International Business Test #1

Globalization Pros

- A company does not have to be the size of a multinational giants to facilitate, and benefit from the globalization of markets.

Collectivism vs. Individualism

- Collectivism refers to a political system that stresses the primacy of collective goals over individual. - Individualism is the opposite; refers to a philosophy that an individual should have freedom in his or her economic and political pursuits. - In contrast to collectivism, individualism stresses that the interest of the individual should take precedence over the interest of the state.

Purposes of World Trade Organization

- Primarily responsible for policing the world trade system and making sure nation-states adhere to the rules laid down in the treaties signed by the WTO members . - Facilitating the establishment of additional multinational agreements

Purposes of World Bank

- Set up to promote economic development. - Focuses on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments.

Globalization Cons

- Significant differences exist among national markets along many relevant dimensions, including consumer tastes and preferences, distribution channels, culturally embedded value system, business systems and legal regulations

International Monetary Fund Cons

- The requirements given to countries who lend money to them, such as making the country adopt specific economic policies aimed at returning their troubled economies to stability and growth.

International Monetary Fund Pros

- They help nation-states whose economies are in turmoil and whose currencies are in turmoil and whose currencies are losing value against those of other nations.

Purposes of United Nations

- To preserving peace through international cooperation and collective security. - To develop friendly relations among nations. - To cooperate in solving international problems - To promote respect for human rights - To be a center for harmonizing the actions of nations

class consciousness

A tendency for individuals to perceive themselves in terms of their class background.

According to Max Weber, Protestantism encouraged capitalism's development by A) emphasizing the importance of hard work and wealth creation for the glory of God and frugality. B) limiting an individual's religious freedom. C) encouraging the consumption of accumulated wealth by indulging in worldly pleasures. D) believing that salvation occurred in the next world, rather than this world. E) adhering to the hierarchical domination of religious and social life that characterized the Catholic Church.

A) emphasizing the importance of hard work and wealth creation for the glory of God and frugality.

Mixed Economy

An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion.

According to the UN Charter, one of the four purposes of the UN is to A) encourage high tariffs on imports of manufactured goods. B) be a center for harmonizing the actions of nations. C) promote the establishment of multinational treaties. D) facilitate globalization of production. E) provide enhanced protection for patents.

B) be a center for harmonizing the actions of nations.

In the early twentieth century, the socialist ideology split into two broad camps and the people who believed that socialism could be achieved only through violent revolution and totalitarian dictatorship were referred to as A) anarchists. B) communists. C) individualists. D) democrats. E) capitalists.

B) communists.

An argument in support of the falling barriers to international trade and investment is that the falling barriers A) prohibit countries from specializing in the production of goods and services. B) drive the global economy toward greater prosperity. C) reduce attacks from foreign competitors. D) increase the bargaining power of business firms by decreasing the incomes of consumers. E) reduce the need to export jobs overseas.

B) drive the global economy toward greater prosperity.

Ethnocentrism

Behavior that is based on the belief in the superiority of one's own ethnic group or culture; often shows disregard or contempt for the culture of other countries.

According to Hofstede, in societies where ________ was emphasized, ties between individuals were tight. A) individualism B) low power distance C) collectivism D) femininity E) low uncertainty avoidance

C) Collectivism

Only a totalitarian regime that is committed to which of the following is capable of promoting economic growth? A) limiting individualism and privatization B) command economy C) market system and strong protection of property rights D) dictatorship E) limiting human freedom

C) market system and strong protection of property rights

The absence of a legal system that protects property rights and the lack of machinery to enforce that system in a market economy usually results in A) deregulation and privatization of the economy. B) reduced barriers to foreign direct investment and international trade. C) the lack of incentive to engage in economic activity. D) an increase in the incentives to engage in economic activity. E) an improvement in the operating efficiency of newly privatized firms.

C) the lack of incentive to engage in economic activity.

Jewish law is an example of what type of law system? A) autocratic B) civil C) theocratic D) universal E) common

C) theocratic

Different legal systems

Common Law: Based on tradition, precedent, and custom. Civil Law: Based on detailed set of laws organized into codes. Theocratic Law: Based on religious teachings

Communists vs. Social Democrats

Communism is generally regarded as hard-left, making fewer concessions to market capitalism and electoral democracy than do most forms of socialism. As a system of government, communism tends to center on a one-party state that bans most forms of political dissent

CISG

Contracts for the International Sale of Goods - Uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in different nations.

Democracy and Totalitarianism

Democracy refers to a political system in which government is by the people, exercised either directly or through elected reps. Totalitarianism is a form of government in which one person or political party exercises absolute complete control over all spheres of human life and prohibits opposing political parties.

Corruption

Dishonest behavior by those in positions of power, such as managers or government officials. Corruption is seen and treated as illegal.

Understanding FDI

FDI occurs when a firm invests resources in business activities outside is home country.

Hofstede's dimensions

Individualism (IDV) vs. collectivism: "The degree to which individuals are integrated into groups" - In individualistic societies, the stress is put on personal achievements and individual rights. People are expected to stand up for themselves and their immediate family, and to choose their own affiliations. - In collectivist societies, individuals act predominantly as members of a lifelong and cohesive group or organization. People have large extended families, which are used as a protection in exchange for unquestioning loyalty.

Innovation and Entrepreneurship and their requirements

Innovation is new products, new processes, new organizations, new management practices, and new organizations. Entrepreneurship is the activity of setting up a business or businesses, taking on financial risks in the hope of profit. Market economy & property rights

Intellectual Property

Intangible creative work that is embodied in physical form and includes copyrights, trademarks, and patents

Hofstede's dimensions

Long term orientation (LTO), vs. short term orientation: First called "Confucian dynamism", it describes societies' time horizon. - Long term oriented societies attach more importance to the future. They foster pragmatic values oriented towards rewards, including persistence, saving and capacity for adaptation. - In short term oriented societies, values promoted are related to the past and the present, including steadiness, respect for tradition, preservation of one's face, reciprocation and fulfilling social obligations.

Hofstede's dimensions

Masculinity (MAS), vs. femininity: "The distribution of emotional roles between the genders". Masculine cultures' values are competitiveness, assertiveness, materialism, ambition and power, whereas feminine cultures place more value on relationships and quality of life.

Social mobility

Movement of individuals or groups from one position in a society's stratification system to another

Hofstede's dimensions

Power distance is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. - Cultures that endorse low power distance expect and accept power relations that are more consultative or democratic. - In high power distance countries, less powerful accept power relations that are more autocratic and paternalistic.

Property Rights

Refers to the 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.

Globalization of Markets

Refers to the merging of historically distinct and separate national markets into one huge global marketplace.

Languages

Spoken and unspoken language

PPP (Purchasing Power Parity)

The buying power of income in a country

Moore's Law

The cost of microprocessors continues to fall, while their power increases. (_______, which predicts that the power of microprocessor technology doubles and its cost of production falls every 18 months).

Command Economy

The government controls the goods and services produced, the quantity produced, and the prices for which they are sold.

Late-mover disadvantages

The handicaps that late entrants into the market may suffer

Lowing Trade and Investment Barriers

The lowering made globalization and markets and production a theoretical possibility.

Political economy

The system of government in a nation

Privatization

To change from government or public ownership or control to private ownership or control.

Hofstede's dimensions

Uncertainty avoidance index (UAI): "a society's tolerance for uncertainty and ambiguity". It reflects the extent to which members of a society attempt to cope with anxiety by minimizing uncertainty - People in cultures with high uncertainty avoidance tend to be more emotional. They try to minimize the occurrence of unknown and unusual circumstances and to proceed with careful changes step by step by planning and by implementing rules, laws and regulations - In low uncertainty avoidance cultures accept and feel comfortable in unstructured situations or changeable environments and try to have as few rules as possible. People in these cultures tend to be more pragmatic, they are more tolerant of change.

HDI (Human Development Index)

a measure of a country's standard of living, including health and education

Social stratification

a system by which a society ranks categories of people in a hierarchy

Market Economy

all productive activities are privately owned, as opposed to being owned by the state.

Class system

less rigid form of social stratification in which social mobility is possible

Cross-cultural literacy

meaning an understanding of how cultural differences across and within nations can affect the way business is practiced.

GNI (Gross National Income)

measures the total annual income received by residents of a nation

Mores

norms that are widely observed, have great moral significance than other norms, and are central to the functioning society and to its social life.

Globalization of Production

refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production.

De-regulations of economies

removal of government restrictions concerning the conduct of a business

Folkways

routine conventions of everyday life

Stock of FDI

total cumulative value of foreign investments

Risks

unforeseen events and obstacles that can negatively affect business. Political or legal.