companies and individuals engaging in global business (or planning to do so) need to become familiar with the idiosyncrasies of contract law in the different countries where they may operate. - in certain countries certain groups of citizens (e.g., fe- males) may actually not have full "capacity" to enter into contracts. - In other countries, the rules regarding what technically represents "offer" and "acceptance" or contractual "mu- tual agreement" may differ considerably from the rules that exist in the United States. - advisable to retain local attorneys to help draw up any contracts involving foreign jurisdictions.

What is criminal law?

- criminal law law that establishes which violations of a nation's laws are crimes punishable by possible incarceration - what actions constitute crimes may differ widely in countries throughout the world, depending in part upon the nature of that nation's legal system. - definition of what constitutes a crime in a given country may change con- siderably over time along with changes in a nation's social mores and social norms.

What are the 9 dimensions of the GLOBE project?

- cultural dimensions, along with the specific questionnaire item used to measure each cultural dimension. o Power Distance: The degree to which members of a collective expect power to be distributed equally. Followers are (should be) expected to obey their leaders without question. o Uncertainty Avoidance: The extent to which a society, organization, or group relies on social norms, rules, and procedures to alleviate the unpredictability of future events. Most people lead (should lead) highly structured lives with few unexpected events o Humane Orientation: The degree to which a collective encourages and rewards individuals for being fair, altruistic, generous, caring, and kind to others. People are generally (should be generally) very tolerant of mistakes. o Collectivism I: The degree to which organizational and societal institutional practices encourage and reward collective distribution of resources and collective action. Leaders encourage (should encourage) group loyalty, even if individual goals suffer. o Collectivism II: The degree to which individuals express pride, loyalty, and cohesiveness in their organizations or families. Employees feel (should feel) great loyalty toward this organization. o Assertiveness: The degree to which individuals are assertive, confrontational, and aggressive in their relationships with others. People are (should be) generally dominant in their relationships with each other o Gender Egalitarianism: The degree to which a collective minimizes gender inequality. Boys are encouraged (should be encouraged) more than girls to attain a higher education. o Future Orientation: The extent to which individuals engage in future- oriented behaviors, such as delaying gratification, planning, and investing in the future. More people live (should live) for the present rather than for the future. o Performance Orientation: The degree to which a collective encourages and rewards group members for performance improvement and excellence. Students are encouraged (should be encouraged) to strive for continuously improved performance.

What is a democracy? Athenian democracy? Representative democracy

- democracy Greek for "rule by the people"; form of government in which all citizens have a right to vote - Athenian democracy the purest form of democracy, in which all adult citizens vote directly on matters affecting the community - representative democracy form of government in which citizens vote to elect given individuals to serve as their representatives for a certain period of time - Elections in representative democracies are always secret ballot in nature, with legal protection afforded to citizens' rights to freedom of speech and expression. - democracies are to some extent unstable, since elections are held at peri- odic intervals at which time new representatives of the people are elected and come into political power. - Some countries with strong representative democracies, such as Great Britain, Japan, Spain, South Korea, and Norway, also have ceremonial monarchs (kings and queens) that serve as permanent heads of state but have no real political power. o help provide a degree of stability to the overall political system. o referred to as constitutional monarchies.

What is culture and its characteristics?

- different components of culture, such as manners, power, face saving, names and titles, language, religion, gift giving, and risk taking. - Culture involves how a group of people behave, what the people value and appreciate, what the people believe is right and fair, and many other aspects of life. P - culture learned behavior; a way of life for one group of people living in a single, related, and independent community

How do political and legal systems vary between countries?

- different countries throughout the world have different legal and political systems. - What might be a heavily punished crime in one country may be a very lightly punished crime in another one or per- haps not even a crime at all. - Doing business in some countries is fraught with legal and political risks. - Widespread corruption and even governmental expropriation of assets frequently occur in some countries, notably in the developing world; while the legal and political situation in other nations is very stable

What is a dispute settlement law?

- dispute settlement law the law governing how dis- putes arising in the conduct of global business are settled - public option is to resolve the case through litigation, which means bringing the case to a public or government-run court of law to settle the dispute.

What are economic risks?

- economic risks the risks that economic prob- lems or mismanagement in a given country will have a meaningful negative impact upon the conduct of business in that country - example, might involve restric- tions on the transfer or exchange of a given foreign country's currency or the devaluation of that currency. - Currency devaluation and conversion restrictions are obviously only some of the many economic risks companies take when engaging in international business. - repayment of any loans the company makes to others may be questionable, in part because of weak legal structures with respect to the enforcement of contractual obli- gations. - Other potential economic risks might involve human resources and labor relations. - Another potential economic risk companies face doing business in- ternationally is that of inflation. - Corruption is also a very important economic (and political) risk com- panies face in the world of global business, - there are many ways companies can potentially avoid or at least mitigate such risks through careful planning and research. o consid- erable data and research exists regarding the stability of currencies throughout the world, and companies can take advantage of this research by primarily doing business in coun- tries known to have stable currencies. - economic risks are not independent of political risks, - Economic problems, such as hyperinflation, often lead to po- litical unrest and related problems. - political changes such as a military junta's overthrow of a democratically elected regime can quickly impact a country's economic situ- ation. - Businesses engaging in enterprise overseas, or intending to do so, need to plan for both economic and political risks.

Can ethics be taught?

- ethics classes affect people's actions in a positive manner. - teaching ethics will have at least some impact upon the ethical perspectives and behavior of those being taught. - Association to Advance Collegiate Schools of Business (AACSB) five fundamentals of ethics education: o • Personal integrity o • Responsibility of business in society o • Ethical decision making o • Ethical leadership o • Corporate governance - Never underestimate the power that one person can have in standing up for what is right. - The success of a nation, a profession, or a business, depends upon each individual doing his or her part. Whether individuals do their parts depends on their personal integrity.

What is corruption?

- existence or lack of existence of corruption in a country, state, or province has a very significant and special impact on the ability of companies to conduct global business in that jurisdiction. - corruption a situation where businesses are able to illegally alter rel- evant private and/or public decision making by way of bribes, kickbacks, blackmail, extortion, and related activities - two kinds of business corruption: private corruption and public cor- ruption.

What 5 dimensions did hofstede discover?

- findings led him to identify clusters of coun- tries and regions according to five cultural levels, or dimensions. o Individualism vs. collectivism involves the worth of an individual versus the worth of the groups of which that person is a member ("me versus the group"). o Power distance refers to egalitarianism (equality) versus authority in a society High power distance countries are those where superiors and elders are treated with deference and respect, low power distance countries, where relationships are more egalitarian. o masculine vs. feminine the extent to which a society minimizes gender inequality does not refer to the position or role of women in society. extent to which a society values traditionally masculine attributes (assertiveness, competi- tion) or traditionally feminine ones (modesty, caring for others). o Uncertainty avoidance examines the extent to which societies tolerate risk or are risk averse. o time orientation the extent to which a society emphasizes short-run or long- run time horizons

What are the four basic steps to ethical decisions?

- four basic steps in ethical decision making: o First: define all the facts and circumstances. Second: identify the people affected. Third: determine the alterna- tive decisions and consequences. And fourth: make the decision, which is comprised of two parts: determine the right action and carry out the right action. - When a choice must be made, courage will be required to give up wealth, fame, popularity—or anything else—that is required to maintain integrity - business world, the purpose of ethics is to direct business men and women to abide by a code of conduct that facilitates and encourages public confidence in their prod- ucts and services.

What are the 4 characteristics of culture?

- four characteristics of culture: o First, culture is not inherited; rather it is learned, usually through one's parents, friends, schools, and other influences. o Second, it is nearly impossible to change an entire country's cul- ture; culture is relatively static and not easily modified—especially by external forces. o Third, it is the responsibility of the global firm to ascertain the level of importance of various aspects of culture in the foreign markets it serves and recognize these aspects when doing business overseas. o Fourth, companies' operations, chiefly marketing and management, need to recognize and adjust to the cultural environment existing in the countries the global company serves.

What is a genercized trademark?

- genericized trademark a trademark that has become so well known or colloquial that it now describes a general class of product or service, as opposed to a specific product or service as intended by the trademark's owner - trade- mark holders also face the constant risk of people trying to imitate or sometimes even outright copy or counterfeit their trademarked product or service.

What is integrity?

- integrity adherence to moral and ethical principles; soundness of moral character; honesty. As a practical matter, a person of integrity knows what is right and holds the courage to do it - Unethical behavior is rarely the result of not knowing the right thing to do, but it is often the result of lacking courage to do what is right.

What is intellectual property?

- intellectual property property that is the product of intellectual rather than physi- cal activity o Examples of intellectual property include the chemical formula for a new drug to cure colon cancer, a new biography of President Barack Obama, a new computer software video game, and the musical score to a new movie. - today's "knowledge economy," intellectual property is more important than ever. - usually very hard to make or conceive, but relatively easy to copy. - to protect the creation of intellectual property and to encourage innovation, creativity, and investment in this domain, most nations have laws that afford certain in- tellectual property special protections

Internal controls must be reasonable to provide assurance for what?

- internal control must be sufficient to provide reasonable assurance for the following: o (1) that transactions are executed in accordance with management's general or specific authorization; o (2) that transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and to maintain accountability for assets; o (3) that access to assets is permitted only in accordance with management's general or specific authorization; and o (4) that recorded accountability for assets is compared with the existing assets at reason- able intervals and appropriate action is taken with respect to any differences

What are internal controls?

- internal controls a system of rules and procedures designed to ensure the accuracy and reliability of financial and accounting information - Bible also describes internal control procedures, such as the use of accounting reports to monitor a steward's performance and dual custody of assets. - internal controls prevent dishonest persons from doing wrong, but just as importantly prevent honest persons from being the subject of suspicion and false accusation. - businesses mostly were owned and operated by one person. - owner- operator maintains firsthand knowledge of all activities of the business. He or she monitors the business so that goods are not stolen or lost. - dominant form of business is the corporation in which the own- ers (i.e., the stockholders) rely upon professional managers to operate the firm - Professional managers rely upon the accounting information system to supply them with the financial information they need to make effective decisions. - good information leads to good decisions.

What are the elements of culture?

- language, religion, values and attitudes, manners and customs, material elements, aes- thetics, education, and social institutions.

How does education affect culture?

- level of education held by people in foreign countries is a major factor in explaining economic growth. - Education must be considered when expatriate managers hire host- country personnel to work on complicated production machinery, place them in training programs, staff office positions, and so on. - level of education must be such that high- tech products can be accepted because the market knows how to use them. - content of advertisements must recognize a nation's level of education. - Some countries emphasize different educational specialties. - France, Japan, and India, and, to some extent, Great Britain, have a tiered system of higher education that features prestigious colleges and universities. - Foreign companies op- erating in these nations may be tempted to recruit only from these universities but should, instead, hire the best-qualified individuals regardless of academic pedigree.

What is litigation?

- litigation involves bringing a dispute to a publicly/governmentally run court of law for resolution - One significant problem, though, of taking disputes of this kind to the courts is that courts throughout the world generally have considerable backlogs; thus it may take a year or more before the court is even able to hear the case. - many global businesses are now choosing to resolve their disputes via a private process called arbitration.

What is The Importance of Culture for Managing and Marketing in Overseas Markets?

- managing people and resources in a foreign country, close attention to host coun- tries' cultures is critical. - key factor in global management success has been communication. - country's culture affects its attitudes toward work.

What are manners and customs? How does it relate to gift giving?

- manners and customs, the way a society does things that prevail in foreign countries. - affect both the management and marketing operations of a company. - Gift-giving is one aspect that describes manners and customs. - In general, small gifts are appropriate, whereas large gifts may be viewed as a bribe that contravenes international law. - Types of wrapping paper, ribbons, and colors are other elements of gift-giving that are important, as is knowing when to give a gift.

What is a monopoly?

- monopoly situation where there is only a single seller of a product in an industry, and there are very high barriers to enter this industry - antitrust regulators in many countries are, or at least have been, far less aggressive than in the United States - antitrust laws may be illegal in most developed countries in the world, but they are not always meaningfully or easily enforced

What are the cultural dimensions of doing business in Japan?

- most flights from the United States to Tokyo—about 14 hours in length from the United States' West Coast—arrive late in the afternoon. - "welcoming" activities were designed to take advantage of his severe case of jet lag so that he would be more likely to grant concessions at the next day's meetings. - Japanese executives would engage in lengthy periods of silence. - not much had happened during negotiations until the eve- ning before he was scheduled to return to the United States. - Upon meeting a Japanese executive, a slight bow and handshake are appropriate - Business card etiquette is important. On one side of the card, the information should be in English; the other side should have the same information in Japanese. - It is not appropriate to look directly into the eyes of your Japanese hosts. - It is important for your Japanese hosts to know your title and rank. They prefer to do business with high-ranking individuals. - Japanese business has a group orientation, rather than an individualistic one. "The peg that stands out gets hammered down" is an old Japanese saying. - They expect foreign business representatives to arrive prepared and to have decision- making authority. - New potential business partners must have been referred to Japanese business repre- sentatives through a third party.

What is important about advertising campaigns with different cultures?

- must be carefully tailored to local cultures

What are the cultural dimensions of doing business in Arab countries?

- number of "don'ts": o • Avoid sitting so that the sole of one's shoe is shown. o • The left hand is viewed as "unclean." o • Good posture is imperative. o • Foreign business representatives should not inquire about the wives of Arab business representatives. o • Do not be overly effusive when praising the possessions of Arab hosts, as this could create a perception that you expect they give these possessions to you. o • Arab business representatives will probably be reluctant to do business with women. If a woman is accepted, modest dress is appropriate. o • Arab business representatives may frequently divert from the topic initially discussed, then return to it.

What sources can be used to obtain cultural information?

- number of sources they can access to learn more about the cul- ture of various foreign countries. - primary sources are talking to employees who have lived or worked abroad, executives who have traveled to other countries, training programs, and consulting firms. - Persons who may be about to undertake an international assignment can be exposed to cultural idiosyncrasies in which they are asked how they would handle various cultural traits that might occur in their assigned countries.

What are the cultural dimensions of doing business in China?

- overriding cultural aspect of doing business in China is guanxi ("gwanshe"). - guanxi Chinese philosophy denoting friendships among unequals and unlimited exchanges of favors; it is not based on senti- ment, emotions, or a group orientation - Guanxi refers to the relationship between subordinates and superiors. - It is utilitarian, not emotional. It has an individual orientation, not a group orientation. - Exchanges are often uneven, working to the advantage of weaker members in the guanxi relationship. - claims of modesty and inadequacy should be viewed as subtle demands for generosity, reminding the more powerful individual of his or her obligation to be more magnanimous. - Persons of low rank may be powerful and influential due to guanxi relationships with superiors. - foreigners who want to conduct business in China may need to seek out these lower-level persons and obtain their favor in order to gain access to the more powerful superiors who are the decision makers.

What are patents?

- patent the right granted to the inven- tor of a product or process that excludes others from selling, making, or using the invention for a certain period of time - remain in force for between five and twenty years, depending on the invention and the country. - inventor of the product is granted a monopoly over it for the given period of time (i.e., no one else can copy, make, or sell this invention for the specified time period). - latter part of the 20th century, Japan and the United States were the world's patent powerhouses, issuing far more patents than any other countries

What are political risks? What are macropolitical and micropolitical risks?

- political risks the risks that political forces or problems in a given country will have a meaningful nega- tive impact upon the conduct of business in that country - Political risks can be both micro and macro in nature. - micropolitical risk a political risk that only affects a certain industry or set of firms in a given country - macropolitical risk a political risk that essentially affects all businesses in a given country - Potential changes in government, civil wars, social unrest, and possible government confiscation of assets are all examples of the types of political risk companies face in the world of global business. - Scandinavian and European countries, such as Norway, Sweden, Switzerland, Luxembourg, and Denmark, near the top of the list, meaning that companies engaging in business in these countries face the least potential political risks. - Russia, Croatia, and Brazil tend to anchor the other end of the list—companies doing busi- ness in those countries face considerable political risks.

How does religion relate to culture?

- powerful cultural aspect that must be recognized as companies manage their overseas operations and market their products in foreign cultures. - different religions observe different holidays that must be recognized. - Weekends and work hours can vary according to different religions. I - Companies marketing food products overseas must be aware of religious differences.

What is private corruption?

- private corruption business corruption involving other private businesses, individuals, or groups - Private corruption can often be very difficult to detect, and, in some countries in the world, government officials charged with enforcing anticorruption laws simply look the other way ( - private corruption can at times be somewhat difficult to define. - practice of paying business lobbyists and making business campaign contributions to elected officials in hopes of achieving legisla- tion favorable to a company's business interests. - definitions of private corruption may vary widely across the globe - Transparency International released a comprehensive study of corporate bribery in developed countries throughout the world, ranking countries on a "Bribe Payers Index."

What is a product safety law?

- product safety law the law that establishes the standards of product safety to which the manufacturers and sellers of products are to be held - standards vary considerably in countries around the world. - Some countries place relatively lax safety standard obligations on product manufacturers and sellers operating essentially under a regime of caveat emptor or "buyer beware."

What is public corruption?

- public corruption the practice of making illegal payments to government offi- cials or engaging in blackmail, extortion, or other related activities in order to obtain government contracts or gov- ernmental approval for busi- ness activities

What is the purpose of clustering countries and regions by culture?

- purpose is to provide inter- national managers with cultural clusters that would allow for similar marketing and man- agement strategies.

What do financial scandals result in?

- recent scandals have often led to investors' loss of confidence in the stock market and in the reliability of corporate financial reports

What are the secondary sources of obtaining cultural information?

- secondary sources: o U.S. Department of Commerce Country Commercial Guide provides cultural infor- mation for 133 countries. o Economist's Intelligence Unit contains the same type of information on 180 coun- tries in its Country Reports. o Culture Grams, from Brigham Young University's Center for International and Area Studies, describes customs existing in 174 countries. o Craigshead's International Business, Travel, and Relocation Guide to 84 Countries gives cultural information for these nations. o Price Waterhouse Coopers Doing Business in 118 Countries contains useful information about 118 countries.

What is socialism?

- socialism an economic ideology where the government/state plays a strong role in the economy and may own stakes in certain businesses - do not aspire to be "classless." - tend to be somewhat more collectively than individualistically oriented, with disparities in income and wealth less extreme than in capitalistic countries. - high degree of importance on worker/labor rights and on the existence of strong free labor unions.

What is tax law? What are tax haven countries?

- tax law the body of law dealing with governmental levying of taxes on individuals and corporations - benefits of conducting business in a certain locale are so great that businesses will want to locate there in spite of high tax rates and complex tax regulations. - many companies have been on the prowl for more tax-friendly bases of operation. For a number of major U.S. companies, the country of choice in this regard has been Switzerland. - tax haven countries countries with little or no tax transparency

What are trademarks?

- trademark a distinctive phrase, name, word, picture, symbol, or design, or a combination of these, that identifies a given business's service or product and is owned by said business - "Coca-Cola" is perhaps the most famous trademarked name in the world, and its distinctive logo very clearly identifies the beverage being sold by the company that produces it virtually anywhere in the world. - companies try through public relations campaigns, celebrity endorsements etc. to make them as popular as possible (think about all the star athletes endorsing Nike products), while at the same time trying not to push their popularity so far that they become "genericized"

What are values and attitudes with respect to culture?

- values basic beliefs or philosophies that are pervasive in a society - in some countries. high value is placed upon foreigners and foreign items, as they are associated with sophistication - some countries - subtle resistance to foreigners and things foreign. o aversion to purchasing foreign products and their resistance to accepting employment with foreign firms operating in these countries. - Attitudes are feelings or opinions. o Attitudes toward change must be considered by international businesses. o many societies, proposed change is viewed with suspicion— especially if it is suggested by foreigners.