International Business , inngangur að alþjóðaviðskiptum kafli 1- eh?
Political systems do all EXCEPT define the people
A political system includes the structural dimensions and power dynamics of its government. They do not define people.
Collectivism
A political system that emphasizes collective goals as opposed to individual goals
Right-Wing Totalitarianism
A political system in which political power is monopolized by a party, group, or individual that generally permits individual economic freedom but restricts individual political freedom, including free speech, often on the grounds that it would lead to the rise of communism
Theocratic Totalitarianism
A political system in which political power is monopolized by a party, group, or individual that governs according to religious principles
Code of Ethics
A business's formal statement of ethical priorities
Foreign commerce has stopped and domestic businesses have closed in a country experiencing civil disorder, ethnic disorder, and insurrection. This situation illustrate A catastrophic political risk
A catastrophic political risk adversely affects the operations of every firm in the country. Threats such as ethnic discord, civil disorder, and insurrection fundamentally disrupt society and devastate the business environment for all companies.
A type of legal system that is based on judicial precedent is known as common law.
A common law system relies on tradition, judge-made precedent, and usage. It respects established case law in resolving disputes. Judicial officials refer to statutory codes and legislation, but only after considering the rules of the court, customs, judicial reasoning, prior court decisions, and principles of equity.
Contract
A document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved
Multinational Enterprise
A firm that owns business operations in more than one country
In Hong Kong, citizens possess civil liberties and other democratic rights; however, a 1,200-member committee composed of handpicked elites chooses Hong Kong's Chief Executive. According to the Economist Intelligence Unit, the type of political system illustrate hybrid regime
A hybrid regime mixes democratic and totalitarian practices. The EIU identifies 36 countries (22.2% of countries), including Hong Kong, as hybrid regimes. In hybrid regimes, procedural and distributed irregularities often corrupt free and fair processes. Hong Kong has telltale aspects of a democracy, such as an impartial judiciary, civil liberties, independent media, and political parties. Still, authoritarian policies persist.
Political ideology stipulates how a society ought to govern itself and outlines the methods of how to do so
A political ideology stipulates how a society ought to govern itself and outlines the methods of how to do so. Based on this ideology, a society will have varying degrees of political freedom.
Tribal Totalitarianism
A political system in which a party, group, or individual that represents the interests of a particular tribe (ethnic group) monopolizes political power
Representative Democracy
A political system in which citizens periodically elect individuals to represent them in government
When an organization tends to believe that its business units abroad should act like local companies, it is known as Polycentrism
A polycentric organization believes that its action abroad should resemble the actions of local companies.
United Nations Convention on Contracts for the International Sale of Goods (CIGS)
A set of rules governing certain aspects of the making and performance of commercial contracts between sellers and buyers who have their places of business in different nations
Civil Law System
A system of law based on a very detailed set of written laws and codes
Theocratic Law System
A system of law based on religious teachings
Common Law
A system of law based on tradition, precedent, and custom; when law courts interpret common law, they do so with regard to these characteristics
Culture
A system of values and norms that are shared among a group of people and that when taken together constitute a design for living
A system that consolidates power in a single agent who then controls the political, economic, and social activities is known as a totalitarian system
A totalitarian system consolidates power in a single agent who then controls the political, economic, and social activities. A totalitarian system subordinates the individual to the interests of the collective.
Communist Totalitarianism
A version of collectivism advocating that socialism can be achieved only through a totalitarian dictatorship
A government of the people, by the people, and for the people is known as a democratic system.
Abraham Lincoln held that democracy is a government "of the people, by the people, for the people." Modern-day democracies translate this ideology into the principles that all citizens are politically equal, entitled to freedom of thought, opinion, belief, speech, and association, and command sovereign power over public officials.
Values
Abstract ideas about what a society believes to be good, right, and desirable
According to the hierarchy-of-needs theory of motivation, people try to fulfill physiological needs first
According to the hierarchy-of-needs theory of motivation, people try to fulfill lower-level physiological needs before higher-level needs. The most basic needs are physiological: food, water, and security.
According to the hierarchy-of-needs theory of motivation, people try to fulfill physiological needs
According to the hierarchy-of-needs theory of motivation, people try to fulfill lower-level physiological needs before higher-level needs. The most basic needs are physiological: food, water, and sex.
international business
All the commercial transactions that take place between two or more countries
World-wide sourcing
All types of businesses are getting inputs from several global locations
The United States has been ranked first on the technological scale, but low on the economic scale of globalization. This is an example of how globalization can differ by dimention
Although a country may rank as highly globalized on one dimension, it may be low on another.
Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
An OCED convention that establishes legally binding standards to criminalize bribery of foreign public officials in IB transactions and provides for a host of related measures that make this effective
Group
An association of two or more individuals who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other's behavior
Market Economy
An economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced
Command Economy
An economic system where the allocation of resources, including determination of what goods and services should be produced, and in what quantity, is planned by the government
Individualism
An emphasis on the importance of guaranteeing individual freedom and self-expression
When the contact among countries brings change that results in the mixing of cultural elements, it is known as Creolization
An example of creolization occurs when two languages merge to form a "creole" language. When the change results in mixing cultural elements, we have creolization.
World Intellectual Property Organization
An international organization whose members sign treaties to agree to protect intellectual property
International Business
Any firm that engages in international trade or investment
A laissez-faire
A laissez-faire approach holds that the government should not interfere in business affairs; rather, the market should operate according to the neoliberal principles of free market fundamentalism. A laissez-faire system is an individualistic system.
The global movement in the second half of the 20th century that resulted in the number of countries led by democratic governments growing from 22 to 120 is called the Third Wave of Democratization
Between 1950 and 2014, the number of electoral democracies grew from 22 to 120 countries during the so-called Third Wave of Democratization, a global movement that expanded individual freedoms and civil liberties.
Kinesics is the way people walk, touch, and move their bodies.
Body language, or kinesics, is the way people walk, touch, and move their bodies. Kinesics differs among cultures, and very few gestures have universal meanings.
A company that starts out with a global focus because of its founders international experience is called A born-global company
Born-global companies start out with a global focus because of their founders' international experience and because advances in communications give them a good idea of the location for global markets and supplies.
Property Rights
Bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource
Data indicate that democratic reversals have occurred in many countries is a true statement about the current state of democracy
By 2012, data signaled democracy's retreat worldwide. By 2015, retreat gave way to reversals in many countries and, as Freedom House warned, the "return of the iron fist."
Confucian Dynamism
Captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors
Risks that include political developments that adversely affect the operations of every company in a country are known as catastrophic risks
Catastrophic political risks are risks that include political developments that adversely affect the operations of every company in a country. It typically arises from macro flashpoints—ethnic discord, illegal regime change, civil disorder, and insurrection—that disrupt society. Anti-state activities in Egypt in early 2011, for example, paralyzed its economy.
The process of imposing elements from a dominant alien culture over time into a local culture is called cultural imperialism
Change by imposition—sometimes called cultural imperialism—involves imposing certain elements from an alien culture, such as a forced change in laws by a dominant country that, over time, becomes part of the subject culture.
You are a manager for an American company that is opening factories in rural areas in a foreign country. Because the factory workers are able to obtain a substantial income, some local farmers decide to stop working on their farms and start working at the factories. This is an example of change by choice
Change by choice might occur as a reaction to social and economic situations that present people with new alternatives.
Though cultural value systems are set early in life, they might change or evolve through two methods which is choice or imposition
Change by choice might occur as a reaction to social and economic situations that present people with new alternatives. Change by imposition—sometimes called cultural imperialism—involves imposing certain elements from an alien culture, such as a forced change in laws by an occupying country that, over time, becomes part of the subject culture.
G20
Comprises the finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the EU and European Central Bank
political stability is NOT one of the contributing factors in the recent resurgence of totalitarianism rather than democracy in some countries
Countries, skeptical of the virtues of a multiparty democracy, have translated authoritarian ideologies into single-party political systems. For many poverty-stricken, politically unstable countries, patience with the not-yet-realized dividends of the "democracy advantage" thesis has worn thin. Economic insecurity from high unemployment, slow growth, and rising debt in many Western democracies also erodes the effectiveness of democracy, as do conflicting ideas about what democracy should look like and how it should function.
Critics charge that globalization does homogenizes to products, companies, work methods, social structures, and even language
Critics charge that globalization homogenizes merchandise, production methods, social structures, and even language, thus undermining the cultural foundation of sovereignty.
Critics claim that all EXCEPT business growth are problematic results of globalization.
Critics claim that globalization threatens national sovereignty, puts stress on the environment, and creates income inequality and personal stress.
The frustration that results from having to absorb a multitude of new cultural cues and expectations is known as culture shock
Culture shock typically occurs when a person starts living in a foreign culture for the first time and encounters many kinds of new values, customs, norms, and expectations.
Culture is BEST describes learned norms based on values, attitudes, and beliefs of a group of people
Culture—learned norms based on thevalues, attitudes, and beliefs of a group of people—is an integral part of anation's operating environment.
Two factors that underlie trend towards greater globalization
Declining barriers to international trade and technological chanve
All EXCEPT institutional factors Demography should be examined by a company before it implements international strategies
Demography is one of the physical factors (not institutional factors) that smart companies must examine before implementing international strategies. Demography includes a country's population density, education, age distribution, and life expectancy, which all impact IB operations such as market demand and workforce availability.
developmental psychologists believe basic value systems are acquired as a child
Developmental psychologists believe that most people acquire their basic value systems as children, including such concepts as evil versus good, dirty versus clean, ugly versus beautiful, unnatural versus natural, abnormal versus normal, paradoxical versus logical, and irrational versus rational. These values are not easily changed later on. Next Question
When doing business in the United States, you would be expected someone to arrive A few minutes before the actual start time of the business meeting
Different perceptions of time and punctuality also might create confusion. U.S. businesspeople usually arrive early for business appointments, a few minutes late for dinner at someone's home, and a bit later still for large social gatherings. In another country, the concept of punctuality in any or all of these situations might be different.
Foreign Direct Investment (FDI)
Direct investment in business operations in a foreign country
Home- and host-country regulations on taxation, employment, and foreign-exchange transactions are known as domestic law
Domestic law includes both home- and host-country regulations on taxation, employment, and foreign-exchange transactions, whereas international law-in the form of legal agreements between countries-determines how earnings are taxed by all jurisdictions.
When an organization or individual believes that its culture and practices are superior to that of other countries, it is known as ethnocentrism
Ethnocentrism reflects the conviction that one's own practices are superior to those of other countries. In IB, the term is usually applied to a company (or individual) so strongly committed to the principle of "What works at home will work abroad" that its foreign practices ignore differences in cultures and markets.
The ranking of some people within a culture more highly than others within that culture is known as Social stratification
Every culture ranks people. Social stratification creates hierarchies and influences a person's class, status, and financial rewards within that culture. In business, this practice might entail ranking members of managerial groups more highly than production group members. Social stratification is determined by (1) individuals' achievements and talents and (2) their group memberships.
Country-by-country analysis can be a difficulty for managers for all of these reasons EXCEPT subcultures never exist within a nation
Every nation, or even group of individuals such as a workforce, has several cultures and cultures within the larger culture, making a broad analysis difficult and ineffective. A subculture, whether based on ethnic group, age, education, or other factors can exist within one country, making a country-by-country analysis difficult for managers.
Translating from the native language to the foreign language, then having a second person translate from the foreign language back to the native language is an example of using back translation when translating business documents
For written work, do back translations: Have one person go from, say, English to French and a second from French back to English. If your final message says what you said originally, it's probably satisfactory.
Totalitarianism
Form of government in which one person or political party exercises absolute control over all spheres of human life and opposing political parties are prohibited
Franchising
Franchising is a mode of business in which one party allows another to use its trademark as an essential asset of the franchisees business
A mode of business in which one party allows another to use its trademark as an essential asset is known as franchising
Franchising is a mode of business in which one party allows another to use its trademark as an essential asset of the franchisee's business.
Generally, people do not find their economic status to be satisfactory unless they are doing better and keeping up with others
Generally, people do not find their economic status to be satisfactory unless they are doing better and are keeping up with others. In terms of economic well-being, we look not only at our absolute situations but also compare ourselves to others.
Geocentrism requires companies to balance informed knowledge of their organizational cultures with home- and host-country needs, capabilities, and constraints
Geocentrism requires companies to balance informed knowledge of their own organizational cultures with home- and host-country needs, capabilities, and constraints. Because it encourages innovation and improves the likelihood of success, geocentrism is the preferred approach for companies to succeed in foreign cultures and markets.
You live in Jamaica and rarely see your country compete in many winter Olympic sports. This is an example of international business being affected by geography
Geography can affect where different goods and services can be produced. Jamaica's geography is not conducive to winter sports, hence the dearth of Winter Olympians from that country.
Effective supply chain management
Globalization enables consumers to have more product variety, better quality products, and lower prices due to increased competition. However, globalization does not necessarily improve supply chain management.
Products that are shipped from China when only 4 percent of the product's parts were made in China are examples of globalization
Globalization refers to the widening set of interdependent relationships among people in different parts of the world who happen to be divided by nations.
Patent
Grants the governor of a new product or process exclusive rights to the manufacture, use, or sale of that invention
Society
Group of people who share a common set of values and norms
Social strata
Hierarchical social categories based on family background, occupation, and income
High Individualism
High individualism describes an employee's preference to fulfill leisure time and improve skills outside the organization, receive direct monetary compensation as opposed to fringe benefits, and engage in personal decision making and on-the-job challenges.
Collectivism indicates an employee's penchant for dependence on the organization instead of the employee's preference for leisure time and outside activities
High collectivism, in contrast, typifies an employee's penchant for dependence on the organization thorough training, satisfactory workplace conditions, and good benefits. In countries with high individualism, a self-actualization opportunity is a prime motivator because employees want challenges. In those with high collectivism, fulfilling security needs is a prime motivator.
A government that protects the liberties of individuals demonstrates individualism
Individualism refers to the primacy of the rights and roles of the individual. The doctrine of individualism emphasizes the primacy of individual freedom, self-expression, and personal independence (think of the declaration that we all have "certain inalienable Rights, that among these are Life, Liberty and the pursuit of Happiness").
individual regime
Individualism refers to the primacy of the rights and roles of the individual. The doctrine of individualism emphasizes the primacy of individual freedom, self-expression, and personal independence (think of the declaration that we all have "certain inalienable Rights, that among these are Life, Liberty and the pursuit of Happiness").
External stakeholders
Individuals or groups that have some claim on a firm such as customers, suppliers, and unions
Institutional factors that that may affect a company's international operations include Politics, law, culture, and economy
Institutional factors such as politics, law, culture, and economy may affect a company's international operations.
Paris Convention for the Protection of Intellectual Property
International agreement to protect intellectual property
International business transactions refer to all EXCEPT to personal conversations
International business is defined as all the commercial transactions (including sales, investments, and transportation) that take place among countries.
International Monetary Fund
International institution set up to maintain order in the international monetary system
United Nations
International organization made up of 193 countries to promote peace, security, and cooperation
General Agreement on Tariffs and Trade (GATT)
International treaty that committed signatures to lowering barriers to the free flow of goods across national borders and led to the WTO
Product Liability
Involves holding a firm and its officers responsible when a product causes injury, death, or damage
jargon is NOT considered a silent language
Jargon, often referred to as "buzzwords," are often industry or culturally specific words that are not easily understood outside of the group of people using them Jargon is not considered a silent language.
Signed contracts that permit one company to allow another to use its assets are known as licensing agreements
Licensing agreements are signed contracts that permit one company to allow another to use its assets-such as trademarks, patents, copyrights, or expertise.
Many Americans are surprised to learn that 15% of the value of U.S consumption comes from other countries.
Many Americans are surprised to learn that only about 15 percent of the value of U.S. consumption comes from other countries. This suggests globalization is less pervasive than you might think.
Tangible products that are sent out of a country are known as merchandise export
Merchandise exports are tangible products that are sent out of a country.
Tangible products that are sent out of a country are known as merchandise exports
Merchandise exports are tangible products that are sent out of a country.
Goods that are brought into a country are known as merchandise imports
Merchandise imports are goods that are brought into a country.
Globalization of markets
Merging of historically distinct and separate national markets into one huge global market;
Globalization
Movement from thinking about markets in terms of geographic areas to thinking about them as something that transcends borders; the shift towards a more integrated and interdependent world economy
One of the most important aspects of any particular market that managers must monitor and study in order to assess risk is the politics and laws in that market.
Navigating markets requires studying how political and legal circumstances overlap and differ. Managers evaluate, monitor, and forecast the dimensions and dynamics of foreign political environments.
The three objectives of expanding sales, acquiring resources, and reducing risk help guide all of the following decisions EXCEPT how many partners should be involved in international business.
Normally, the three objectives guide all of one's decisions about whether, where, and how to engage in international business.
Mores
Norms seen as central to the functioning of social life
International Trade
Occurs when a firm exports goods or services to consumers in another country
prestige relates to a person's status in an organizational setting
One factor in silent language relates to a person's status, particularly in an organizational setting. A U.S. manager who places great faith in physical things as cues to prestige might underestimate the status of foreign counterparts who don't have large, plush corner offices on high floors.
Political risk refers to risk in all EXCEPT Political party affiliation
Political risk is a potential loss arising from a change in government policy or events in a country. Although each political party has a core set of values and beliefs, one's political party affiliation does not represent a political risk.
Potential loss arising from political decisions, events, or conditions that change a country's business environment is known as political risk
Political risk is the risk that political decisions, events, or conditions change a country's business environment in ways that force investors to accept lower rates of return, cost them some or all of the value of their investment, or threaten the sustainability of their operation.
one of the major problems that arise from cultural collisions is A company's employees encounter distress due to adjusting to foreign behaviors.
People experiencing cultural collision often feel confused and uncomfortable.
Internal Stakeholders
People who work for or own the business such as employees, directors, and stockholders
All of the following are factors of increasing globalization EXCEPT static political environments
Political changes sometimes open new frontiers, such as diplomatic relations between the United States and Cuba. Today, because of changing political situations and government policies, only a few countries are heavily isolated economically or do business almost entirely within a political bloc.
Democracy
Political system in which government is by the people, exercised either directly or through elected representatives
World Trade Organization
Primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states (97% of world trade countries)
An American clothing company partners with a textile company in China to produce its new fleece jacket at a lower cost. This is an example of resource acquisition
Producers and distributors seek out products, services, resources, and components from foreign countries-sometimes because domestic supplies are inadequate. They're also looking for anything that will create a competitive advantage, such as acquiring any resource that cuts costs.
Intellectual Property
Products of the mind, ideas; can be protected by patents, copyrights, and trademarks
Folkways
Routine conventions of everyday life
Exporting
Sale of products produced in one country to residents of another country
Companies engaging in international business might benefit from all of the following EXCEPT increased sales
Selling in countries with different timing of business cycles can decrease swings in sales and profits (e.g., increasing sales stability through operations in countries that enter and recover from recessions at even slightly different times).
You are a professional athlete from the United States and are traveling to Rome for a competition. Your travel expenses in Rome can be interpreted as service exports
Service exports can be defined as providers and receivers of payments for services. As a professional athlete traveling in Rome, you are receiving services associated with travel; these services are service exports.
Product Safety Laws
Set certain safety standards to which a product must adhere
Norms
Social rules and guidelines that prescribe appropriate behavior in particular situations
The social stratum of an individual is determined by all of the following EXCEPT An individual's character and potential
Social stratification can determine outward things like a person's class, status, and financial rewards within a culture, but not a person's character or potential.
The frustration that results after a person has absorbed a new culture's cues and expectations and then returns home is known as reverse culture shock
Some people experience reverse culture shock when returning home after becoming partial to certain aspects of life in a different culture.
Socialist
Someone who believes in public ownership of the means of production for the common good of society
Globalization of production
Sourcing of goods and services from locations around the globe to take advantage of national differences in cost and quality factors of production
You own a company in a country that has strict labor laws and want to find a way to cut costs. You decide to produce your product in a foreign country with fewer labor laws. This demonstrates threats to national sovereignty criticisms of globalization
Sovereignty is a nation's freedom to "act locally" and without externally imposed restrictions. Many critics suggest globalization diminishes countries' sovereignty.
Strategic concerns focuses on long-term issues when opening an international operation
Strategic concerns direct their attention to long-term issues that shape the competitiveness, profitability, and sustainability of the firm.
Political system
System of government in a nation
Legal system
System of rules that regulate behavior and the processes by which the laws of a country are enforced and through which redress of grievances is obtained
Social structure
The basic social organization of a society
Contract Law
The body of law that governs contract enforcement
The creation of legal agreements between countries that determine how earnings will be taxed by all jurisdictions is known as international law
The creation of legal agreements between countries that determine how earnings will be taxed by all jurisdictions is known as international law.
degree of adjustment
The degrees of successful adjustment refer to the extent to which a culture is willing to accept the introduction of something foreign in addition to their view on cultural issues.
Trademarks
The designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products
Copyrights
The exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit
Public action
The extortion of income or resources of property holders by public officials, such as politicians and government bureaucrats
All EXCEPT democratic are types of legal systems
The five types of legal systems are common law, civil law, customary law, theocratic law, and mixed. A democracy is a type of political system, not legal system.
The globalization of markets is directly responsible for progressively standardizing legal systems
The globalization of markets progressively standardizes legal systems. Countries intent on attracting foreign investors develop positive reputations, transparent regulations, and consistent politics. Similarly, officials design business regulations that are easily accessible and objectively administered.
Stakeholders
The individuals or groups that have an interest, stake, or claim in the actions and overall performance of a company
Legal system are specifies rules that regulate behavior, the process by which laws are enforced, and the procedures used to resolve grievances
The legal system specifies rules that regulate behavior, the process by which laws are enforced, and the procedures used to resolve grievances.
To integrate the diverse elements of a society is the goal of a political system
The mission of a political system is clear-cut: integrate different groups into a functioning, self-governing society.
People often treat the idea of a nation and the idea of culture as synonymous because there are basic similarities among people within the same national boundaries.
The nation provides a workable definition of culture because similarity among people is both a cause and effect of national boundaries. Within a nation's borders, people chiefly share such essential attributes as values and language. However, people can belong to multiple cultures based on their nationality, ethnicity, religion, gender, work organization, profession, age, and income level.
All of the following EXCEPT economic forces comprise the political principles and legal outlooks that define a nation's business environment.
The political policies and legal practices that define a nation's business environment are comprised of the role of government in society, political ideologies, political risk, the legal environment, and operational and strategic legal issues.
Political economy
The political, economic, and legal systems of a country
Moore's Law
The power of microprocessor technology doubles and its costs of production fall in half every 18 months
Intellectual property rights (IPR) specifies ownership of creative ideas, innovation, or intangible insights
The primary safeguard is an intellectual property right (IPR) that grants the registered owners of inventions, literary and artistic works, and symbols, names, images, or designs the right to determine the use of their property. In other words, an IPR grants the registered owner of a copyright the legal authority to decide who might use the property and under what circumstances.
The primary types of political risk include all of the following EXCEPT global
The primary types of political risk are systemic, procedural, distributive, and catastrophic.
All of the following have led to the rise of democracy since the mid-1970s EXCEPT Societal demands for collectivism
The rise of democracy since the mid-1970s is due to the failure of totalitarian regimes, improvements in technology, and economic dividends of political freedom. The shift from collectivism to individualism promoted civil liberties and encouraged political freedom.
The rule of man holds that ultimate authority resides in a person whose word is law
The rule of man holds that ultimate authority resides in a person whose word and whim, no matter how unfair or unjust, is law. For much of history, rulers and law were one and the same—the law was the will of the ruler, whether that ruler was called king, lord, empress, shogun, czar, raj, chief, or caliph.
Rule of man holds that ultimate power resides in a person whose word and whim is law
The rule of man holds that ultimate authority resides in a person whose word and whim, no matter how unfair or unjust, is law. The rule of man is an instrumental device of totalitarianism.
Privitization
The sale of state-owned enterprises to private investors
Private action
The theft, piracy, blackmail and the like by private individuals or groups
Expanding sales, acquiring resources, and reducing risk make up the three major objectives that underlie the reasons for engaging in international business
The three major objectives that underlie the reasons for engaging in international business are expanding sales, acquiring resources, and reducing risk.
Stock of FDI
The total accumulated value of foreign-owned assets at a given time
Globalization
The widening set of independent relationships among people from different parts of the world that happens to be divided into nations
A type of legal system that is based on religious teachings is known as theocratic law
Theocratic law is a type of legal system. A theocratic law system relies on religious doctrine, precepts, and beliefs. Ultimate legal authority is vested in religious leaders, who regulate business transactions and social relations based on their interpretation of the sacred text.
Determining a culture's specific hierarchy of needs can help a business do Distinguish the reward preferences of employees in foreign countries.
The hierarchy-of-needs theory can help a business distinguish the reward preferences of employees in different parts of the world.
Social Democrats
Those committed to achieving socialism by democratic means
Communists
Those who believe socialism can be achieved only through revolution and totalitarian dictatorship
Foreign Corrupt Practices Act
US law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical action
Cross-cultural literacy
Understanding how the culture of a country affects the way business is practiced
MNEs stipulate the choice of law clauses in international contracts to protect themselves during conflict resolution
Usually, in the face of a cross-national dispute, each company petitions its home-country court to claim jurisdiction in the belief that it will likely receive more favorable treatment. This situation is especially pressing when a MNE from a rule-of-law system has legal difficulties in a rule-of-man environment. Worry about legal proceedings in certain legal systems leads MNEs to specify a choice-of-law clause in contracts that stipulates whose laws, if necessary, govern dispute resolution. Importantly, it obliges both parties to negotiate a compromise in the event the law changes.
Mercantilism
an economic philosophy advocating that countries should simultaneously encourage exports and discourage imports (trade surplus)
Conflict between divergent cultures that come in contact with one another is referred to as cultural collision
When contact among divergent cultures creates problems, the situation is known as cultural collision.
Measuring globalization is problematic because domestic business transactions can become international ones when national boundaries shift
When national boundaries shift, such as in the breakup of Ukraine, domestic business transactions can become international ones and vice versa.
Business managers face all EXEPT choosing a business worldwide operational concerns
Worldwide operational concerns for managers include starting a business, entering contracts, hiring and firing workers, and closing the business. Although the business model might change slightly, the MNE already has a business before they opt to open overseas.
Rights Theories
a 20th century theory that human beings have fundamental rights and privileges that transcend national boundaries and cultures
Universal Declaration of Human Rights
a UN document that lays down the basic principles of human rights that should be adhered to
Absolute Advantage
a country has an absolute advantage in the production of a product when it is more efficient than any other country at producing it
Factor Endowments
a country's endowment with resources such as land, labor, and capital
Ethical Strategy
a course of action that does not violate a company's business ethics
Just Distribution
a distribution of goods and services that is considered fair and equitable
Turnkey Project
a project in which a firm agrees to set up an operating plant for a foreign client and hand over the "key" when the plant is fully operational
Zero-Sum Game
a situation in which an economic gain by one country results in an economic loss by another
Ethical Dilemma
a situation in which there is no ethically acceptable solution
Franchising
a specialized form of licensing in which the franchiser not only sells intangible property (usually trademark) to franchisee, but also insists that the franchisee agree to abide by strict rules on how it does business
Caste System
a system of social stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime
Class System
a system of social stratification in which social status is determined by the family into which a person is born and subsequent socioeconomic achievements; mobility between classes is achievable
Business Ethics
accepted principles of right or wrong governing the conduct of businesspeople
First-Mover Advantages
advantages accruing to the first to enter a market
Agglomeration
agglomeration describe the process of many new companies moving into areas with numerous compatitiors and suppliers.
Licensing
an arrangement in which a licensor grants the rights to intangible property to the licensee for a specified period and receives a royalty fee in return
A nation's freedom to "act locally" and without externally imposed restrictions is known
as sovereignty.
Kantian Ethics
based on the belief that people should be treated as ends and never purely as means to the ends of others
Cultural Relativism
belief that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate
Pioneering Costs
costs than an early entrant has to bear that a later entrant can avoid
First-Mover Disadvantages
disadvantages associated with entering a foreign market before other IB's
Globalization leads to all except
effective supply chain management
Timing of Entry
entry is early when a firm enters a foreign market before other foreign firms and late when a firm enters after other IB's have established themselves
Joint Venture
establishing a firm that is jointly owned by two or more otherwise independent firms
Individualism vs. Collectivism
focuses on the relationship between the individual and his/her fellows
Power Distance
how a society deals with the fact that people are unequal in physical and intellectual capabilities. Cultures that are high on this let inequalities grow over time, cultures that are low on this try to play inequalities down
Current Account
in the balance of payments, records transactions involving the export or import of goods and services
Factors of production
inputs into the productive processes of a firm, including labor management, land, capital, and technological know how
Uncertainty Avoidance
measures the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty
Balance of Payments Accounts
national accounts that track both payments to and receipts from foreigners
Current Account Surplus
occurs when a country exports more goods, services, and income than it imports
Current Account Deficit
occurs when a country imports more goods, services, and income than it exports
Capital Account
records one-time changes in the stock of assets
Financial Account
records transactions that involve the purchase or sale of assets
Masculinity vs. Femininity
relationship between gender roles and work
Ethical Systems
set of moral principles, or values, that are used to guide and shape behavior
In the United States, 97 percent of exporters are
small firms
Wholly Owned Subsidiary
subsidiary in which the firm owns 100% of the stock
Religion
system of shared beliefs and rituals that are concerned with the realm of the cared
Free Trade
the absence of barriers to the free flow of goods and services between countries
Righteous Moralism
the belief that a multinational's home country standards of ethics are the appropriate ones for companies to follow in foreign countries
Naive Immoralism
the belief that if a manager of a multinational sees that firm from other nations are not following ethical norms in a host nation, the manager should not either
Most of the world's goods and services are still sold in
the countries where they're produced.
Social Mobility
the extend to which individuals can move out of the social strata into which they are born
Social Responsiblity
the idea that businesspeople should consider social consequences of economic actions when making business decisions
New Trade Theory
the observed pattern of trade in the world economy may be due in part to the ability of firms in a given market to capture first-mover advantages
Class Consciousness
the tendency for individuals to perceive themselves in terms of their class background
Constant Returns to Specialization
the units of resources required to produce a good are assumed to remain constant no matter where one is a on a country's production possibility frontier
Organization Culture
the values and norms shared among an organization's employees
Utilitarian Approaches to Ethics
these hold that the moral worth of actions or practices is determined by their consequences
Two major forces in the global economy
trade and investment
Economies of Scale
unit cost reductions associated with a large scale output
