INTB MID-TERM STUDY GUIDE

Specific Dimension

- distinguishes among cultures based on the social patterns for public and private life. - there is a small private life that is kept private, with a large public life, with many relationships that may be brief

In WTO negotiations, members have established five basic principles, norms on which the global trade system rests:

1. Trade without discrimination 2. Free Trade 3. Predictability 4. Promoting Fair Competition 5. Encouraging Development and Economic Reform

More than ________________ of the earth's surface consists of arid and semiarid regions.

- one-third

Culture influences others and ________________.

- ourselves

Interface produces Flor, a carpet product made from ________________, in its attempts to move towards sustainability.

- petroleum

Future-focused Cultures

- plan, anticipate, and see a better world evolving.

Trompenaars' past focused culture uses history to understand the ________________.

- present

Most of Trompenaars' dimensions are based on the specific culture's patterns of ________________.

- relationships

Stakeholder theory forces businesses to figure out what kind of ________________ they want with their stakeholders.

- relationships

Nuclear power is a ________________ energy source.

- renewable

Council of the European Union

- represents the member-states and is the primary policy-setting institution of the EU.

European Parliament

- represents the people of Europe and is elected from member-states.

Hall suggests that to understand a culture you must ________________ or have intensive training in it.

- spend a lifetime in it

Trompenaars' Seven Dimensions

1. Universalism vs. Particularism (rules vs. relationships) 2. Individualism vs. Communitarianism 3. Neutral vs. Affective (unemotional vs. emotional) 4. Specific vs. Diffuse 5. Achievement vs. Ascription 6. Attitudes toward Time 7. Attitudes toward the Environment

Can you explain the general importance of international institutions to business decision makers and their firms?

International institutions limit and direct the decisions available to business decision makers.

A common market is essentially a single market, so all of the ______________ become common.

barriers to trade

EU regulations have ______________impact in the United States, Japan, China, and elsewhere.

major

New institutional theory suggests institutions are a collection of ________________ that "regulate the relations of individuals to each other.

norms

Each of the IMF members contributes funds, known as ______________, determined by the nation's relative size in the world economy, which in aggregate form a pool of money from which the IMF can lend.

quotas

UN agreements set technical standards and norms that function as the ______________ for the global economy.

soft infrastructure

The EU is a ______________ body that has become a regional government.

supranational

General Assembly

the main deliberative body in which each nation has one vote regardless of its size, wealth, or power.

Gestures (are, are not) ________________ universal.

- are not

Informal Institutions

- Institutions that influence behavior through norms, values, customs, and ideologies.

Material culture includes all the ________________ of a given culture.

- objects

Climate

- (temperature, precipitation, and wind) is important because it sets the limits on what people can do, physically and economically

United Nations

- 192-member organization dedicated to the promotion of Peace & Stability of the world.

Ethnocentricity

- Assuming one's own culture to be superior to other cultures

European Commission

- Body responsible for the day to day operations

Can you explain the significance of culture differences for international business, in general, and also for several of the functional areas?

- Culture affects everything we do; it affects international business because crossing borders is elemental to IB. In marketing, culture may require different marketing mixes for different cultures. In HR, culture influences the processes of motivation and evaluation. Culture may influence production through plant layout. In accounting, culture contributes to whether the controls are tight or loose. In finance, borrowing is influenced by culture. Desirable leadership traits are also greatly influenced by culture.

What is Culture?

- Culture is learned; we are not born with a culture. - The various aspects of culture are interrelated. - Culture is shared, patterned, and mutually constructed through social interaction. - Culture defines the boundaries of different groups.

Can you describe in a general way what culture is?

- Culture is the beliefs, rules, techniques, institutions, and artifacts that characterize human populations. In other words, culture consists of the "individual worldviews, social rules, and interpersonal dynamics characterizing a group of people set in a particular time and place." It is learned, interrelated, shared, constructed through social interaction, and defines the boundaries of groups

European Monetary Union (EMU), or Economic and Monetary Union:

- EU group that established use of the euro in the 16 country euro zone.

European Court of Justice

- decides cases arising under the Treaty of Rome and subsequent agreements. On EU matters, its authority supersedes that of the member-nations' national courts.

What is environmental sustainability and what is its potential influence on business?

- Environmental sustainability is an approach that takes care of the present needs of the business and the needs of future generations at the same time. Such approaches usually consider the ecological, social, and economic systems in which a business functions, its natural world, social world, and economic world.

________________ is described as the world's most important inland waterway system.

- Europe's Rhine Waterway

The process that puts coal under pressure at high temperature to convert it to crude gas is the ________________ process.

- Fischer-Tropsch

How do the geographical features of a country or region create contextual differences that contribute to economic, cultural, political, and social conditions important to international business?

- Geographical features such as location, topography, and climate form the basis of the inherited context for business. Location influences access to ports and water ways, potential trade and political relationships. Topography influences available land use, accessibility and ease of transport. Climate controls where populations are. Porter's diamond is a good way to analyze how these endowments contribute to a nation's competitive advantage.

Can you describe Hall's concept of high and low context and how it applies to cultures?

- Hall's HC LC concept is a classification of cultures based on the amount of context the culture's communication patterns rely on. In HC cultures, communication tends to be implicit, whereas in LC cultures, communication is explicit.

The term ________________ describes unconventional sources of petroleum.

- Heavy Oil

________________ context cultures tend to use the nonspoken language more intensively.

- High

Polychronic Time

- High Context cultures - Having to do with simultaneous activities, multitasking - That is, two or more activities are carried out within the same clock block; switching among activities can be both desirable and productive. We think of this as multi-tasking.

Trompenaars' Individualism-Communitarianism dimension is similar to ________________ 's Individual-Collectivism dimension.

- Hofstede

Long-Term Orientation/Confucian Dynamism

- Hofstede describes it as dealing with Virtue regardless of Truth, that is, the level to which people in the culture will persevere to overcome obstacles they cannot overcome with will or strength.

Can you describe Hofstede's framework?

- Hofstede's framework is concerned with work values across cultures and has five dimensions. They are: individualism-collectivism, power distance, uncertainty avoidance, masculinity-femininity, and long-term orientation (aka Confucian Dynamism).

World Bank

- Investment company that lends money for development projects

________________ have to do with the recognition that environmental resources are exhaustible.

- Limits

Freer trade

- Lower trade barriers encourage trade growth.

Aesthetics

- describe a culture's sense of beauty and taste and is expressed in its art, drama, music, folklore, and dance.

Because culture cannot be ________________, we learn about it by observing its social world.

- directly observed

Heavy Oils

- Oil that does not flow easily and cannot be drawn from wells

China's Trompenaar's Dimensions:

- Paticularist- context determines what concepts apply - Collectivist- group benefits - Affective- more expressive - Diffuse- here is a large private life and a smaller public life that is more difficult to enter. No clear distinction between work life and private life. - Ascription- consider who a person is by family lineage or age, or other attributes.

Mexico Trompenaar's Dimensions:

- Paticularist- context determines what concepts apply - Individualist- Individual benefits - Affective- more expressive - Diffuse- there is a large private life and a smaller public life that is more difficult to enter. no clear distinction between work life and private life. - Achievement- reward what you do

In Hofstede's approach, ________________ describes how the culture copes with inequality.

- Power Distance

Trade-related Intellectual Property Rights

- Refers to the WTO agreement that protects copyrights, trademarks, trade secrets and other intellectual property matters

Explain the major characteristics of sustainable business

- Sustainability suggests limits, interdependence and equity in distribution for businesses. The business recognizes the limits to their actions when they recognize that environmental resources are exhaustible and that their business has a responsibility to sustain them. Interdependence describes the relationship among the ecological, social, and economic systems of the business. Equity suggests that for interdependence to work, there cannot be vast inequities in the distribution of gains from the value-adding activities of the business.

What nonrenewable and renewable energy options are available, and what are their broad business implications?

- The nonrenewable energy options are the fossil fuels: petroleum, coal and natural gas. Nuclear energy is also a nonrenewable energy source, but on a vastly different scale than the others. The renewable energy sources include at least eight sources: hydroelectric, solar, wind, geothermal, waves, tides, biomass fuels such as ethanol, and ocean thermal energy conversion. Renewable energy sources will replace fossil fuels, either due to price or depletion. There also is growing concern about the impact of carbon emissions produced by coal and oil on climate change. So there are many possible impacts on business, depending on the business positioning with renewable sources.

Can you discuss the sociocultural aspects of culture?

- The sociocultural aspects of culture are how a society's culture manifests or shows itself. Culture shows itself through all parts of a society; aesthetics, religion, material culture, language, and social organization are some of the major sociocultural categories. The text has a special focus on gift giving across cultural borders.

Neutral Dimension

- This dimension describes the culture's rules for display of emotions. People in neutral cultures tend to withhold emotional expression

Individualism vs. Communitarianism

- This dimension has to do with whether people plan their actions with reference to individual benefits or group benefits.

Uncertainty avoidance

- describes a society's comfort with uncertainty. Hofstede points out that this dimension "ultimately refers to man's search for Truth" because it describes the extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations.

masculinity-femininity dimension

- describes the distribution of roles between the genders.

Can you outline Trompenaars' dimensions?

- Trompenaars' dimensions number seven, and the first five address the culture's patterns for relationships among people, while the final two have to do with time and nature. The dimensions are: Universalism vs. Particularism (rules vs. relationships), Individualism vs. Communitarianism, Neutral vs. Affective (unemotional vs. emotional), Specific vs. Diffuse, and Achievement vs. Ascription; and then Attitudes toward Time and Attitudes toward the Environment.

The last trade area to have tariffs dropped was?

- U.S. corn exports into Mexico, where the many small farmers have had transitional protection from U.S. corn imports.23

New Institutional Theory

- Understanding of Institutions as Social Constructs, a collection of norms that structure the relation of individuals to one another.

United States Trompenaar's Dimensions:

- Universalist- conditions apply to all - Individualist- individual benefits - Affective- more expressive - Specific- there is a small private life that is kept private, with a large public life, with many relationships that may be brief - Achievement- reward what you do

Political tensions related to equity in distribution have been seen in ________________ and ________________ oil businesses.

- Venezuela's and Bolivia's

Promoting Fair competition

- WTO agreements support fair competition in agriculture, services, and intellectual property, discouraging subsidies and the dumping of products at prices below the cost of their manufacture.

Doha Development Agenda

- WTO extend conference on trade - One of Doha's goals is that developed countries provide market access to goods from the very least developed countries and increase technical assistance for them.

Guanxi

- a Chinese institution that describes a type of relationship similar to a combination of social capital and mentoring, is another example of an informal institution.

European Union

- a body of 27 European countries committed to economic and political integration.

Shale

- a fissile rock (capable of being split) composed of laminated layers of claylike, fine-grained sediment

International Court of Justice (ICJ)

- also known as the World Court, makes legal decisions involving disputes between national governments and gives advisory opinions.

Customs Union

- an agreement that adds common external tariffs to the FTA.

Stakeholder Theory

- an understanding of how business operates that takes into account all identifiable interest holders

Material Culture or Artifacts

- are all the human-made objects of a culture; people who study this are concerned with how people make things (technology) and who makes what and why (economics).

Achievement Cultures

- are meritocracies that reward what you do. In the United States, for example, it is the primary determinant of social status. This dimension may be especially helpful with staffing and interpersonal dynamics.

Stakeholder theory suggests that the tensions among the varying stakeholders in a business environment can be ________________.

- balanced

Leadership styles vary ________________.

- by culture

Production manager know that the cultural attitude toward ________________ can influence the local acceptance of new production methods.

- change

Hall's approach is based on ________________.

- communication styles

Universalist

- condition in which concepts apply to all - tend to be rules-based - The United States tends to be moderately rules-based

Paticularist

- condition in which context determines what concepts to apply - tend to be relationship-based. - other cultures, the judgment is situational—it all depends.

Ascription Cultures

- consider who a person is by family lineage or age, or other attributes.

Switzerland has built competitive advantage based on its geographical ________________.

- contraints

North American Free Trade Agreement (NAFTA)

- created a free trade area among Canada, Mexico, and the United States that came into existence on January 1, 1994.

Common Market

- created when a customs union lifts restrictions on the mobility of services, people, and capital among the member-nations.

Low Context

- cultures have explicit communication patterns. They do not rely so greatly on the context of the communication. The explicit communicator is direct and unambiguous: What you say is what you mean. - In North America, communication tends to be low context (LC), direct and to-the-point. In LC cultures, to "tell it like it is" is understood to be a positive trait.

Sociocultural

- description of the social world through which we observe the effects of culture.

Environmental Sustainability

- economic state in which the demands placed upon the environment by people and commerce can be met without reducing the capacity of the environment to provide for future generations

A sustainable business operates so that the ________________ is not damaged for future generations.

- environment

Normal Informative Institutions

- establish standards, "propagate principles, and broadly represent 'humanity." - Examples are professional organizations and nongovernmental organizations (NGOs) that influence behavior through shared norms and values. The United Nations is also an informal normative institution.

________________ is considering one's own culture superior to others.

- ethnocentricity

LC culture is ________________.

- explicit

Present-focused Cultures

- focus on what is happening now.

Encouraging development and economic reform

- goals is that developed countries provide market access to goods from the very least developed countries and increase technical assistance for them. Developed countries have started to allow duty-free and quota-free imports for many products from the least developed countries, but agriculture remains a difficult area in which to build agreement.

Security Counsel

- has responsibility for maintaining international peace and security. Membership is five permanent members—China, France, the Russian Federation, the United Kingdom, and the United States—each having veto power, and 10 non permanent members elected by the General Assembly and representing specific regions to ensure every area is represented.

Secretariat

- headed by the secretary-general of the United Nations, is the UN's staff. The secretary-general is appointed by the General Assembly on the recommendation of the Security Council for a five-year renewable term.

Predictability

- helps businesses know what the real costs will be. The WTO operates with tariff "bindings," or agreements to not raise a specific tariff over a given time. Such promises are as good as lowering a tariff because they give businesspeople realistic data.

Individualism-collectivism measures the degree to which people are ________________.

- integrated into groups

Complete Economic Integration

- involves a high degree of political integration, which requires member-nations to surrender important elements of their sovereignty.

Biomass

- is a category of renewable energy fuels based on photosynthesis, the process through which plants transform the sun's energy into chemical energy.

Economic and Social Council (ECOSOC)

- is concerned with economic and social issues, including trade, transport, industrialization, economic development, population growth, children, housing, women's rights, racial discrimination, illegal drugs, crime, social welfare, youth, the human environment, and food.

Informal Cognitive Institutions

- is of tremendous importance to the international manager. It uses shared ideas to define reality by means of conceptual frameworks or schema.

Bretton Woods

- is significant because it resulted in the world's first negotiated agreement among independent nations to support trade through monetary institutions.

Power distance

- is the extent to which members of a society expect and accept power to be distributed unequally

World Trade Organization

- is the only global international organization designed to establish and help implement rules of trade between nations.

Sustainability is ________________ and ________________ at the same time.

- local and global

European Central Bank (ECB)

- manages the euro to ensure the price stability of European markets, largely by managing interest rates. It makes decisions independent of member governments.

Other Cultures attitudes towards the environment:

- may be more inclined to seek harmony with nature rather than to dominate it.

individualism-collectivism dimension

- measures the degree to which people in the culture are integrated into groups.

How is the stakeholder model useful for achieving sustainable business practice?

- stakeholder theory involves consideration of the network of tensions caused by competing demands within which any business exists. Stakeholder theory forces a business to address underlying values and principles. It "pushes managers to be clear about how they want to do business, specifically, what kind of relationships they want and need to create with their stakeholders to deliver on their purpose."i Stakeholder theory also suggests that the tensions among the varying stakeholders in a business environment can be balanced. Business then becomes about relationships in the larger context and the responsibilities that develop from them. In stakeholder theory, profits are a result of value creation rather than the primary driver in the process, as in the economic model.

By its nature, sustainability is a ________________ concept.

- systems

Free Trade Area

- tariffs are abolished among the members, but each member-nation maintains its own external tariffs, those to countries in the rest of the world. So members have free trade among themselves but have their own trade restrictions with nonmember nations.

North American Anglo Cultures attitudes towards the environment:

- tend to assume that they are meant to dominate nature. This can-do attitude does not allow natural obstacles such as oceans and mountains get in the way of progress.

Kyoto Protocol

- the United Nations Framework Convention on Climate Change, calls for nations to work together to reduce global warming by reducing their emissions of the gasses that contribute to it, carbon dioxide first among them. - US has not ratified the Protocol

High Context

- the communication tends to be implicit and indirect. - Japan, China, Latin American and Middle Eastern countries, communication is more subtle and inferred.

The masculinity-femininity dimension measures ________________ gender roles in the culture.

- the gap between

Trade without discrimination

- the most-favored nation (MFN) principle, and it requires that nations treat all WTO members equally.

Context

- the relevant environment

Context is ________________.

- the surrounding

Nonverbal Communication

- the unspoken language - can often tell businesspeople something that the spoken language does not—if they can understand it.

Diffuse Dimension

- there is a large private life and a smaller public life that is more difficult to enter. - there is no clear distinction between work life and private life.

Natural Resources

- they are anything supplied by nature on which people depend. - Important to business productive capacity are energy and nonfuel minerals.

Nonrenewable Energy Sources

- they are fossil fuels: - petroleum, coal, and natural gas and nuclear power

Affective Dimension

- this dimension describes the culture's rules for display of emotions. - cultures are much more expressive.

Past-focused Cultures

- use history as a lens to view the present.

Monochronic Time

- with time characterized as linear, tangible, and divisible into blocks, consistent with the economic approach to time. Emphasizes planning and the establishment of schedules, with significant energy put into the maintenance of established schedules. - Low Context Cultures have this

Hofstede's 5 Dimensions

1. Individualism-Collectivism 2. Power Distance 3. Uncertainty Avoidance 4. Masculinity-Femininty 5. Long Term Orientation/Confucian Dynamism

Can you identify the levels of economic integration?

Economic integration begins with a free trade area, may move on to a customs union, and then to a common market. A common market may move toward complete economic integration.

As the IMF struggles today with core issues related to its purpose in a changing world, some economists think that ______________ may be an area for renewed IMF focus.

Exchange rates

In a free trade area (FTA), each member-nation maintains its own ______________.

External tariffs

Although the WTO is known as the "free trade organization," many of its agreements support

Fair competition

Formal Institutions

Institutions that influence behavior through Laws & Regulations.

UN agreements negotiate the global ______________ for the international exchanges of goods, services, money, and information

Rules of the game

Par Value

Stated Value

The WTO's current conference on trade,______________, has seen discord on many issues connected to the trading needs of developing nations.

The Doha Development Agenda

Can you discuss the EU and its impact?

The EU is a body of 27 European countries committed to economic and political integration. The EU has harmonized national standards, labeling laws, testing procedures, and consumer protection measures, eliminated customs and tax formalities within the EU, and introduced the euro. It has reduced the cost of doing business within the EU, set highly regarded ecological and sustainability standards, and greatly impacted business through its regulations.

______________ has power to impose sanctions on individuals, companies, and member-nations that are found to violate EU agreements.

The European Court of Justice

The first WTO principle or norm on which the global trade system rests is that trade should be without discrimination, a principle also known as

The Most Favored Nation (MFN) principle

Can you outline the United Nations as an institution and its relevance to international business?

The United Nations, dedicated to the promotion of peace and stability of the world, is composed of five organs, the General Assembly, the Security Council, the Economic and Social Council, The International Court of Justice and the Secretariat. The impact of the UN on the conduct of business can be extremely specific, because UN committees negotiate the global "rules of the game" for the international exchanges of goods, services, money, and information.

Can you describe the purposes of the two global monetary institutions, the IMF and the World Bank?

The purpose of the IMF is to coordinate multilateral monetary rules and their enforcement. The purpose of the World Bank is to lend money for development projects.

Can you discuss the purpose of the World Trade Organization and its impact on international business?

The purpose of the WTO is to establish and help implement rules of trade between nations. It has been markedly successful in doing so, judging by increasing trade flows, but presently faces the challenge of bringing the benefits of increased trade to poorer countries.

With our open ________________, vast inequities may lead to unrest and violence.

communication

International Monetary Fund (IMF)

coordinates multilateral monetary rules and their enforcement.

The World Bank was established at the Bretton Woods meeting in order to address ______________ issues.

developement

Based on the way they influence behavior, institutions can be either ______________ or ______________.

formal or informal

NAFTA is an example of a ______________ in North America.

free trade area

Institutions strive to reduce ________________ in the firm's external environment.

uncertainty