IB 300
UN impact on business
- ships, airlines, airwaves, and weather forecasts are protected by UN rules -universal postal union protocols -rules for international commercial transcations
Doha Development Agenda
-Focused on trade between developed and developing economies -Most concerns market access for developing nations, esp. for their textiles, clothing, agriculture and fish
High Context
-less verbally explicit communications; less written/formal information -more internalized understandings of what is communicated -multiple cross-cutting ties and intersections with other s -long-term relationships -strong boundaries -knowledge is situational -face to face relationship
Language
-most obvious and distancing cultural distinction; both spoken and nonspoken -gestures vary and their meanings vary between cultures
Aesthetics
-refers to a culture's sense of beauty and good taste -expressed through art, drama, music, folklore, dance, etc
Low Context
-rule oriented -knowledge is codified, public, external, and accessible -sequencing, separation -more interpersonal connections of shorter duration -Knowledge is more transferable
Trompenaar's Seven Dimensions: time dimension
-where the primary focus is as a lens to view the present -whether actions are sequential or synchronous
Bretton Woods Conference
1944 conference at which Allied nations' treasury and central bank representatives met to establish the International Monetary Fund and theWorld Bank
Development of regional trade agreements such as
ASEAN, Mercosur, the EU, USMCA(NAFTA)
Foreign environment
All the uncontrollable forces originating outside the home country that surround and influence the firm
variable levy
An import duty set at the difference between world market prices and local government-supported prices
International business
Business that is carried out across national borders
The three largest markets for American exports of goods in 2017 were
Canada, Mexico, and China
Which country currently exports the most to the United States?
China
______ was the world's leading manufacturing country for about 1,800 years, until it was replaced by Britain in about 1840.
China
Which of the elements in Porter's diamond model of national advantage takes into consideration the sophistication of a company's customers?
Demand conditions
annual inflows
FDI investments into developed nations has declined
In high-context cultures, nonverbal language plays a minor role. Business professionals rely more on the spoken word.
False
Leadership traits may vary some by culture, but underneath, they all build on the basic idea that all people want to be led and directed.
False
The dynamic capability theory states that for a firm to invest overseas, it must have three kinds of advantages: ownership specific, internalization, and location specific.
False
There are three main classes of social institutions, based on the conditions of their formation: family, kinship, and free association.
False
Organisation for economic coperation and development
Group of developed countries dedicated to promoting their own and other nations' economic expansion. Provides research on economic and business topics.
International Monetary Fund
Institution that fosters global monetary cooperation, financial stability, international trade, high employment and sustainable economic growth, and reduction of poverty
World Bank
Institution that lends money for development projects
What effect has the FCPA had on American business?
It has brought the discussion of bribery into the open, which has, overall, been positive.
What is driving the internationalization of business?
Political Technological Market Cost Competitive
secretariat
The staff of the UN, headed by the secretary-general
Civil law is the most widespread system in use globally.
True
Customary international law draws on practices that have been followed often for centuries.
True
International business differs from domestic business in that a firm operating across borders must deal with the forces of three kinds of environments—domestic, foreign, and international.
True
Understanding how religion affects cultural attitudes is important for marketing professionals to know.
True
When a manager unconsciously imparts his or her own cultural values on a situation without taking into account the possibility that the culture might vary in a foreign environment, that manager is exhibiting a self-reference criterion.
True
Economic and Social council
UN body concerned with economic and social issues such as trade, development, education, and human rights
international court of justice
UN body that makes legal decisions involving disputes between national governments
domestic environment
Uncontrollable home country factors that surround and influence the firm.
trade-related intellectual property rights (TRIPS)
WTO agreement to protect the interests of those that create ideas
Five universal problems 3
What are the preferred forms or modes of human activity?
Five universal problems 5
What is the basic nature of humans?
Five universal problems 4
What is the best way to think about time?
Five universal problems 1
What relationship should people have to nature? That is, how should they think about their activities with regard to nature?
Five universal problems 2
What sorts of relationships should exist among individuals?
International business really began
When Phoecican and Greek merchants sent representatives abroad to sell goods
An informal cognitive institution is
a collection of shared ideas that define relaity
Specific Duty
a fixed sum levied on a physical unit of an imported good
patents
a government grant giving the inventor of a product or process the exclusive right to manufacture, exploit, use, and sell that invention or process
Mercantilists believed that
a nation should have an export surplus in order to accumulate precious metals
trademark
a shape, color, design, phrase, abbreviation, or sound used by merchants or manufacturers to designate and differentiate their products
sanctions seldom
achieve their goal
An international manager has three choices when deciding how to employ a technique used in domestic operations to an international operation: transfer it intact, not use it, or
adapt it to local conditions
countervailing duties
additional import taxes levied on imports that have benefited form export subsides
Trompenaar's Seven Dimensions: universalism vs particularism
address whether rules or relationships regulate behaviors
Functionalism and the European Union
agree on small things, leads to bigger things.
Environment
all of the forces influencing the life and development of the firm
Technological drivers
allows smaller companies to communicate with customers abroad and compete globally
The WTO has made progress on trade-related intellectual property rights(TRIPS). An example of this progress is
an agreement that properly rights should not take precedence over public health
Some countries impose both an ad valorem duty and a specific duty on a single import. What type of duty are these countries using?
compound
Trompenaar's Seven Dimensions achievement vs ascription
considers what a person does contrasted with who a person is
Environment as used in the textbook involves the forces surrounding and influencing the life and development of the firm and is classified as
controllable and uncontrollable
Insurance and outsourced skills, such as hostage negotiations, as needed to
cope with crisis
Exchange of gifts
creates a social bond that requires you to be a giver, receiver, and holder of an obligation
Since 1983, the proportion of world trade coming from the United States has
decreased overall
UN general assembly
deliberative body of the UN made up of all member nations, each with one vote regardless of size, wealth, or power
Indulgence versus restraint
describes a culture's tendency either to allow relatively free gratification of human desires or suppress human drives though strict social norms
Uncertainty avoidance
describes how cultures handle the fact that the future is unpredictable
Masculinity-femininity
describes the distribution of roles between the sexes
A nation that is struggling to remain competitive in the world market may decide to reduce the value of the country's currency relative to other currencies. This process is called currency
devaluation
A major portion of the exports from developing countries go to ________ countries, and this proportion has been ________.
developed; decreasing
Differences between foreign and domestic environment
different values, difficult to access, interrelated
Nonquantitative non tariff barriers
direct government participation in trade customs and other admin procedures government and private standards
The first principle of the WTO's five basic principles is trade without
discrimination
trade without
discrimination
Trompenaar's Seven Dimensions: specific vs diffuse
distinguishes among cultures based on their differentiation between private life and public or work life.
the purpose of the International Financial Corporation (IFC) is to invest in companies and financial institutions in developing countries to build
domestic capital markets
The three levels of international business
domestic, foreign, international
Tariffs often are set to
encourage local input
protecting the
environment
A patent gives the inventor
exclusive right to manufacture, exploit, use, and sell the invention for a given time period.
Import channel members* merchants, banks, and customs brokers) are
experienced in handling exporter's area
voluntary export restraints
export quotas imposed by exporting nation
promoting
fair competion
A government nationalizes a firm when it shifts the ownership from public to private.
false
Economic cooperation often begins with a common market as in the case of the EU
false
Incoterms are established by the UN Commission on International Trade.
false
The World Bank is made up of one large institution, the International Development Association, and three smaller institutions
false
When people are kidnapped for ransom, all governments agree that the right response is to pay the ransom, get the hostages released, and then retaliate.
false
subsides
financial contributions, provided directly or indirectly by a government that confer a benefit, including grants, preferential tax treatment, and government assumption of normal business expenses
In a low power distance culture,
first names are likely to be used in the office because the ideal is equality
Dynamic Capabilities Theory
for a firm to successfully invest overseas, it must have not only ownership of unique knowledge or resources, but also the ability to dynamically create, sustain, and exploit these capabilities over time
Harrison Manufacturing, based in Toledo, recently purchased a new manufacturing facility and production equipment in Germany that it will use to produce component parts. This purchase is an example of
foreign direct investment (FDI)
Protectionism
give infant industries a change to grow and build comparative advantage
Among the cybercrimes that most often target businesses are
hacking and data espionage
Satisfactory transportation facilities
have already been established
Piracy
hijacking and kidnapping on the seas
consumer impact
import duty increases the price they pay
Must learn characteristics of other cultures
in order to adapt to them
international level is comprised of
indivdual states
Currency from the foreign country
is available to pay for the exports
Pragmatic versus normative
is measure of how people deal with the unexplained in their lives
power distance
is the extent to which followers see leaders as having much higher status than them.
Trompenaars' Seven Dimensions Individualism vs. Communitarianism
is whether people plan their actions with reference to individual benefits or group benefits
A business would obtain KRE insurance to cover losses associated with
kidnapping situations associated with a foreign involvement
Family basic unit based on
kinship
Culture is
learned
UN security council
main peacekeeping body of the UN, composed of members including 5 permanent members
Material culture includes
manufactured goods
The Bell Package, proposed in 2013, focuses in part on
market access for goods from the least developed countries
Free associations
may be formed by commonalities such as age, gender, or common interests
Individualism-collectivism
measures the degree to which people in the culture are integrated into groups
Much of the world's outflow of FDI is associated with
mergers and acquisitions
quicker, less expensive, and
more private
International business managers
must learn to live, work, and meet business goals in other cultures
The 17th and 18th centuries have frequently been termed the "Age of Mercantilism" because
national power depended on the sponsorship and control of merchant capital
Quantitative barriers
numerical limits for specific goods imported during specific period
arbitration resolution process instead
of going to court
UN convention
on the international sale of goods
international institutions
only have the power that the states give to them
A basic cultural concept is
our way is not the only way
Culture frameworks are helpful, but their use may
oversimplify and limit our understanding and learning after a point
The Foreign Corrupt Practices Act (FCPA) is U.S. legislation that
prohibits bribery by American companies abroad.
The rise of the Ottoman Empire before 1300 influenced trade as it
promoted a search for sea routes from Europe to Asia
Governments provide stability by
protecting business from unfair competition and from attacks and theft.
Kidnapping
provide source of operating funds for terrorists
Arbitration is often preferred when the contract stipulates U.S. law and one of the litigants is foreign because it is
quicker, cheaper, and more private than litigation.
know country and region so risk assessment is
realistic
Smaller nations would like patent protection to be
reduced, so that they can make money sooner.
Trompenaar's Seven Dimensions: Neutral vs affective
refers to withholding of emotion contrasted with its expression
Trompenaar's Seven Dimensions: internal vs external
reflects attitude toward controlling nature
common law
relies on previous court decisions and interprets statutes and regulations
UN International Court of Justice
relies on voluntary compliance
The Qur'an is associated with Islam and indicates the presence of which form of law?
religious
Religious Law
religious document is the basis of the legal system -prohibits charging interest
The IDA loans to the world's 75 poorest nations and
represents the largest single source of donor funds for basic social services in these nations.
An achievement culture is one in which members are
rewarded for what they do, what they have accomplished, so what they are
In high-context cultures, direct conversations that "tell it like it is" would be viewed as
rude
Social structures influence behavior at a fundamental level;
rules and organization vary across cultures
institutions
rules of the game
Inflict economic damage, punish, or encourage change of behavior
sanctions
An argument against using sanctions to punish an offending nation is that
sanctions seldom achieve their goal of forcing change in the offending country
Kendall was recently assigned to a management role in his company's overseas operation. He has been taken off guard several times when his employees responded negatively because they said he didn't take their culture into consideration when he made decisions. His employees are referring to a
self-reference criterion
Dumping
selling product abroad for less than cost of production
Culture is ____, ____, and _______ through social interactions
shared, patterned, and mutually constructed
freer trade
through negotiation
The government of a trading partner may be applying pressure on its imports
to buy from countries like the United States are good customers for the nation's exports
There should be no strong cultural objections at home
to buy these goods
Import duty to bring cost of imports up
to cost of domestic goods
Internalization Theory
to obtain a higher return on its investment, a firm will transfer its superior knowledge to a foreign subsidiary that it controls, rather than sell it in the open market
When the value of imports into a nation exceeds the value of its exports, that nation is experiencing a(n)
trade deficit
International institutions provide nations that opportunity to build multilateral solutions through collaborative communication
true
One of the significant differences between formal and informal institutions is how they gain compliance
true
Policy continuity and government stability are more important to a business than the type of political system.
true
The U.S. enforcement of Equal Employment Opportunity Commission (EEOC) law in U.S. companies operating abroad is an example of extraterritoriality.
true
The United Nations operates with voluntary agreement, so it is essentially an informal institution
true
Unfair international competition for a company can be minimized through the enaction of national laws.
true
new institutional theory suggests that institutions be understood as collections of rules and codes of conduct that limit behavior
true
foreign corrupt practices act
u.s. law prohibits payments to foreign government officials in order to receive special treatment - facilitating payments are allowed
Hamlin Millworks is frustrated with the lobbyists who are currently trying to influence Congress to raise taxes for all corporations in the wood products industry. In the environment of Hamlin Millworks, these lobbyists are an example of
uncontrollable forces
Terrorism
unlawful acts of violence committed for a wide variety of reasons
Undervalue currency and EXPORT goods you have a comparative advantage in
utilizing government subsides and protectionist policies to grow manufacturing/industrialization to support exports
International experience is
valuable
Train for daily living skills:
varying driving routes awareness of surroundings anti-terrorism training
One of the problems associated with the "cheap foreign labor" argument for restricting trade is that
wages don't account for all production costs.
Country Risk Assessment
we try to measure quantitatively how "bad" it is to operate in a nation
FDI is made by firms in industries
with relatively few competitors, due to their possession of technical and other advantages over indigenous firms
Does the IMF lend money?
yes, BUT as a last resort
compound duty
A combination of specific and ad valorem duties
What is the role of the home country in risk assessment?
It is a significant consideration
Eclectic theory of international production
Theory that for a firm to invest overseas, it must have three kinds of advantages: ownership specific, internalization, and location specific.
Which statement describes economies of scale?
They are the predictable decline in the average cost of producing each unit of output as a production facility gets larger and output increases.
How do the dimensions of Kluckhohn and Strodtbeck's framework help us to better understand other cultures?
They help us to further understand beliefs and actions in other cultures
Mexico and Canada are major U.S. trading partners because they have the benefit of lower freight charges and shorter delivery times. Why do these benefits exist for these two nations?
They share a border with the United States
According to the theory of comparative advantage, international trade can still be a positive-sum game that benefits both countries having an absolute advantage over one another.
True
Aesthetics is
an area of philosophy that deals with beauty.
Ad Valorem Duty
an import duty levied as a percentage of the invoice value of imported goods
Counterfeit drugs represent
an industry that is growing rapidly in both size and in its worldwide risk to public health
the international realm is ruled by
anarchy
encouraging development
and economic reform
Cybercrime
any illegal internet-mediated activity that takes place in electronic networks
Intellectual property includes
anything that is the result of creative work that can be protected by legal means.
The business climate in these importing nations
are already favorable
The various aspects of culture
are interrelated
export and import regulations
are not insumountable
Civil Law
based on codification, a systematic collection of laws designed to cover all areas of concern
The most important sources of international law are
bilateral and multilateral treaties, along with customary law
predictability through
binding and transparency
don't ban imports
but equalize them
Nationalization motivated by the belief that government
can manage a public good or necessity better than the private, profit-driven sector.
During the trial, the judge openly questioned the defendant and her lawyers and often challenged the presented evidence. There wasn't a jury and the judge made the final decision. Which type of legal system would include this scenario?
civil
sanctions produce
collateral economic damage
At the end of the trial, the judge stated that his decision for the case was based on a decision made in a similar case twenty years ago. Which form of law is indicated by the use of previous cases?
common
Intellectual property protection
patents trademarks trade names copyrights trade sectrets
Trompenaars's specific-diffuse dimension has to do with
patterns for public and private life
Material Culture
people who study material culture are concerned with how people make things (technology) and who makes what and why (economics)
A market situation in which there is a sufficiently large number of well-informed buyers and sellers of a homogeneous product such that no individual participant has enough power to determine the price of the product, resulting in a marketplace that is efficient in production and allocation of products is known as
perfect competition
Honest Yogurt Company of Denver, Colorado, was relieved when trade barriers on dairy products were lifted in Europe and the company could sell its products there. Which type of driver was affecting the company's ability to do business in Europe?
political
no worldwide court has
power to enforce its decrees
types of dumping
predatory dumping social dumping environmental dumping
The trend toward unification and socialization of the global community is illustrated by which of the following?
preferential trading arrangements that group several nations into a single market
A manager form a U.S. company is negotiating with a Japanese company for goods. What is most likely to be the American's most import criteria in the purchasing decision
price
The EU's impact on international buisness is
significant, since the EU standards, especially in the environment and sustainability, impact firms that want to do business in the EU
Strategic Behavior Theory
strategic rivalry between firms in an oligopolistic industry will result in firms closely following and imitating each other's international investments in order to keep a competitor from gaining an advantage
tariffs
taxes on imported goods for the purpose of raising their price to reduce competition for local producers or stimulate local production
What is one of the reasons suggested by Alfred Marshall for why firms tend to cluster together on a geographic basis?
technological information can be readily shared.
Common law is more adversarial, but more flexible,
than civil law systems
Must accept
that other cultures are different
Rapid urbanization of populations combined with industrialization in the emerging markets is quickly shifting the world's economic center of gravity from
the Americas and Europe to Asia
Examples of expropriation without compensation involve the following governments
the Unite States confiscated Iranian property in the United States and Cuba confiscated property during the Cuban revolution of the 1950s, and Zimbabwe confiscated land owned by white Zimbabwean citizens.
ethnocentricity
the belief that your own culture is superior to other cultures
Culture defines
the boundaries of different groups
The legal system of a country is composed of
the collection of governing principles, and the legislation and regulations enacted to provide for the welfare of the country.
Referring to Hall's high- and low-context framework, in a high-context culture
the context carries much of the communication
Hofstede's individualism-collectivism measures
the degree to which people in the culture are integrated into groups
greenfield investment
the establishment of new facilities from the ground up
Unlike quotas, voluntary export restraints (VERs) are imposed by
the exporting country's government
Foreign environmental forces often operate differently than domestic environmental forces because
the forces are interrelated
Societal Organization
the institutionalized structures of social relationships
International Development Association's purpose is to loan to
the poorest nations
cross-border acquisition
the purchase of an existing business in another faction
Portfolio investment
the purchase of stocks and bonds to obtain a return on the funds invested
Direct Investment
the purchase of sufficient stock in a firm to obtain significant management control
Privatization:
the selling of government owned property to the private sector to gain more efficiency in business operations, to raise money or to change in political climate/ philosophy
Culture
the sum total of the beliefs, rules, techniques, institutions, and artifacts that characterize human populations
Nationalization:
the taking of private property by a government to make it public
Some nontariff barriers are difficult to discourage because
they consist of government subsides and standard